CITIC SEC: Maintains "buy" rating on TOPSPORTS (06110) with a target price of HK$3.5.

CITIC SEC released a research report stating that TOPSPORTS (06110) saw a high single-digit year-on-year decrease in sales in FY3Q26 (corresponding to 2-year/3-year CAGR of -6%/-1%), with a slight deepening of discounts across all channels compared to the same period last year but a narrower month-on-month decline. The company's inventory and aging structure continued to improve. The company has lowered its full-year guidance, with the previously guided target of flat year-on-year net profit facing pressure to achieve, potentially resulting in a slight deviation. In the short term, industry foot traffic performance is weak, with pressure on discounts and sales across all channels. In the medium to long term, with the recovery of industry inventory health, the restoration of sales momentum for key brands like Nike, and the continued volume growth of new exclusive brands in running and outdoor categories like SOAR, Norrna, and Norda, the company is expected to gradually return to a stable growth trajectory. Considering the company's history of high dividends and high dividend yield, a 15X PE ratio is given for the company's fiscal year 2027, corresponding to a target price of 3.5 Hong Kong dollars, and maintaining a "buy" rating.