Sina Finance App reports that CMSC International has issued a research report reducing its target price for XTEP INT'L (01368) by 14%, from HK$4.3 to HK$3.7, while downgrading its rating from "Overweight" to "Neutral."

The brokerage has revised down its sales growth forecast for Xtep's main brand in 2027 to -5% and lowered Saucony's sales growth forecast to +5%, resulting in a 2027 net profit forecast that is 10% below the market consensus.

Although retail sales performance in the third quarter of 2026 was in line with the downwardly revised expectations, with the main brand recording a mid-single-digit decline in sales and Saucony posting mid-single-digit growth, and management maintaining healthy inventory levels and stable discount rates, the brokerage believes that consensus revenue growth expectations for 2027 to 2028 still face structural downside risks.

Competitive Landscape and Growth Catalysts

From a competitive standpoint, the brokerage believes that Xtep's brand portfolio lacks diversified growth catalysts. Compared with ANTA Sports Products Ltd (02020) and Li Ning Co Ltd (02331), both of which carry "Overweight" ratings, the latter two are expected to benefit from new growth drivers such as the Puma brand revitalization and the launch of Stephen Curry-related products, with these drivers likely to extend through 2027.

The brokerage notes that Saucony still primarily relies on its traditional professional running positioning and marathon event sponsorship model. Additionally, the outlook for online channels and DTC transformation remains uncertain.

Earnings Forecast Adjustments

The brokerage has cut its net profit forecasts for Xtep International in 2027 and 2028 by approximately 12%. The new target price is based on a 7.5x price-to-earnings ratio at the end of 2027.