Core Viewpoint - Cathay Securities maintains an "Overweight" rating for Jiangnan Buyi (03306), projecting net profits for FY2026-2028 at 980 million, 1.05 billion, and 1.15 billion yuan respectively, with a target price of 26.77 HKD based on a PE of 13X for FY2026 [1] Group 1: Financial Performance - For FY26H1, the company reported revenue of 3.376 billion yuan, a year-on-year increase of 7.0%, and a net profit of 676 million yuan, up 11.9% [1] - Gross margin and net margin improved to 66.52% and 20.02%, respectively, reflecting increases of 1.4 percentage points and 0.9 percentage points year-on-year [1] - The company declared an interim dividend of 0.52 HKD per share, with a payout ratio of 36.4% [1] Group 2: Brand and Channel Performance - Mature brand JNBY generated revenue of 1.86 billion yuan in FY26H1, growing 5.67% year-on-year, while growth brands like LESS saw a significant increase of 16.33% to 394 million yuan [2] - Online channels experienced robust growth, with revenue reaching 753 million yuan, a 25.10% increase year-on-year, while direct and distribution channels grew by 5.72% and 0.31% respectively [2] Group 3: Store Expansion and Membership Growth - As of December 31, 2025, the company expanded its global retail stores to 2,163, with a net increase of 46 stores [3] - Active membership accounts reached 590,000, an increase of 50,000 year-on-year, with high-value members contributing significantly to retail sales [3] - Inventory management remained effective, with inventory at 1.02 billion yuan, growing 2.91% year-on-year, which is lower than revenue growth [3]