CICC released a research report stating that it essentially maintains JNBY's (03306) FY26 earnings forecast at RMB 926 million, introduces FY27 earnings forecast of RMB 983 million. The current stock price corresponds to 10.1x/9.7x FY25/26 P/E ratios, maintaining an outperform industry rating. Considering the company's continuously improving brand strength, the target price has been raised by 18% to HK$23.70, corresponding to 12.0x/11.6x FY25/26 P/E, representing 19% upside potential from current levels.

CICC's main viewpoints are as follows:

**FY25 Performance in Line with Expectations**

The company announced FY25 (July 2024 - June 2025) results: revenue of RMB 5.55 billion, up 4.6% year-on-year; net profit attributable to shareholders of RMB 890 million, up 5.3% year-on-year. Performance was in line with expectations. The company declared a final dividend of HK$0.93 per share, together with an interim dividend of HK$0.45 per share, representing a full-year payout ratio of approximately 75%.

**High-Value Member Base Continues to Expand, Strong Growth in Emerging Brands**

In terms of membership, the number of member accounts with total purchases exceeding RMB 5,000 in FY25 increased by approximately 20,000 to over 330,000. By channel, FY25 direct retail/distribution/e-commerce channel revenues changed by -6%/+10%/+18% year-on-year to RMB 2.08/2.27/1.20 billion respectively, with online benefiting from strong growth in onmygame. FY25 direct retail stores decreased by a net 24 to 492 stores, while distribution stores increased by a net 116 to 1,625 stores, as the company converted some direct retail stores in non-core cities to distribution. By brand, FY25 revenue for JNBY/jnby by JNBY/LESS/CROQUIS changed by +2.3%/+2.9%/+0.2%/-4.6% year-on-year to RMB 3.01/0.83/0.62/0.72 billion respectively. Emerging brands revenue surged 107.4% year-on-year to RMB 360 million, mainly due to the consolidation and rapid growth of newly acquired brands onmygame and B1OCK.

**Stable Profitability, Inventory Increase**

FY25 gross profit margin decreased by 0.3 percentage points year-on-year to 65.6%, mainly due to the increased proportion of distribution and online channel revenue. FY25 selling expense ratio increased by 0.6 percentage points year-on-year to 35.6%, mainly due to increased brand investment and 30th anniversary event expenses; administrative expense ratio increased by 0.1 percentage points year-on-year to 9.6%. FY25 effective tax rate decreased by 3.8 percentage points year-on-year to 26.3%, mainly due to reduced dividend withholding tax. Overall, FY25 net profit margin attributable to shareholders increased by 0.1 percentage points year-on-year to 16.1%. Operationally, inventory turnover days at the end of FY25 increased by 5 days year-on-year to 161 days, mainly due to increased autumn/winter 2024 inventory and stock preparation.

**Development Trends**

The company reiterated its FY26 retail target of RMB 10 billion. It is expected that the company's terminal sales performance in July-August outperformed peers. The strong member loyalty and multi-brand cultivation capabilities are expected to drive steady earnings growth. Additionally, the company plans to build its own logistics center, which may reduce net financial income due to capital occupation, causing FY26 revenue growth to outpace profit growth.

**Risk Warnings**: Intensified competition, retail performance below expectations, member expansion pace and consumption capacity below expectations.