BOCI Research has lowered the target price of XTEP INT'L (01368) to 4.3 Hong Kong dollars, with sales in the first half of the year falling short of expectations.

Bank of China International released a research report stating that XTEP INT'L (01368) had weaker than expected operational data in the second quarter. The core XTEP brand and Saucony recorded year-on-year declines in the mid-single digits and increases in the low single digits, respectively, both of which were below the bank's expectations. Bank of China International has lowered its earnings forecasts for XTEP for the years 2026-2028 by 2% to 3% to reflect the weak retail sales in the second quarter and the deleveraging impact of physical retail operations, with the target price lowered from 5 Hong Kong dollars to 4.3 Hong Kong dollars, and the rating is "buy." The bank stated that in the current macro environment, it has become more challenging for XTEP to achieve its annual revenue target. It is expected that management may provide a conservative revenue outlook when the mid-term results are released in August. However, the net profit margin guidance may still be maintained at a high single-digit level, limiting the short-term downside risk in profitability. The bank believes that if the weather factors become more favorable, XTEP's strategy focusing on running products may drive growth in the second half of the year.