Cinda Securities: The short-term pressure of Taobo (06110) is basically in line with expectations, deepening collaboration and waiting for a turning point

The Zhitong Finance App learned that Cinda Securities released a research report saying that Taobo (06110) released operating results for the third quarter of the 2025/26 fiscal year, and the total sales amount of the company's retail and wholesale business fell by a high number of units over the same period last year, which is in line with previous performance guidelines. The retail business continues to outperform the wholesale business, and discounts and inventory conditions are manageable. Judging from the channel and operating performance, this shows the company's strong retail management capabilities.

Cinda Securities's main views are as follows:

Judging from the channel and operating performance, the retail business continues to perform better than the wholesale business. Discounts and inventory conditions are manageable, reflecting the company's strong retail management capabilities

By channel, the decline in retail sales was less than that of wholesale. Looking at online and offline segments, offline showed improvement, and the growth rate of online entry into a high base weakened. In terms of discount management, the overall discount rate for direct retail sales has deepened year over year. Thanks to the narrowing of the growth gap between offline and online, the extent of deepening discounts was narrower than in the first half of the fiscal year. In terms of inventory management, total inventory at the end of the period continued to decline year on year, turnover efficiency remained good, and the storage age structure improved slightly from month to month. The store network continues to be optimized. By the end of the third quarter, the gross sales area of direct-run stores decreased by 13.4% year on year and 1.3% month on month, and the closing rate was slower than in the second quarter.

The collaboration between the company and core brands continues to deepen, and it is expected that they will recover together in the future

Nike's recently announced results are under strong short-term pressure. The company and Nike are facing similar pressure on the customer flow pressure, weak sell-out rate, and inventory challenges faced by the Chinese market. The two sides will work together to overcome difficulties in the future: first, product support. Nike clearly will step up recycling efforts for used goods, reduce the value of recycled inventory, and optimize the channel inventory structure; at the same time, it has adjusted orders for the spring and summer of 2026 to control the delivery of new products. The second is market governance. The two sides are working together to standardize the order of the online market and promote unified price management. The bank believes that Taobo is expected to cross the trough with core customers and usher in a rebound in the future.

The company continues to promote new business layouts, and a new growth curve can be expected

The company's expansion into professional segmented tracks is progressing steadily and has already been implemented. In terms of running categories, its running brand collection store ektos has successfully launched and strengthened brand awareness and community ties through appearances at top events such as the Shanghai Marathon. The outdoor category has achieved a breakthrough through the exclusive agent of Norway's high-end outdoor brand Norrøna. The first store has already been opened, and plans are to expand in more cities in the future. Taobo is continuing to create a new growth curve through new categories.

The financial guidance for the whole year is conservative and long-term optimistic

In terms of financial guidelines, the company pointed out that terminal demand fluctuations have intensified since entering December, and operating pressure has increased significantly. The previously set target of “year-on-year net profit for the whole year” is expected to deviate within a manageable range. In the future, the company will maintain a “short-term prudent, long-term optimistic” attitude.

Profit forecast: The bank expects the company's net profit to be HK$1,285/13.97/HK$1,528 billion for the fiscal year of FY2026-2028, and the corresponding PE is 14.52X, 13.36X, and 12.21X, respectively.

Risk warning: Nike brand recovery falls short of expectations, offline retail continues to be under pressure, and new business expansion falls short of expectations.