Morgan Stanley has downgraded SHENZHOU INTL (02313) to "outperform" with a target price of HKD 92.6.

, Macquarie released a research report stating that it has lowered SHENZHOU INTL's (02313) net profit forecast for the fiscal years 2024 and 2025 by 1.9% and 3% respectively. It is expected that the lower gross profit margin will be partially offset by a lower operating expense ratio, resulting in a 5% target price reduction from 97.4 Hong Kong dollars to 92.6 Hong Kong dollars, while maintaining an "outperform" rating. The report mentioned that SHENZHOU INTL's production measures in the second half of 2024 are expected to improve employee productivity, with sales volume expected to increase by 17% year-on-year. Additionally, due to a higher proportion of sportswear and casual wear, the average selling price is expected to decline slightly compared to the first half of the year. The bank expects the group's gross profit margin for the second half of the year to reach 27.2%, an increase of 1.4 percentage points year-on-year. However, due to temporary impacts from wage increases, the margin is expected to decrease by 1.8 percentage points compared to the first half of the year. The bank believes that the company will pass on costs to brand customers at the appropriate time. Looking ahead to 2025, Macquarie expects Uniqlo and adidas to be the main drivers of order growth for SHENZHOU, and predicts further expansion in the group's gross profit margin. The bank also forecasts that Nike's revenue will turn positive year-on-year in the second half of the year, and the group's average product price will increase.