The Zhitong Finance App learned that CITIC Lyon published a report. Shenzhou International (02313) issued a profit warning last Friday, lowering Shenzhou International's target price by 1.9% to HK$51 from HK$52 to maintain an investment rating of “outperforming the big market.” Shenzhou International's profit for the first half of 2026 is expected to drop 38-43% year on year (about RMB 18.1-1.97 billion), mainly due to factors such as the appreciation of the RMB against the US dollar, rising labor, pension and raw material costs due to the tense situation in the Middle East, increased production capacity in Southeast Asian factories, and fluctuations in demand.
CITIC Lyon anticipates a medium single-digit percentage decline in revenue in the first half of 2026, and the strong performance of Adidas (Adidas), Uniqlo (Uniqlo) and domestic brands is expected to offset PUMA's weakness. Shenzhou International's base for the second half of 2026 is low. The bank expects sales to increase 7% per year, an improvement over the first half of the year.
Looking back at the pressure of RMB appreciation in the second half of 2025, although the bank is still confident in Shenzhou International's ability to increase its market share among brand customers, it also believes that the potential needs of brand customers after the World Cup are still unclear. In view of the bank's forecast price-earnings ratio (P/E) for 2026/2027 (11 times/10 times, respectively) and the predicted dividend ratio of 5.5-6%, Shenzhou International's 2026/2027 profit forecast was lowered by 11-12%.