CICC: Maintains BOSIDENG (03998) Outperform Rating with a Target Price of 5.65 Hong Kong Dollars.

CICC released a research report stating that they maintain their EPS forecast for BOSIDENG (03998) for FY26/27 at 0.32/0.34 yuan, with the current stock price corresponding to 11/10 times FY26/27 P/E ratio. They also maintain their outperform rating and target price of 5.65 HKD, corresponding to 16 times FY26 P/E ratio, representing a 40% upside potential from the current levels. Recently, BOSIDENG has launched the high-end product line AREAL, urban outdoor, high-tech commuting, and flexible light sports four major series of spring/summer new products, showing progress in product innovation, brand positioning enhancement, and globalization. Key points from CICC include: - The core IP series of BOSIDENG in FY26 has achieved impressive performance, driving revenue growth while further enhancing brand image. - In the fluctuating environment of FY26, the group's down garment business is expected to achieve mid- to high single-digit growth. The BOSIDENG main brand is expected to achieve mid-single-digit growth, with the core IP series of products with high unit price representing a new brand image performing well. The Arctic series has maintained healthy growth despite a larger base, reflecting consumer recognition of the series. The Puff series has achieved more than double-digit growth through actions such as participation in Paris Fashion Week and upgrading of technology fabrics. The high-end urban line AREAL series' first season autumn/winter products have a sell-out rate of over 95%, successfully establishing consumer recognition. - In terms of channels, the online business led by Douyin (TikTok) has performed well. - Due to BOSIDENG's outstanding brand strength and product power, as well as the excellent operation ability of the Douyin team, BOSIDENG has achieved high-quality growth in the Douyin channel with significantly fewer stores than industry peers, driving the group's online business performance in FY26. Meanwhile, the group's offline business remains stable, with same-store sales expected to improve year-on-year. With a healthy overall channel inventory, it lays the foundation for high-quality growth in FY26/27 - The group's overall inventory in FY26 remains at a healthy level, ensuring good discount and gross margin levels, with CICC optimistic about the group's profit growth rate in FY26 exceeding revenue. The healthy channel level and continuous introduction of new products also provide a good foundation for the group's growth in FY27. Continuous high proportion of dividends back to investors, continuous buyback demonstrates confidence - The group's good financial condition ensures a continuous high dividend payout rate of over 80%, with CICC expecting the current dividend yield of the company to be close to 7%. In addition, the company spent approximately 17.04 million HKD to repurchase 4.246 million shares at an average price of approximately 4.012 HKD per share on March 31 and April 15, showing confidence in the company. Risk warning: Retail environment below expectations, weather uncertainty, fluctuation in raw material prices.