CICC: Maintain outperform rating on BOSIDENG (03998) with a target price of 5.65 Hong Kong dollars.

China International Capital Corporation (CICC) released a research report stating that due to BOSIDENG (03998) as the industry leader showing significant operational resilience, it raised its FY27 EPS forecast by 7.6% to 0.37 yuan and introduced a FY28 EPS forecast of 0.39 yuan. The current stock price corresponds to a PE ratio of 8.4/8.1 times for FY27/FY28, with a FY27 dividend yield of 9.6%. Considering the downward shift in industry valuation center, the firm maintained its outperform industry rating and target price of 5.65 Hong Kong dollars, corresponding to a PE ratio of 13 times for FY27, representing a 56% upside potential from the current level. Key points from CICC: - FY26 performance exceeded the bank's expectations - The company announced its FY26 financial performance: revenue of 27.35 billion yuan, a year-on-year growth of 5.6%; net profit attributable to shareholders of 3.99 billion yuan, a year-on-year increase of 13.7%, slightly exceeding the bank's expectations, mainly due to the main brand revenue slightly surpassing expectations. The company announced a final dividend of 0.25 Hong Kong dollars per share, with a dividend payout ratio of 80%. - BOSIDENG main brand and Snow-fly continued to show healthy growth in FY26, with a year-on-year growth in down jacket business revenue of 8.7% - In the volatile environment of FY26, the group's down jacket business continued to show steady growth, with the BOSIDENG main brand recording a growth of 6.9%, with core IP series such as Extreme Cold and Profiterole steadily increasing their sales ratio and optimizing product structure. Meanwhile, in brand building, BOSIDENG continued to enhance its brand influence through activities such as appearing on Paris Fashion Week runway shows, entering the Galeries Lafayette in Paris, and opening pop-up stores at K11 in Hong Kong. The high-end urban line AREAL performed well in sales, successfully establishing consumer recognition. Snow-fly continued to focus on the cost-effective down jacket market, boosting its online business and enhancing brand influence through sponsorships such as the Super Lig, with revenue increasing by 16.6%. - Wuxi Online Offline Communication Information Technology Co., Ltd.'s direct sales channels performed well - The direct sales channel revenue of BOSIDENG's down jacket business increased by 16.7% in FY26, becoming an important engine driving the company's growth. Wuxi Online Offline Communication Information Technology Co., Ltd.'s direct sales channels performed excellently, with offline direct sales channels achieving outstanding growth through the continuous creation of distinctive and efficient energy stores and meticulous management. Online channels, benefiting from BOSIDENG's outstanding brand strength and product power, as well as the excellent operation capabilities of the Douyin team, drove the group's online business performance in FY26. - Overall inventory health across all channels and continuous improvement in group profitability - The group's overall inventory remained at a healthy level, with inventory turnover days decreasing by 1 day to 117 days. Based on good inventory management capabilities, BOSIDENG's main brand gross profit margin and group profit margin continued to improve. The company exhibited operational resilience in a volatile environment. With successful product line expansion and continuous enhancement of brand influence, the bank believes that it is poised for continued healthy growth in FY27. Risk warning: Retail environment falling below expectations, weather uncertainty, fluctuation in raw material prices.