EB SECURITIES: Shenzhou International (02313) performance is below expectations, with decreased profit forecasts. Valuation is currently at a low level, still recommend buying.

EB SECURITIES released a research report stating that SHENZHOU INTL (02313) will face pressure on its performance in 2025 due to various factors such as the external macro environment and exchange rates. In terms of capacity construction, the company is progressing steadily, with the completion of the main construction and partial equipment installation of the second fabric factory in Vietnam by the end of 2025. This factory, once operational, will alleviate the supply shortage of fabrics for the overseas clothing factories expansion. Cambodia's newly built clothing factory plans to hire 6,000 employees, with around 5,400 already recruited. Production efficiency has reached about 85% of normal levels, and the ramp-up of capacity and efficiency improvements at the new factory will have a positive impact on gross margins. In addition, the company's domestic production base is continuously undergoing technological upgrades. Considering the uncertainty in the domestic and international macroeconomic and retail environments, EB SECURITIES has lowered the company's profit forecast for 2026-2027 (with a 16% and 14% decrease in net profit attributable to shareholders compared to the previous forecast) and added a profit forecast for 2028. It is estimated that the net profit attributable to shareholders for 2026-2028 will be 6 billion, 6.78 billion, and 7.4 billion respectively, corresponding to EPS of 3.99, 4.51, and 4.92 for 2026-2028, with PE ratios of 11, 9, and 9 times. The valuation is low, and EB SECURITIES maintains a "buy" rating on SHENZHOU INTL. EB SECURITIES' main opinions are as follows: