Guoxin Securities: Maintaining the Taobo (06110) “superior to the market” rating downgraded to a reasonable valuation range of HK$3.2 to HK$3.5

The Zhitong Finance App learned that Guoxin Securities released a research report saying that based on significant disruptions in offline retail sales, the net profit forecast for FY2026-2028 is expected to be 12.2/13.3/1.49 billion yuan (previous value was 12.9/14.1/1.57 billion yuan), respectively, -5.3%/+9.6%/+11.5% year-on-year. Based on the reduction in profit forecasts, the reasonable valuation range was lowered to HK$3.2 to HK$3.5 (previous value was HK$3.8 to HK$4.0), corresponding to the 2027 fiscal year 14-15 xPE, maintaining the “superior to the market” rating.

Guoxin Securities's main views are as follows:

Company announcement: In the third quarter of fiscal year 2026, the total sales amount of the Group's retail and wholesale business recorded a high year-on-year decline in units. As of November 30, 2025, the gross sales area of direct-run stores decreased by 1.3% compared to the end of the previous quarter and 13.4% compared to the same period last year.

Turnover growth: Sales in the third quarter of FY2026 fell by a higher number of units year on year. The growth rate of online channels was still better than offline channels, but due to the base figure, the differentiation was narrower than in the first half of the year

According to the company's announcement, total sales of direct and wholesale businesses fell by a high number of units in the third quarter of fiscal year 2026 (September-November 2025). The decline continued the FY26Q2 trend and was slightly weaker than the first half of the year as a whole. By channel, the growth rate of online channels is still better than that of offline channels, but due to the base figure, the online growth rate slowed slightly compared to the first half of the year, and offline performance improved slightly compared to the first half of the year.

By the end of November, the gross sales area of direct-run stores had decreased by 1.3% compared to the end of the previous quarter, down 13.4% from the same period last year, and narrower than FY26Q2; continuously optimizing the offline store network, carefully opening stores, eliminating back-end stores and loss-making stores, and focusing on expanding the online channels of offline stores; the number of stores closed this year is expected to be drastically reduced compared to last year, and the closure rate for the second half of the fiscal year was slower than in the first half of the fiscal year. The running brand collection store ektos debuted at the Shanghai Marathon Sports Fair at the end of November, bringing together nearly 20 top brands; the Norwegian outdoor brand Norrona, an exclusive agent, landed in Kerry City, Pudong, Shanghai in October in the form of a pop-up store.

In terms of inventory, total inventory declined year-on-year at the end of the third quarter, in line with the direction of sales performance and maintained good turnover efficiency; the company and brand partners continued to prioritize dynamic inventory relative health, but it became more difficult to grasp the health of inventory due to the strong promotional atmosphere in the industry.

In terms of discounts, the proportion of discounts deepened year-on-year due to an increase in the share of online channels, but due to the narrowing of sales differentiation in offline and online channels, the increase in discount rates was narrower than in the first half of the fiscal year.

Nike: FY2026Q2 performance was slightly better than the management's previous guidelines and the agency's consistent expectations, there were differences in the recovery speed of each region and channel, and the pressure in Greater China was high. The Q3 guidelines fell short of the agency's unanimous expectations. Management indicated that the company is in the middle of recovery

FY2026Q2 revenue was US$12.4 billion, +1% year-on-year, with a constant exchange rate of 0%, which was better than previous management guidelines and the agency's agreed expectations. Looking at the subregion, revenue in North America led growth. The EMEA region's performance was stable, and the performance of Asia Pacific and Latin America was divided. The performance of the Latin American region was positive but the performance of the Asia-Pacific region was sluggish. The decline in customer traffic to stores in Greater China, the decline in the sell-out rate during the quarter, and aging market inventories continued to drag down overall performance. The decline in gross margin was better than management's previous guidance and the agency's consistent expectations.

Looking ahead, Q3 revenue is expected to drop by a single digit, with gross margin falling by about 175 to 225 basis points; the adjustment period measures and external tariff pressure will affect short-term performance, but the North American and running categories continue to highlight long-term improvement potential, and Win Now is making significant progress; the wholesale business is expected to grow moderately this fiscal year. Pressure on Greater China and Converse brands will still exist for the rest of the year, and the impact of tariffs on gross margin is expected to weaken, but it is still an important influencing factor.

Adidas: Revenue for the third quarter fell short of the agency's unanimous expectations, and operating profit was better than the agency's unanimous expectations; all regions and channels achieved double-digit growth in the first three quarters (excluding Yeezy's influence), benefiting from the company's continued upward brand momentum, better-than-expected business performance, and success partially offset the additional costs caused by the increase in US tariffs, and management raised guidance for the whole year

Adidas's 2025Q3 performance recovery continued. The Adidas brand's constant exchange rate revenue increased 12% (company's overall +8%), and operating profit was +23% year-on-year to 736 million euros. After excluding the impact of Yeezy's profit base, the main brand's profit growth was even more significant. Most regions, channels, and categories achieved double-digit growth (North America grew by only 8%; accessories grew by only 1%), and professional and fashion, footwear, and apparel categories joined forces. The increase in guidance throughout the year mainly benefited from the company's continued upward brand momentum, better-than-expected business performance, and success partially offset additional costs due to higher US tariffs.

Investment advice: Optimistic about the company's operational resilience and long-term cash returns

In the third quarter (September-November), the company's retail sales pressure declined to a high number of units, and the trend of the second quarter was basically maintained. Inventory improvements and discount declines narrowed month-on-month. The company's main brand customer, Adidas has been booming since last year, and has maintained rapid growth globally and in Greater China. Adi management expects double digit growth for the main brand FY2025; Nike's FY2026Q2 performance is better than previous management guidance and agency expectations, but the Greater China region faces challenges and needs to work with Taobo to build a high-end positioning and standardized management system integrating online and offline channels in the future; in addition, Taobo has increased outdoor and running tracks in recent years, becoming the exclusive Chinese outdoor brand for Norda, Norrona, Soar and other outdoor brands Agent and set up a run Brand collection store ektos.

Risk warning: Consumption recovery falls short of expectations; supply chain logistics are blocked; channel optimization reforms fall short of expectations.