CICC has released a research report, estimating CRYSTAL INTL's (02232) EPS for 2026-2027 at US$0.09 and US$0.09 respectively, with a CAGR of 10% from 2025 to 2027. The current share price corresponds to a P/E ratio of 9x for 2026 and 8x for 2027. Based on an 11x P/E for 2026, a target price of HK$7.32 is set, representing a 26% upside from the current level. This marks the first coverage with an Outperform rating. The firm is optimistic about the company's faster asset turnover efficiency and cross-category innovation capabilities. Amid rapidly changing fashion trends, the company may demonstrate stronger performance resilience compared to single-category manufacturers. The projected dividend yield for 2026 is 7.6%, providing a margin of safety. CICC's key views are as follows:
As a leading and diversified apparel manufacturing giant, CRYSTAL INTL's light-asset, high-turnover model drives ROE. Founded in 1970, CRYSTAL INTL is currently the world's second-largest listed apparel manufacturer by revenue, covering five major categories: casualwear, denim, sportswear and outdoor apparel, intimate apparel, and knitwear. Its craftsmanship and product diversity surpass those of its peers. With a short production cycle and high asset turnover efficiency, the company achieved an ROE of approximately 14% in 2025.
The company's core competitiveness lies in its unique "co-creation model," which can shorten the traditional development decision cycle from weeks to days. With expertise across all categories, the company excels at cross-category innovation, such as applying knitwear technology to sportswear to stimulate customer purchases. In terms of production capacity, the company's manufacturing bases are spread across Vietnam, China, Cambodia, Bangladesh, and Sri Lanka, with overseas capacity accounting for over 80% of the total. High levels of automation and intelligence enhance production efficiency, driving continuous growth in profit per employee.
Order growth momentum from key customers, represented by UNIQLO, remains strong, and the cyclical recovery of the casualwear market may be underway. In 2025, Fast Retailing (UNIQLO) was the largest customer, accounting for 37% of the company's revenue, with its performance consistently reaching record highs. It is anticipated that Fast Retailing's operational growth will serve as a stabilizing force for the company's order growth. Additionally, apparel demand is shifting toward products that "combine functionality and fashion," and the casualwear market is experiencing a cyclical upturn. As a core supplier in the casualwear segment, the company is expected to benefit significantly. It is also projected that the company may increase its share in sportswear and outdoor apparel brands, such as adidas.
Potential catalysts: Orders exceeding expectations, production efficiency improvements exceeding expectations. Risks: Orders and capacity expansion falling short of expectations, fluctuations in tariff policies, and risks of raw material price increases.