Bank of America Securities lowers the target price for BOSIDENG to 4.6 yuan and reduces earnings forecast, reiterating "Buy"

Bank of America Securities published a research report indicating that based on the downward revision of OEM revenue forecasts and the pace of offline expansion, it has lowered the earnings estimates for BOSIDENG (03998.HK) for the fiscal years 2025 and 2026 (ending in March) by 5% and 9% respectively. Under the adjusted target valuation multiple, the target price has been reduced by 15% from the original HKD 5.4 to HKD 4.6.

The report states that a warm winter, intense competition, optimization of the product mix to focus on core winter products, a more conservative offline expansion, and a decline in OEM business affected by tariffs have all contributed to growth being weaker than expected. The firm reaffirms a "Buy" rating based on its own measures and relatively low valuation.

The firm expects BOSIDENG's revenue growth for the fiscal year ending March 2026 to be 4%, including a 6% growth in the down jacket business, a 7% decline in OEM business, and a 13% decline in women's wear business. For BOSIDENG's core brand, online growth is faster than offline, while the number of offline stores has decreased year-on-year due to a conservative expansion pace. On the positive side, due to a focus on core winter products, more collaborative products, and reduced discount pressure, the overall average selling price has recorded low single-digit growth year-on-year. The firm expects a slight improvement in gross margin due to changes in the business mix, although this is partially offset by changes in channel mix, and anticipates that net profit will grow by 8% year-on-year, slightly faster than revenue growth