According to a report published by Morgan Stanley, Bubble Mart's second-quarter sales fell by about 10% year-on-year, lower than the forecast, but the profit margin performance of core operations was far more resilient than expected. Profit margins in the Chinese market have improved, and overseas cost structures have also become more flexible. Sales remain the main risk, but the market's outlook for dealing with profit margins is turning positive. Damo pointed out that the exchange loss of RMB 720 million in the first half of the year was mainly due to lower profits than expected, due to foreign currency holdings and the appreciation of the RMB over half a year. The company will begin hedging exchange rate risks and diversifying currency portfolios. The management announced that it will carry out a share repurchase of 2 billion to 5 billion yuan, which is equivalent to a potential repurchase of 15 million to 38 million shares at current prices, accounting for about 1% to 3% of the total share capital. The bank believes it can support the stock price. The bank lowered its earnings forecast per share by 7%, 5% and 7% from 2026 to 2028, and lowered the target price from HK$214 to HK$203, maintaining the “Overweight” rating.

Disclaimer:Webull uses external vendor Google Translation Service for news translations where we endeavour to ensure these are correct, however, we recommend that you please double-check this information accordingly. Webull is not responsible for translation errors or issues.