JP Morgan expects Xtep International (01368) to increase its annual sales and net income by 10% and 12%, respectively.
According to the report released by JPMorgan, it maintained a "neutral" rating on Xtep International (01368) due to slow industry growth and weak demand for mainland China consumers, with a target price of HKD 4.9. The bank also expects the group's annual sales and net income to increase by 10% and 12%, respectively, with a 0.1 percentage point increase in net profit margin year-on-year to 7.3%.
The company's second-quarter retail sales of the main brand increased by 10% year-on-year, roughly in line with expectations. Inventory levels further improved to 4 months, and discount levels also dropped to 25%. Management maintains a positive outlook for the third quarter, with weak performance in June continuing until now, but still showing positive growth. The guidance for the annual retail sales growth of the main brand is over 10%, and the group's overall sales, excluding K-Swiss and Palladium, has a high unit increase of 10%.