CICC: Maintains "outperform" rating on BOSIDENG (03998) with a target price of HK$5.63.

CICC released a research report stating that it is maintaining its basic forecast for BOSIDENG (03998) FY26 EPS at 0.34 yuan and introducing a FY27 EPS forecast of 0.38 yuan. The current stock price corresponds to a 12/11 times FY26/27 P/E ratio. They maintain an outperform industry rating and an unchanged target price of 5.63 Hong Kong dollars, corresponding to a 15/14 times FY26/27 P/E ratio, with a 22% potential upside from the current stock price. Key points from CICC: FY25 performance (April 2024-March 2025) meets expectations The company's FY25 revenue increased by 12% year-on-year to 25.9 billion yuan, and net profit attributable to shareholders increased by 14% to 3.5 billion yuan, meeting the banks expectations. The company declared a final dividend of 22 Hong Kong cents per share, corresponding to a full-year dividend payout ratio of approximately 84%. The core down business continues to maintain steady growth Despite unfavorable factors such as a high base, warm winter, and fluctuations in the consumption environment, the brand's core down business recorded a 7% revenue growth in 2HFY25, reflecting the company's brand influence and sales resilience in the down industry. By channel, direct sales/wholesale revenue increased by 1%/47% respectively. The company continued to focus on building benchmark Top stores and as of the end of March, approximately 31% of the company's stores were located in first and second-tier cities, a year-on-year increase of 2.8ppt; meanwhile, the company focused on strategic growth market expansion, opening a net of 253 stores throughout the fiscal year. In terms of brands, core brand BOSIDENGs revenue increased by 7% to 13.2 billion yuan in 2HFY25, accounting for 85% of down business revenue. OEM business FY25 revenue increased by 26.4% to 3.37 billion yuan, with high growth in the OEM business reflecting the company's active expansion of high-quality new customers, the capability to quickly fulfill orders, and the effectiveness of expanding overseas production capacity in a fluctuating environment. Healthy inventory turnover and good expense control The company continued to strengthen integrated inventory operations, increasing inventory turnover days by 3 days to 118 days at the end of FY25. Sales and administrative expense ratio decreased by 2.4ppt to 42% in 2HFY25, mainly due to operational efficiency improvements and good expense control, with operating profit margin increasing by 0.3ppt to 20.4%. Development trends The company plans to adhere to a dual-focus strategic direction, focusing on the core down business and fashionable functional technology apparel, leading with the brand, innovating and developing multi-category products, deepening market operational strategies at multiple levels, implementing a customized strategy for each store, and accurately matching people, goods, and flow.