CLSA has adjusted its financial forecasts for XTEP INT'L (01368), lowering its sales projections for the current and next fiscal years by 0% to 1%. The firm also reduced its net profit estimates by 8% to 12%. The valuation basis was extended and revised, with the target price-to-earnings multiple decreasing from 10 times to 9 times, reflecting a 30% discount compared to industry peers. Consequently, the target price was revised downward from HK$6.3 to HK$5.5. The "outperform" rating was maintained, reflecting continued optimism about the company's medium-term growth prospects. The ongoing adjustments are expected to yield positive outcomes.

The brokerage anticipates that XTEP's group sales will increase by 4.4% year-over-year in 2026, primarily driven by product innovation and diversification efforts. This growth will be supported by ongoing channel restructuring for both the core XTEP brand and the Saucony brand. However, operating profit margin is projected to face pressure, declining by 1.8 percentage points to a forecasted 12.5% in 2026. Key factors contributing to this margin compression include XTEP's plan to reclaim distribution rights for approximately 500 stores in 2026, which will increase the proportion of direct-to-consumer (DTC) channels. Additional factors include store relocations and the company's share-based compensation plan.

For the first quarter of 2026, CLSA forecasts that retail sales for the XTEP brand will achieve mid-single-digit percentage growth year-over-year, while the Saucony brand is expected to record approximately 25% growth.