Huatai Securities: Downgrade Gaoxin Retail's target price to 1.7 Hong Kong dollars, maintaining a "buy" rating.

Huatai Securities issued a report stating that Gaoxin Retail's revenue for the second half of the fiscal year ending in March dropped by 10.6% year-on-year, with a loss of 200 million yuan, due to weak consumer demand and intensified industry competition putting pressure on performance. The new management team is steadily advancing the restructuring plan, systematically driving changes in the supply chain, stores, and organizational structure. Adjusted EBITDA for the previous fiscal year reached 3.16 billion yuan, providing cash flow support for the high dividend strategy, with a total dividend payout of 25.5 Hong Kong cents per share. Considering weak downstream demand and intense competition among retail companies, the bank lowered Gaoxin's net profit forecasts for the 2027-28 fiscal years to 60 million and 370 million yuan, respectively, and introduced a forecast of 440 million yuan for the 2029 fiscal year. Taking into account the steady progress of the company's restructuring plan, the initial results of the new business format layout, and the attractiveness of high dividends for investment, the bank revised the forecast P/E ratio for the 2028 fiscal year to 38 times, with a target price reduced from 2.18 Hong Kong dollars to 1.7 Hong Kong dollars. With the effective implementation of restructuring measures, the progress in restoring profitability is worth monitoring, and the "hold" rating is maintained.