Core Viewpoint - Guosen Securities maintains an "outperform" rating for Jiangnan Buyi (03306) with a target price of HKD 21.8-25.8, corresponding to a FY2026 PE of 11-13x, highlighting the opportunity for investment in undervalued, high-dividend leaders [1] Financial Performance - In the first half of FY2026, Jiangnan Buyi achieved revenue of RMB 3.376 billion, a year-on-year increase of 7.0%, demonstrating resilience amid overall pressure in the apparel retail industry [2] - Gross margin improved by 1.4 percentage points to 66.5%, driven by changes in channel structure, product pricing strategies, and discount management [2] - Net profit increased by 11.9% to RMB 676 million, with net profit margin rising from 19.1% to 20.0% [2] - Operating cash flow reached RMB 996 million, a year-on-year growth of 21.1%, supporting the company's ability to maintain high dividend payouts [2] Dividend Policy - The company declared an interim dividend of HKD 0.52 per share and plans to maintain a 75% payout ratio for the full fiscal year 2026 [2] Channel and Brand Performance - Online revenue grew by 25.1% to RMB 750 million, accounting for 22.3% of total revenue, with an improved gross margin of 65.8% [2] - Offline revenue increased by 2.7%, with self-operated channels growing by 5.7% while distributor channels remained flat [2] - Comparable same-store sales declined by 2.2%, primarily due to the impact of a warm winter and the timing of the Spring Festival [2] - The main brand, JNBY, accounted for 55.1% of revenue with a growth of 5.7% and a gross margin increase of 1.8 percentage points to 69.4% [2] - Emerging brands showed strong potential with a revenue growth of 22.4%, although their gross margin decreased by 3.6 percentage points to 48.8% [2]