Macquarie: Top Sports (06110) rated as "neutral", target price raised to HK$2.72

Macquarie released a research report stating that it has a "neutral" rating for TOPSPORTS (06110), and has raised its net profit forecasts for the fiscal years 2025 and 2026 by 6.3% and 5.6% respectively, mainly due to higher revenue forecasts. At the same time, it has raised its target price from 2.6 Hong Kong dollars to 2.72 Hong Kong dollars. The total sales of TOPSPORTS Sports in the third quarter of the year declined by a single-digit percentage year-on-year, exceeding the bank's expectations. The bank pointed out that the discount level of TOPSPORTS in the third quarter expanded compared to the previous quarter, mainly due to the expansion of offline discount levels caused by inventory promotions; online channel revenue contributed to 40% of retail business, but this was offset by narrowing online discounts. Macquarie stated that due to the smaller decline in TOPSPORTS' revenue in the second half of the year, it is expected that its net profit for the fiscal year 2025 will decline by 34%, compared to the company's management target of a 35% to 45% year-on-year decline. The bank believes that consumers' response to the new running series launched by "Nike" in the first half of the 2025 fiscal year, as well as the upcoming outdoor series, may be the key to revitalizing the brand in China.