Bank of China International: Lowering Trap International's (01368) target price to HK$4.3, sales in the first half of the year fell short of expectations

The Zhitong Finance App learned that Bank of China International (01368) released a research report saying that the second-quarter operating data of TEP International (01368) was weaker than expected. The core TEP brand and Sauchy respectively recorded a year-on-year decline in the number of units in China and a year-on-year increase in the number of low units, all falling short of this forecast. Bank of China International lowered its earnings forecast per share by 2% to 3% for 2026 to 2028 to reflect weak retail sales in the second quarter and the impact of deleveraging physical retail operations. The target price was lowered from HK$5 to HK$4.3, with a rating of “buy”.

The bank said that in the current macro environment, it is becoming more challenging for XTEP to achieve its annual revenue target. It is expected that management may provide a conservative revenue outlook when the August interim results are released, but the net profit margin guidelines may remain at a high level of units, limiting the risk of short-term profit decline. The bank believes that if weather factors turn favorable, Tepec's strategy of focusing on running products is expected to drive growth in the second half of the year.