Damo: Bosideng (03998)'s stock price is likely to rise in the next 60 days and is ranked as the first choice

The Zhitong Finance App learned that in the next 60 days, the probability that Bosideng (03998) stock price will rise is about 80% or more (that is, “very likely”). Using the expected price-earnings ratio (NTMP/E) of 14 times as the target multiple, future development will depend more on product diversification rather than an increase in average selling price (ASP). This means a 1.1-fold price-earnings growth ratio (PEG) and 7% dividend yield, which is very attractive to leading high-quality companies in China's optional consumer sector.

Damo said that Bosideng was recently listed as the preferred stock, and believes that judging from the current attractive 11-times expected price-earnings ratio (NTMP/E), its stock price still has room to rise further. Damo believes that the company expects a 10% increase in sales for the fiscal year ending March 2025 (6% increase in the second half of the year), and net profit growth is faster than expected. This shows that despite a warm winter and a high comparative base, its business quality and competitive advantage are still outstanding.

The bank expects its valuation to increase, based on the following: 1) sales are expected to grow faster (10%-15%) by FY2026; 2) Further decline in upstream costs, which may indicate a better competitive environment and higher gross profit margin (GPM) in FY2026; and 3) the company is growing strongly among large consumer brands. The bank also sees a 7% dividend yield as attractive.