Core Viewpoint - CICC reports that Yue Yuen Industrial Holdings Limited (00551) is a global leader in athletic shoe manufacturing and is expanding its retail business in Greater China, with a diversified global production base. The initial coverage gives an "outperform" rating with a target price of HKD 19.46, corresponding to a P/E of 10.5x for 2026 [1]. Industry Overview - The athletic shoe industry has significant growth potential and is becoming increasingly concentrated. According to Euromonitor, the global athletic shoe market is projected to reach USD 167.7 billion in 2024, with a mid-single-digit growth rate expected over the next five years. The top 10 brands are anticipated to hold a market share of 57% by 2025, indicating a concentrated market structure [2]. - Yue Yuen is the largest athletic shoe manufacturer globally, with an estimated shipment share exceeding 10%. Its subsidiary, Pou Chen Corporation, is a leading athletic apparel retailer in Greater China. For 2024, Yue Yuen's revenue and net profit attributable to shareholders are projected to be USD 818 million and USD 39 million, respectively, with the manufacturing segment accounting for 69% of revenue and 89% of net profit [2]. Competitive Advantages - The company has strong development capabilities for mid-to-high-end footwear, allowing it to establish deep ties with major international brands such as Nike and Adidas, as well as long-term collaborations with other renowned brands like Asics and New Balance. The top five customers are estimated to account for 80-90% of the manufacturing segment's revenue [3]. - Yue Yuen is at the forefront of global capacity expansion, with a diversified layout of production bases [3]. Business Outlook - With overseas brand inventories at manageable levels and accelerated product innovation, the manufacturing segment's performance is expected to stabilize and grow. By 2026, tariff disruptions may lessen, and major brand clients, exemplified by Nike, are focusing on product innovation. This, combined with the growth of several premium brands, is expected to lead to stable revenue growth in the manufacturing segment [4]. - The company is anticipated to improve its performance due to the resolution of previous capacity ramp-up issues and uneven capacity utilization [4]. Market Differentiation - The company is expected to restart growth by actively optimizing its customer base and structure, leveraging its development capabilities and global capacity layout to ensure performance certainty. The forecasted dividend yield for 2026 is 8.2%, providing a margin of safety. Potential catalysts include the recovery of clients and orders exceeding expectations, as well as improvements in production efficiency [5]. Earnings Forecast and Valuation - The company is projected to have EPS of USD 0.23 and USD 0.24 for 2025 and 2026, respectively, with a CAGR of -0.4% from 2024 to 2026. The current stock price corresponds to a P/E of 8.6x for 2026. Based on a P/E of 10.5x for 2026, the target price is set at HKD 19.46, indicating a 23% upside from the current price, with an initial coverage rating of "outperform" [6].
中金：首次覆盖裕元集团给予“跑赢行业”评级 目标价19.46港元