申洲國際集團控股有限公司* SHENZHOU INTERNATIONAL GROUP HOLDINGS LIMITED Pursuant to Rule 2.07A of the Rules Governing The Listing of Securities on The Stock Exchange of Hong Kong Limited under the expansion of paperless listing regime and electronic dissemination of Corporate Communications that came into effect on 31 December 2023, the Company is writing to inform you that the Company has adopted electronic dissemination of Corporate Communications. Please note that both the English and Chinese versions of all future ...

Financial Performance - For the six months ended June 30, 2025, the company reported sales of RMB 14,966,384, an increase of 15.4% compared to RMB 12,975,971 in the same period of 2024[8]. - Gross profit for the same period was RMB 4,058,018, reflecting a gross margin of 27.1%, down from 29.0% in 2024[8]. - Profit attributable to equity holders of the parent company was RMB 3,176,836, representing a year-on-year increase of 8.4% from RMB 2,931,028[8]. - Revenue for the six months ended June 30, 2025, was RMB 14,966,384 thousand, an increase of 15.4% compared to RMB 12,975,971 thousand for the same period in 2024[47]. - Gross profit for the same period was RMB 4,058,018 thousand, up 7.9% from RMB 3,761,469 thousand in 2024[47]. - Net profit for the six months ended June 30, 2025, reached RMB 3,176,836 thousand, representing a 8.4% increase from RMB 2,931,028 thousand in 2024[49]. - Basic and diluted earnings per share for the period were RMB 2.11, compared to RMB 1.95 in the previous year, reflecting a 8.2% increase[47]. Assets and Liabilities - The company's total assets increased to RMB 56,177,197, up from RMB 53,107,848 as of December 31, 2024[8]. - The equity attributable to the owners of the parent company was approximately RMB 36,959,881,000, an increase from RMB 35,852,895,000 at the end of the previous year[30]. - Total liabilities as of June 30, 2025, were RMB 18,801,843 thousand, compared to RMB 16,826,163 thousand at the end of 2024, indicating a 11.7% increase[50]. - The debt-to-equity ratio as of June 30, 2025, was approximately 39.8%[41]. - The total bank borrowings amounted to approximately RMB 8,161,280,000, with USD loans around RMB 1,529,399,000 and HKD loans approximately RMB 6,631,881,000[37]. Market Performance - The company anticipates continued growth potential in the domestic market, driven by government policies to stimulate domestic demand[12]. - The global apparel consumption demand showed signs of recovery, although uncertainties from U.S. tariff policies impacted market share in the U.S.[12]. - International sales accounted for 75.6% of total sales, with significant growth in the U.S. market, which saw a 35.8% increase to RMB 2,554,890,000[26]. - Sales of sports products reached approximately RMB 10,128,586,000, a 9.9% increase from RMB 9,212,546,000, driven by rising demand in Europe and the United States[23]. - Sales in the European market reached approximately RMB 3,028,824,000, an increase of about RMB 501,899,000 or 19.9% compared to the same period last year[27]. Operational Efficiency - The average collection period for accounts receivable increased to 77 days from 71 days, suggesting a slower collection process[8]. - The inventory turnover period remained stable at 115 days, slightly down from 116 days[8]. - The company is upgrading domestic production capacity through equipment updates and process optimization to enhance product quality and reduce labor costs[18]. - The company has acquired approximately 7 hectares of new land in Anhui for a new automated garment factory, aimed at improving production efficiency[18]. Cash Flow and Investments - Net cash generated from operating activities was approximately RMB 2,692,920,000, an increase of about RMB 383,344,000 compared to the same period last year[31]. - The net cash flow from investing activities was negative at RMB (3,179,077), compared to RMB (982,969) in 2024, indicating increased investment outflows[57]. - Capital expenditures for the six months ended June 30, 2025, totaled approximately RMB 1,533,639,000, with about 23% allocated for production equipment and 74% for new factory construction[39]. Corporate Governance - The board has adopted a corporate governance code and has complied with all code provisions during the reporting period[117]. - The audit committee consists of four independent non-executive directors, responsible for reviewing financial practices and internal controls[129]. - The company has implemented a securities trading code to ensure compliance with trading restrictions for directors and senior management[123]. Shareholder Information - The company declared an interim dividend of HKD 1.38 per share for the six months ending June 30, 2025, compared to HKD 1.25 per share for the same period last year[113]. - Major shareholder "Xie Rong" holds 636,806,950 shares, representing 42.36% of the company's issued share capital[110]. - Mr. Ma Jianrong holds 638,096,650 shares, representing 42.45% of the company's issued share capital[106].

