Tianfeng Securities reiterated its "Buy" rating on STELLA HOLDINGS (01836), adjusting earnings forecasts based on Q3 performance amid a relatively weak consumer environment. The firm now projects 2025-2027 revenue at $1.58 billion, $1.66 billion, and $1.76 billion (previous estimates: $1.62B, $1.71B, $1.81B), with net profits of $160 million, $170 million, and $190 million (prior: $160M, $180M, $190M), corresponding to P/E ratios of 11x, 10x, and 9x respectively.

As STELLA HOLDINGS approaches the end of its three-year plan (2023-2025), it remains on track to achieve a 10% operating margin and low-teens CAGR for post-tax profits, having already exceeded these targets in 2023 and 2024. The company continues to enhance its product mix, diversify its client base, and optimize manufacturing footprint. It will prioritize capacity allocation between luxury/fashion clients and the growing sports segment.

With two new fashion/sports clients commencing shipments in H2, non-dedicated manufacturing facilities are expected to operate near full capacity. Despite market uncertainties, strong demand persists for STELLA's product development and production capabilities due to ongoing client acquisitions. The company is strategically expanding its handbag/accessories manufacturing as a core growth driver, targeting premium clientele. Accelerating this segment will be a key focus in the next three-year plan starting 2026.

STELLA recently acquired a small Vietnamese handbag/accessory factory, planning to leverage its premium production expertise and experienced team to elevate quality and efficiency in this business line.