Citigroup: Lowered the target price of BLOKS (00325) to 88 Hong Kong dollars and maintained a "buy" rating.

Citigroup released a research report stating that the measures taken by BLOKS (00325) in new categories, IP diversification, adult-oriented products, and overseas expansion will pave the way for sustainable growth in 2026 and beyond. Citigroup has downgraded its profit forecast for BLOKS, taking into account more cautious sales assumptions and a cautious trend in profit margins during the expansion period, while maintaining a "buy" rating and lowering the target price from HK$103 to HK$88. Management guidance targets a year-on-year revenue growth of approximately 30% in the coming years. In 2026, it will launch more IP and product lines globally, accelerate the development of new assembly vehicle categories, and improve the efficiency of adult-oriented businesses. Channel inventory has recovered to a healthier level after a slowdown in sales. The bank expects steady revenue growth in the mainland China market for BLOKS, with a year-on-year increase of over 20%, while overseas markets are expected to grow at a faster pace of over 100% year-on-year. Despite the rebound in gross profit margin, the forecasted rebound in net profit margin may still be premature.