Group 1 - The core point of the news is that southbound funds have reduced their holdings in Shenzhou International (02313.HK) by 638,200 shares on September 19, 2025, marking a decrease of 0.68% [1][2] - Over the past five trading days, there have been three days of net reductions in holdings, totaling 350,500 shares [1][2] - In the last 20 trading days, there were 11 days of net increases in holdings, amounting to 4,557,900 shares [1][2] Group 2 - As of now, southbound funds hold 93,446,500 shares of Shenzhou International, which represents 6.2% of the company's total issued ordinary shares [1][2] - Shenzhou International Group Holdings Limited primarily engages in the production and sale of knitted apparel products, utilizing a combination of OEM and ODM methods for manufacturing [2] - The company's product categories include sportswear, casual wear, underwear, and other knitted products, and it also engages in trading and property management through its subsidiaries [2]

Summary of Shenzhou International Conference Call Company Overview - **Company**: Shenzhou International - **Industry**: Textile and Apparel Manufacturing Key Points and Arguments 1. **Vertical Integration Model**: Shenzhou International employs a vertical integration model that covers all production stages from fabric manufacturing to garment production, enhancing profitability and responsiveness to customer demands. The delivery cycle has been shortened to 45 days, and in some cases, even 15 days, which significantly improves supply stability, especially during crises [2][6][12] 2. **Southeast Asia Capacity Expansion**: The company has strategically expanded its production capacity in Southeast Asia to benefit from cost and tax advantages, thereby diversifying risks and ensuring stable deliveries. This move addresses rising labor costs in China and aligns with the global textile manufacturing shift towards Southeast Asia [2][8][12] 3. **Partnerships with Leading Brands**: Shenzhou International collaborates deeply with top brands like Nike and Uniqlo to co-develop innovative fabrics, which enhances product value and profitability. The partnerships focus not only on pricing but also on delivery times and quality, creating a win-win situation that accelerates revenue and profit growth [2][9][10] 4. **Financial Performance Trends**: From 2021 to 2023, the company faced challenges such as inventory buildup and pandemic-related restrictions, leading to a decline in net profit and asset turnover rates. The net profit dropped from approximately 22% to around 14%, and the asset turnover rate hit a record low [2][11] 5. **Future Outlook for 2024**: The company anticipates a recovery in profitability and asset turnover in 2024 due to industry restocking and capacity expansion. Shenzhou plans to increase its workforce and invest in new fabric factories, which will enhance overall profitability. The company does not face pressure from clients to share tariff costs, which helps maintain its competitive edge [2][12][15] 6. **Return on Equity (ROE) Analysis**: The ROE of Shenzhou International has varied over different periods, with a notable increase from 26% to 31% between 2008 and 2011 due to improved net profit margins. The company maintained a stable ROE of around 20% from 2012 to 2020, supported by strong capacity and quality client relationships [4][5][14] 7. **Challenges Faced**: The company encountered significant challenges from 2021 to 2023, including inventory pressure and operational disruptions due to the pandemic. These factors adversely affected profitability and operational efficiency [11][12] 8. **Current Financial Status**: The latest half-year report indicates significant revenue growth, although gross margins have been impacted by rising employee compensation. The company remains optimistic about continued revenue growth and potential margin recovery in the latter half of the year [15] Additional Important Insights - **Industry ROE Characteristics**: The apparel manufacturing industry exhibits significant ROE differences across various segments, with yarn production showing low profitability and turnover, while fabric production has high profitability but low turnover. Shenzhou's vertical integration allows it to achieve high profitability with lower turnover, placing it among the industry's top performers [13][14] - **Investment Confidence**: Shenzhou International's ongoing investments in capacity expansion and new facilities reflect its confidence in future growth, with a projected net profit of approximately 6.66 billion yuan for the year, corresponding to a PE ratio of about 12, indicating a safety margin in valuation [15]

Core Insights - The company reported a revenue of 15 billion with a year-on-year growth of 15% and a net profit of 3.177 billion, reflecting an 8.39% increase [1] - The sports segment generated 10.1 billion in revenue, up 10%, driven by increased demand in Europe and the US [1] - The leisure segment saw a significant revenue increase of 37% to 3.8 billion, mainly due to demand in Japan and Europe [1] - The lingerie segment achieved 900 million in revenue, growing by 4%, supported by sales in Japan and Europe [1] - The gross profit margin decreased by 1.9 percentage points to 27%, primarily due to increased labor costs from employee salary hikes [1] Production Expansion - The company is expanding its production capacity overseas, with a second fabric factory in Vietnam nearing completion and expected to start production by the end of the year [1] - A new garment factory in Cambodia began operations in March 2025, employing around 4,000 workers, with plans for further production scale increases [1][2] - Domestically, the company is upgrading its existing production facilities, including a new weaving factory in Ningbo and renovations in the garment factory [2] Internal Control and Management - The company is enhancing its internal control systems and optimizing management processes to support global operations [2] - Efforts include standardizing control processes, increasing automation in business reviews, and strengthening procurement controls [2] - The company values long-term relationships with suppliers and is improving supplier evaluation and entry processes to ensure a fair operating environment [2] Financial Forecast Adjustments - Due to tariff uncertainties, the company adjusted its revenue forecasts for 2025-2027 to 31.9 billion, 35.5 billion, and 39 billion, respectively [2] - The net profit estimates for the same period are revised to 6.6 billion, 7.3 billion, and 8 billion [2] - Earnings per share (EPS) projections are adjusted to 4.37, 4.83, and 5.31 [2]

