Guotai Haitong Securities has issued a research report maintaining an "Overweight" rating on Jiangnan Buyi (03306). The firm forecasts the company's net profit attributable to shareholders for FY2026 to FY2028 to be RMB 980 million, RMB 1.05 billion, and RMB 1.15 billion, respectively. Assigning a FY2026 PE multiple of 13x and using an exchange rate of 1 HKD to RMB 0.89, the report sets a target price of HKD 26.77. The key points from Guotai Haitong's analysis are as follows.
The company reported its FY26 interim results, with first-half revenue reaching RMB 3.376 billion, a year-on-year increase of 7.0%. Net profit was RMB 676 million, up 11.9% compared to the same period last year. The gross profit margin and net profit margin were 66.52% and 20.02%, respectively, rising by 1.4 and 0.9 percentage points year-on-year. The improvement in profitability is primarily attributed to optimization of the channel structure, a general increase in gross margins across channels, and stable discount management. An interim dividend of HKD 0.52 per share was declared, representing a payout ratio of 36.4%.
Growth brands, particularly LESS, and emerging brands showed impressive growth momentum, while the online channel accelerated. (1) By brand: In FY26 H1, the core mature brand JNBY remained a steady pillar of revenue, generating RMB 1.860 billion, a 5.67% year-on-year increase, with an operating profit margin above the company's overall average. The growth brands CROQUIS/jnby by JNBY/LESS reported revenues of RMB 389 million, RMB 495 million, and RMB 394 million, increasing by 0.35%, 4.12%, and 16.33% year-on-year, respectively. The LESS brand performed especially well, demonstrating strong growth momentum and an increasing share of total revenue. Emerging brands generated revenue of RMB 237 million, a significant 22.42% year-on-year increase, providing greater potential for future growth. (2) By channel: In FY26 H1, revenue from self-operated stores, distributor channels, and online channels was RMB 1.181 billion, RMB 1.442 billion, and RMB 753 million, respectively, representing year-on-year growth of 5.72%, 0.31%, and 25.10%. Gross margins for these channels improved by 0.07, 2.08, and 1.55 percentage points year-on-year. The synergy between online and offline operations contributed to the overall enhancement of profitability.
Store expansion remained steady, while the membership system deepened and inventory health improved. As of December 31, 2025, the group's global network of standalone physical retail stores increased to 2,163, a net addition of 46 stores since the beginning of the period. The number of stores for JNBY, CROQUIS, jnby by JNBY, LESS, and emerging brands were 992, 297, 527, 271, and 54, respectively, with 22 "JNBY+" multi-brand collection stores. Affected by a warm winter and the timing of the Lunar New Year holiday, comparable store sales declined by 2.2% in FY26 H1. However, when adjusting for the Lunar New Year calendar shift, it is estimated that cumulative comparable store sales have returned to positive growth.
Regarding the membership system, the number of active member accounts reached 590,000, an increase of 50,000 year-on-year. The number of highly engaged members with annual purchase totals exceeding RMB 5,000 surpassed 340,000. These members contributed RMB 4.90 billion in retail sales, accounting for over 60% of total offline retail sales. In terms of operational efficiency, inventory at the end of FY26 H1 stood at RMB 1.020 billion, a 2.91% year-on-year increase, which was lower than the revenue growth rate, indicating continued effective inventory management. Accounts receivable were RMB 221 million, with days sales outstanding (DSO) of 9 days, a reduction of 1 day compared to the previous year.
Risk factors include efficiency improvements falling short of expectations and potential tariff levels exceeding forecasts.