In "Major Banks," China International Capital Corporation (CICC) initiates coverage of YUE YUEN IND with an "Outperform Industry" rating and a target price of 19.46 yuan

AASTOCKS
2026.01.02 02:35

CICC published a report stating that it initiates coverage of YUE YUEN IND (00551.HK) with an "Outperform Industry" rating and a target price of HKD 19.46, corresponding to a 10.5 times price-to-earnings ratio for 2026. The company is a global leader in athletic shoe manufacturing and is also expanding its athletic footwear and apparel retail business in the Greater China region.

According to the report, Euromonitor estimates that the global athletic footwear market will reach USD 167.7 billion in 2024, with a projected mid-single-digit growth rate over the next five years. The market share of global athletic footwear brands is concentrated, with the top 10 brands (CR10) expected to account for 57% by 2025. The footwear industry also shows a concentrated pattern, with YUE YUEN IND being the largest athletic shoe manufacturer globally. The firm estimates that its shipment volume share exceeds 10%, and its subsidiary, Pou Chen Corporation, is a leading athletic footwear and apparel retailer in the Greater China region.

The firm anticipates that tariff disruptions may weaken by 2026, and the inventory levels of YUE YUEN IND's major brand clients are under control. Brands represented by Nike are accelerating product innovation, combined with the growth of several high-quality brands. It is expected that the revenue from the manufacturing business will stabilize and grow in 2026, while the issues of ramping up newly built capacity and uneven capacity utilization are expected to improve, leading to a recovery in manufacturing business performance.

The firm believes that the company is more optimistic than the market regarding the proactive optimization of customer numbers and structure to restart growth. It is expected that the development capabilities and global capacity layout tied to high-quality brands will bring performance certainty. Additionally, it forecasts a dividend yield of 8.2% in 2026, providing a margin of safety. The company is expected to achieve earnings per share of USD 0.23 and USD 0.24 for 2025 and 2026, respectively, with a CAGR of -0.4% from 2024 to 2026

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