Investment Rating - The investment rating for the company is "Buy" with a target price not specified [5]. Core Viewpoints - The company reported a revenue of 15 billion RMB for the first half of 2025, representing a year-on-year growth of 15%, and a net profit of 3.177 billion RMB, which is an increase of 8.39% compared to the previous year [1]. - The growth in revenue is attributed to increased demand for sportswear in Europe and the United States, with sportswear sales reaching 10.1 billion RMB, a 10% increase year-on-year. Casual wear saw a significant increase of 37%, reaching 3.8 billion RMB, driven by demand in Japan and Europe [1]. - The company is expanding its production capacity both domestically and internationally, with a new fabric factory in Vietnam nearing completion and a garment factory in Cambodia that began production in March 2025 [2]. - The company is also upgrading its existing domestic production facilities, including a new weaving factory in Ningbo and renovations in its garment factory [2]. - The company is enhancing its internal control systems and optimizing management processes to support its global operations, focusing on standardizing control processes and improving procurement controls [3]. - The revenue forecasts for 2025 to 2027 have been adjusted to 31.9 billion RMB, 35.5 billion RMB, and 39 billion RMB respectively, with net profits projected at 6.6 billion RMB, 7.3 billion RMB, and 8 billion RMB [4]. Summary by Sections Financial Performance - In the first half of 2025, the company achieved a revenue of 15 billion RMB, a 15% increase year-on-year, and a net profit of 3.177 billion RMB, an 8.39% increase [1]. Product Segmentation - Sportswear revenue was 10.1 billion RMB, up 10% year-on-year; casual wear revenue was 3.8 billion RMB, up 37%; underwear revenue was 900 million RMB, up 4%; and other knitted products generated 100 million RMB, up 6% [1]. Production Capacity Expansion - The company is making significant investments in expanding production capacity in Vietnam and Cambodia, with new factories expected to enhance production efficiency [2]. Internal Control and Management - The company is focusing on improving internal controls and management processes to enhance operational efficiency and supplier relationships [3]. Earnings Forecast - Adjusted revenue and net profit forecasts for 2025-2027 reflect a cautious outlook due to tariff uncertainties, with expected revenues of 31.9 billion RMB, 35.5 billion RMB, and 39 billion RMB, and net profits of 6.6 billion RMB, 7.3 billion RMB, and 8 billion RMB respectively [4].

Investment Rating - The report maintains a "Buy" rating for the company [1][10][11] Core Insights - The company achieved a sales revenue of 14.966 billion RMB in H1 2025, representing a year-on-year growth of 15.3%, with a net profit of 3.177 billion RMB, up 8.4% year-on-year [5][7] - The growth in revenue is primarily driven by product diversification and the expansion of overseas production capacity [7][10] - The gross margin decreased to 27.1%, down 1.9 percentage points year-on-year, mainly due to rising labor costs [5][7] Financial Performance - The company's earnings per share (EPS) for H1 2025 was 2.11 RMB, reflecting an 8.2% increase year-on-year [5][7] - The revenue breakdown shows that the sports category generated 10.129 billion RMB (67.7% of total revenue), the leisure category 3.792 billion RMB (25.3%), and the underwear category 0.94 billion RMB (6.3%) [7] - Revenue from key regions includes Europe at 3.029 billion RMB (20.2%), the US at 2.555 billion RMB (17.1%), and Japan at 2.499 billion RMB (16.7%) [7] Future Projections - The company is expected to achieve revenues of 32.039 billion RMB, 35.386 billion RMB, and 38.571 billion RMB for the years 2025, 2026, and 2027 respectively, with growth rates of 12%, 10%, and 9% [9][10] - The projected net profit for the same years is 6.587 billion RMB, 7.323 billion RMB, and 7.996 billion RMB, with growth rates of 6%, 11%, and 9% respectively [9][10] Market Position - The company's four core customers accounted for 82.1% of total revenue, indicating a strong market position and stable order growth [7][8] - The company is well-positioned for future growth due to its brand client expansion and integrated domestic and overseas production capacity [10]

