CLSA has issued a report following a profit warning from SHENZHOU INTL (02313) last Friday, reducing its target price on the stock from HK$52 to HK$51, a cut of 1.9%, while maintaining an "Outperform" investment rating.

SHENZHOU INTL expects its profit for the first half of 2026 to decline by 38% to 43% year-on-year, amounting to approximately 1.81 to 1.97 billion RMB. CLSA forecasts a mid-single-digit percentage decline in revenue for the first half of 2026, with strong performances from Adidas, Uniqlo, and domestic brands likely to offset weakness at PUMA.

Given a lower base in the second half of 2026, CLSA expects sales to grow by 7% year-on-year, showing improvement over the first half. While the firm remains confident in SHENZHOU INTL's ability to increase its market share among brand clients, it notes that potential demand from those clients after the World Cup remains uncertain.

In light of the lower forecast price-to-earnings ratios for SHENZHOU INTL in 2026 and 2027—at 11 times and 10 times, respectively—and a projected dividend yield of 5.5% to 6%, CLSA has cut its earnings estimates for the company for 2026 and 2027 by 11% to 12%.