Goldman Sachs: XTEP INT'L (01368) mid-term net profit exceeds expectations, slightly raised target price to 7.1 Hong Kong dollars.

Goldman Sachs released a research report stating that the new target price for XTEP INT'L (01368) is 7.1 Hong Kong dollars (previously 7 Hong Kong dollars), based on a forecasted P/E ratio of 13 times for 2025. Given that Goldman Sachs believes the risk-return is still attractive, they maintain a "buy" rating on the company. The bank predicts that XTEP INT'L's net profit in the 2025 annual report will increase by 14% year-on-year, with an estimated P/E ratio of 11 times in 2025. XTEP INT'L's net profit in the first half of this year exceeded the bank's forecast by 12%, mainly due to other income and gains being higher than expected, while core business income met expectations, and gross profit margin and operational profit margin were slightly higher than Goldman Sachs' forecasts. XTEP INT'L reiterated its guidance, expecting a net profit growth of over 10% year-on-year in the 2025 annual report due to positive sales growth, and maintaining a cautious optimistic view on the consumption environment in the second half of 2025. The bank stated that after listening to XTEP INT'L's financial report briefing, they maintain their unchanged views. They are encouraged by the steady growth of XTEP's core business in the running market, despite uncertainties in non-functional products and the macro environment. Regarding the Saucony brand, Goldman Sachs maintains a constructive view on its long-term sales and profit capabilities. The bank stated that following XTEP INT'L's net profit exceeding expectations in the first half of this year, they have made slight adjustments of 0% to 1.5% to the net profit forecast for 2025 to 2027, mainly reflecting a slight downgrade in the sales forecast for the XTEP brand due to macro and direct-operated store transformation, increased sales and management expenses investment for both brands in the second half of the year, which are offset by higher-than-expected other income and gains.