STELLA HOLDINGS (01836) surged nearly 10% in afternoon trading. As of press time, the stock was up 9.04% to HK$17.12, with trading volume reaching HK$89.07 million.

On the news front, STELLA HOLDINGS released its interim results showing revenue of US$775 million, representing a 0.66% year-on-year increase. Profit attributable to owners of the parent company reached US$78.633 million, down 14.48% year-on-year. Basic earnings per share stood at 9.5 US cents, with the company proposing an interim dividend of 52 HK cents per share.

Daiwa issued a research report noting that STELLA HOLDINGS had 1 million pairs of shoes delivered early in the first half of last year, creating a high base effect. After adjusting for this impact (estimated at US$8 million), the company's interim net profit should have actually increased by 2% year-on-year.

The brokerage highlighted that based on the company's annual additional profit distribution of US$60 million, unless the company uses these funds for share buybacks, the dividend yield for the next two years is expected to reach 10%, which is considered highly attractive.

Daiwa expects the company to disclose its three-year net profit growth plan when announcing third-quarter results, with projected compound annual growth rate targets of high single digits for 2026-2028.