Jinwu Financial News | The stock price of Taobo (06110) declined. At press time, it fell 4.18% to HK$2.75, with a turnover of HK$45.28 million.
According to the news, CMB International Development and Research Report said that Taobo's performance in the first half of FY25 was in line with expectations. Sales fell 8% year over year to 13.1 billion yuan, and net profit fell 35% year over year to 0.874 billion yuan, in line with the previous profit warning. Furthermore, gross margin fell to 41.1% (down 3.6 percentage points year over year), far short of the bank's expectations, but was offset by cost savings brought about by more store closures.
The bank downgraded Taobo's rating to “hold”, and the target price was also lowered to HK$2.58 (previous value: HK$2.89), based on 12 times the projected price-earnings ratio for FY25 (unchanged). The net profit forecast for the next three years was adjusted to reflect weak sales, increased store closures, increased retail discounts, lower gross margins, and higher provision and impairment risks. Although the 8% dividend ratio is very high, the bank's view remains conservative due to poor prospects in the second half of the year and Nike's likely to take a long time to recover.
