The Zhitong Finance App learned that Goldman Sachs released a research report stating that it lowered the target price of TEP International (01368) from HK$5.7 to HK$5.6, maintaining a “buy” rating, considering its valuation very attractive (equivalent to about 8 times the projected price-earnings ratio in 2026, or about 3 times the price-earnings ratio after deducting cash), and believes that the 2026 investment will pave the way for long-term health and sustainable development.
STEP released lackluster operating data for the second quarter of 2026. Among them, retail sales of TEP's main brands recorded a year-on-year decline in the number of units (low unit growth compared to the first quarter), and Saucone (Saucone) recorded a low year-on-year increase in units (up more than 20% from the first quarter). Management attributed the slowdown to a weak macro environment and a disciplined discount strategy to enhance brand value. Despite short-term challenges, management reiterated the expectations of the number of units of the Group's revenue growing year over year in 2026 and the net profit margin reaching a high number of units.
The bank pointed out that although the strategic transformation of the two major brands is still on track, implementation is slightly slower than expected under the weak macro environment. In response to weak demand in the first half of 2026, the bank lowered TEP's 2026-2028 sales forecast by 2% to 3% to reflect a smoother brand transformation trajectory; the net profit forecast for the same period was lowered by 1% to 3%, while gross margin is expected to be supported by the discount maintenance discipline.