CICC: First Coverage of YUE YUEN IND (00551) with an "Outperform" Rating, Target Price of 19.46 Hong Kong Dollars

Zhongjin Securities released a research report stating that it is covering YUE YUEN IND (00551) for the first time, giving it an "outperform industry" rating with a target price of HK$19.46, corresponding to a 10.5 times price-to-earnings ratio for 2026. The company is a leading global sports shoe manufacturer and also has a presence in the sports shoe and apparel retail business in Greater China. The report stated that according to Euromonitor, the global sports shoe market will reach $167.7 billion by 2024 and is expected to maintain mid-single-digit growth over the next five years. The market share of global sports shoe brands is concentrated, with the top 10 brands accounting for 57% in 2025. YUE YUEN IND is the world's largest sports shoe manufacturer, with a shipment share of over 10%. Its subsidiary, POU SHENG INT'L, is a leading sports shoe and apparel retailer in Greater China. The report predicts that tariff disruptions may subside by 2026, and YUE YUEN IND's main brand customers have manageable inventory levels. Brands like Nike are accelerating product innovation, along with the growth of multiple high-quality brands, leading to stable revenue growth in the manufacturing business by 2026. The company's previous issues with uneven capacity utilization are expected to improve, leading to a recovery in performance in the manufacturing business. The report suggests that the company is expected to see growth after optimizing its customer base and structure, and leveraging its development capabilities and global manufacturing layout to bring performance certainty with high-quality brands. It also predicts a dividend yield of 8.2% in 2026, providing a margin of safety. The company's earnings per share for 2025 and 2026 are estimated to be $0.23 and $0.24 respectively, with a compound annual growth rate of -0.4% from 2024 to 2026.