Core Viewpoint - The company reported a steady growth in revenue and net profit for the first half of 2025, driven by strong orders from major clients and a robust performance in the leisurewear segment, particularly in the U.S. market [1][2]. Financial Performance - Revenue for 25H1 reached 14.966 billion yuan, a year-on-year increase of 15.3%, while net profit attributable to shareholders was 3.177 billion yuan, up 8.4% year-on-year [1]. - The interim dividend per share was 1.38 HKD, representing a 10.4% increase year-on-year, with a payout ratio of approximately 59.6% [1]. Product Performance - Revenue growth by product category for 25H1 was as follows: sportswear +9.9%, leisurewear +37.4%, and underwear +4.1%, with respective revenue shares of 67.7%, 25.3%, and 6.3% [1]. - Leisurewear emerged as the fastest-growing category, benefiting from increased demand in markets such as Japan and Europe, while sportswear growth was steady, driven by demand in the U.S. and Europe [1]. Client Contribution - Revenue from major clients in 25H1 was as follows: Uniqlo 4.33 billion yuan (+27.4%), Adidas 3.44 billion yuan (+6.0%), Nike 2.99 billion yuan (+28.2%), and Puma 1.53 billion yuan (+14.7%) [1]. - Strong order growth was noted from Uniqlo and Adidas, while Nike's order growth remained relatively stable [1]. Regional Performance - Revenue growth by region for 25H1 was as follows: U.S. +35.8%, Europe +19.9%, Japan +18.1%, and mainland China -2.1%, with respective revenue shares of 17.1%, 20.2%, 16.7%, and 24.4% [1]. Cost and Margin Analysis - The gross margin for 25H1 was 27.1%, a decrease of 1.9 percentage points year-on-year, primarily due to increased labor costs from wage hikes for frontline employees [2]. - The selling and administrative expense ratios for 25H1 were 0.73% and 7.23%, reflecting a year-on-year increase of 0.07 percentage points and a decrease of 0.04 percentage points, respectively [2]. - Financial expenses decreased by approximately 15.5 million yuan year-on-year, attributed to lower average financing costs and interest rates [2]. Other Financial Insights - Government subsidies increased by approximately 179 million yuan to 274 million yuan year-on-year, while income tax expenses rose by about 137 million yuan to 455 million yuan due to changes in Vietnam's tax policies [2]. - The net profit margin for 25H1 was 21.2%, down 1.4 percentage points year-on-year [2]. Future Outlook - The company is progressing well with the construction of its second fabric factory in Vietnam, expected to gradually commence production by the end of 2025, with a planned capacity of 200 tons per day [3]. - The new garment factory in Cambodia began operations in March 2025 and is in the process of expanding its workforce [3]. - Net profit forecasts for 2025-2027 have been slightly adjusted from 6.62 billion, 7.38 billion, and 8.16 billion yuan to 6.58 billion, 7.30 billion, and 8.09 billion yuan, respectively, with corresponding P/E ratios of 13, 12, and 10 times [3].

Group 1 - The core viewpoint of the report indicates that Shenzhou International (02313) has seen its performance stabilize in the first half of the year, with a year-on-year sales increase of 15.3%, particularly strong in the leisurewear segment [1] - The dividend payout ratio reached 59.6%, with a dividend yield of approximately 4-5% [1] - Despite rising labor costs leading to a decline in gross margin, it is expected that the adjustment in labor costs has already been reflected in the stock price, and gross margins are anticipated to stabilize in the second half of the year [1] Group 2 - The target price for Shenzhou International has been raised from HKD 49.2 to HKD 67.5 [1] - The rating has been upgraded from "Hold" to "Buy" [1]

Group 1 - The core viewpoint of the article is that DBS has upgraded its target price for Shenzhou International (02313) to HKD 67.5 and raised its rating to "Buy" [1] - Shenzhou International's sales increased by 15.3% year-on-year in the first half of the year, with strong performance in the leisurewear segment [1] - The company has a dividend payout ratio of 59.6%, resulting in a dividend yield of approximately 4-5% [1] Group 2 - Despite rising labor costs leading to a decrease in gross margin, it is expected that the gross margin will stabilize in the second half of the year as labor cost adjustments have already been reflected in the stock price [1] - DBS has raised its target price from HKD 49.2 to HKD 67.5, indicating a positive outlook for the company's performance [1] - The rating upgrade from "Hold" to "Buy" reflects confidence in Shenzhou International's recovery and growth potential [1]