Bank of America Securities expects that Shenzhou International (02313) will recover its gross margin to more than 28% in the first half of this year and will resume to 30% at some point in the second half of this year.
According to the Zhitong Finance APP, Bank of America Securities released a research report stating that Shenzhou International's (02313) share price fell from its high point in June, possibly due to Nike's guidance cuts and tariffs, and believed that many of investors' concerns were somewhat exaggerated, seeing the company's attractive risk-return profile, especially after the sell-off, and giving a target price of HKD 93.5 and maintaining a 'buy' rating.
The bank expects that the company's gross margin will recover to over 28% in the first half of this year and will resume to 30% at some point in the second half of this year. It still believes that the company's profit growth in the first half of this year may be much higher than its revenue growth. The Nike guidance cuts have caused many concerns and have been reflected in the company's fiscal year budget. In addition, among the company's four major customers, including Uniqlo, some investors may point out the weakness of Uniqlo's business in China, but it should be noted that Shenzhou International also has high exposure in other areas of Uniqlo and enjoys share growth in the Uniqlo supply chain.