Yamato: Reiterate a "buy" rating for SHENZHOU INTL(02313) Lower-than-expected gross profit margin in the second half of the year.

Yamato Research released a research report stating that despite short-term unfavorable factors, based on SHENZHOU INTL (02313) current valuation not being expensive, the firm reiterated a "buy" rating, with a target price lowered from 79 Hong Kong dollars to 73 Hong Kong dollars. SHENZHOU INTL's performance in the second half of 2025 fell below expectations, with revenue increasing by 2.2% year-on-year, and gross profit margin decreasing by 1.8 percentage points to 25.6%, hitting a two-year low, performing much worse than the market's expectation of relatively stable gross profit margin. The firm estimates that the lower-than-expected gross profit margin is mainly due to tariffs, RMB appreciation, rising labor costs, and inefficient operations. Looking ahead to 2026, the firm noted that the company's order momentum in January and February remains weak, but there has been some improvement in March. The firm expects sales volume for the full year to increase by mid-single digits year-on-year, with the average selling price slightly declining year-on-year due to RMB appreciation and continued adjustments by Nike and Puma.