Jefferies: Lowering the target price of Yuyuan Group (00551) to HK$5.6 to maintain “outperforming the market” rating

The Zhitong Finance App learned that Jefferies released a research report stating that it lowered the target price of Yuyuan Group (00551) from HK$5.7 to HK$5.6, maintaining the “outperforming market” rating. The market expected Yuyuan Group's stronger performance in the fourth quarter to offset the weak performance in the third quarter, but the bank did not agree with this view.

The bank said that its previous judgment on Adidas express orders appears to be gradually being confirmed, as third-quarter orders, average sales prices, and profitability were all better than previously feared, but some of the strong performance may have stemmed from the early release of demand in the fourth quarter. The September channel survey also showed that weakening demand for Nike (NKE.US) may become the next headwind.

The bank lowered Yuyuan Group's 2026 and 2027 net profit forecasts by 2% and 5%, respectively, to US$196 million and US$224 million. The bank believes that investors are still focusing on the upside space associated with Adidas, but have underestimated the downside risks associated with Nike.