The Zhitong Finance App learned that China Merchants Securities International released a research report stating that it lowered the target price of TEP International (01368) by 14%, from HK$4.3 to HK$3.7, and downgraded the rating from “increased holdings” to “neutral.”
The bank lowered the 2027 sales growth rate forecast for the main brand of Xtrex to -5%, and lowered Saucone's sales growth forecast to +5%, making its 2027 net profit forecast 10% lower than the market's consensus forecast. Although retail sales performance in the third quarter of 2026 was in line with the downgraded expectations, with a single-digit decline in main brand sales, a single-digit increase in Sauconi sales, and management maintaining a healthy inventory level and stable discount rate, the bank believes that consistent expectations of revenue growth from 2027 to 2028 still face structural downside risks.
Judging from the competitive landscape, the bank believes that XTEP's brand portfolio lacks a diversified growth catalyst. Compared with Anta (02020) and Li Ning (02331), which are rated as “gain”, the latter two are expected to benefit from new growth drivers such as Puma's rebranding and the launch of Stephen Curry-related products, and the related driving forces are expected to continue until 2027. The bank believes that Saucone still mainly relies on traditional professional running positioning and marathon event sponsorship models.
Furthermore, there is still uncertainty about the prospects for online channels and DTC transformation. The bank lowered Teb International's 2027 and 2028 net profit forecasts by about 12%. The new target price is based on a price-earnings ratio of 7.5 times at the end of 2027.