HK Stock Market Move | STELLA HOLDINGS(01836) drops more than 5%, Daiwa predicts that the company's net profit in 2025 will be lower than market expectations.

STELLA HOLDINGS (01836) fell more than 5%, as of the time of writing, it fell by 5.25% to HK$14.63, with a turnover of HK$81.8273 million. In terms of news, STELLA HOLDINGS announced yesterday that in the fourth quarter of 2025, the group's unaudited consolidated revenue increased by 0.8% year-on-year to 3.886 billion US dollars; in 2025, the unaudited consolidated revenue increased by 1.5% to 15.678 billion US dollars. In the footwear manufacturing business, the shipment volume remained flat in the fourth quarter of 2025 compared to the previous year, while it increased by about 3.8% on an annual basis in 2025, mainly driven by strong order demand for the sports category and new customers for whom the company is increasing production capacity. The average selling price for both periods has been adjusted downward, due to the growth in the sports category, which has a lower average selling price. Daiwa Securities released a research report stating that it has downgraded STELLA HOLDINGS' rating from "Buy" to "Hold" and revised the target price from HK$18 to HK$15.8. Daiwa stated that the company's fourth quarter performance was affected by shipment delays and ongoing efficiency issues, resulting in the delay of shipment of about 250,000 pairs of shoes to the beginning of 2026, which is expected to have an impact of $2 million on the net profit for 2025. Daiwa expects the company's net profit for 2025 to be lower than $140 million, below the market expectation of $156 million. The forecast for net profit in 2026 is $153 million, lower than the market expectation of $167 million, mainly due to factors such as the losses from the opening of three new factories, severance costs from possible downsizing of two Chinese sports shoe factories, and factory efficiency issues. The bank expects the company's annual cash distribution of $60 million to cease after 2026.