Macquarie: Target price for Taobo (06110)'s “Outperform the Market” rating was reduced to HK$3.9

The Zhitong Finance App learned that Macquarie released a research report stating that the target price of Taobo (06110) was lowered by 5% to HK$3.9, and the rating was “outperforming the market.” The bank lowered Taobo's net profit forecast for the 2026 fiscal year by 4.2% and the 2027 forecast by 3.9%, mainly due to lower revenue forecasts due to weak demand, which led to an increase in expenditure ratios.

The bank said that the company's sales decline in the third fiscal quarter of fiscal year 2026 was in line with management expectations and was comparable to the second quarter. The bank believes that offline store traffic is still under pressure, and demand continued to be weak in December. Its main brand, Nike, said that China's reset will take time, and Taobo and Nike work closely together to build a foundation for long-term growth. The bank believes this will translate into continued support for Taobo in the form of wholesale discounts and inventory repurchases.

The bank said that online channels with continuous discounts may have increased more than offline retail channels in the third quarter, leading to stronger discounts in the channel mix. Despite this, the bank change believes that the negative impact is weakening because the year-on-year change in offline retail discounts has shrunk. The bank anticipates that cost control measures will continue to ease pressure on gross margins in the second half of fiscal year 2026. Currently, revenue for the second half of fiscal year 2026 is expected to drop by 10.8%, and net profit will increase by 12% to 459 million yuan, which means that net profit for fiscal year 2026 will decrease 3% year on year.