CMBC International: Giving Bosideng (03998) a purchase rating with a target price of HK$5.80

The Zhitong Finance App learned that ICBC International released a research report stating that Bosideng (03998) was given a purchase rating, with a target price of HK$5.80. The bank believes that the company's dividend rate is attractive. It is expected that FY26 will maintain a dividend rate of 80% or more, and the current price corresponds to the FY26 dividend rate of about 6.0%. The company's FY26E-FY28E is expected to generate revenue of 285.1/316.0/34.93 billion yuan, +10.1%/+10.5% year-on-year respectively, and net profit to mother of 39.0/43.7/4.90 billion yuan, +10.9%/+12.2% year-on-year. The current price is 13 times the equivalent of 26 EPE.

The main views of ICBC International are as follows:

FY26H1 is in line with expectations. Bosideng's main brand is growing steadily, taking the initiative to go to the warehouse and go to battle lightly

FY26H1 Group's revenue was +1.4% year-on-year to 8.93 billion yuan, and net profit to mother was +5.3% year-on-year to 1.19 billion yuan. Profit grew faster than revenue. The inventory volume at the end of the period was -20% year-on-year, mainly due to the company slowing down the pace of procurement of raw materials and taking the initiative to prepare for the peak season, and the number of receivable turnover days was -4 to 59 days compared to the same period.

(1) Of the segment revenue, branded down jackets were +8% year-on-year to 6.57 billion yuan. In the branded down jacket business, the main brand grew better than others, and offline was better than online. FY26H1's main brand revenue was +8% YoY to 5.72 billion yuan, wholesale/self-operated +8%/+7% YoY, and online revenue +2.4% YoY.

(2) The increase in the share of branded down jackets has increased the Group's profit margin. Fy26H1 Group's gross margin was +0.1pp to 50.0% year-on-year, and the gross margin of the main brand was 64.8%, as 1H Wholesale grew faster than self-operated and active warehousing.

Deepen functional technology+fashion aesthetics, promote peak season sales, and perform well in October-November

(1) On the product side, the main brand has a strong lineup of new products, consolidating functional technology+fashion aesthetics, and differentiated competition. The innovative series of outdoor extreme cold, small fragrance, and puffs grew brightly during the period, focusing on the four major scenes of outdoor/leisure/business/fashion, and collaborating with top international design masters. The main brand cooperated with former luxury creative director Kim Jones to launch Areal's high-end line and cooperative functional style designer ErrolsonHugh to launch Vertex superimposed 3-in-1 down, and the market feedback was enthusiastic.

(2) Main brand single store quality improvement and efficiency +1H effective inventory removal+favorable sales cycle (26th Spring Festival later than 25 years) is expected to drive improvements in discounts and gross margin, and promote sales during peak season. The main brand of FY26H1 is now 67, with a net increase of 126 due to refined operation and the creation of top stores; Flying in the Snow increased by 126.

(3) According to the results meeting, FY26's annual guidelines were maintained (revenue +10%, profit growth faster than revenue); in October-November, offline sales increased by double digits year-on-year, and discounts improved year-on-year.