Glonghui, May 8 | Bank of America Securities published a research report to lower Taobo's earnings per share forecast for the 2024 and 2025 fiscal years by 8% and 7%, respectively. It is mainly based on factors such as lower revenue assumptions due to the restructuring of its Neo stores and lower than expected traffic recovery speed. The bank believes that Taobo's multi-brand portfolio strategy enables the company to effectively capture the needs of different customers for its brands and products; Taobo's profit margin is flexible, mainly due to brand support and greater efficiency brought about by strong retail operation capabilities; and that Taobo is the most valuable brand in the sportswear industry, with a dividend rate of 7%. Based on the above factors, Bank of America Securities lowered Taobo's target price from HK$7.9 to HK$7.3 and reaffirmed the “buy” rating. Bank of America Securities also anticipates that against the backdrop of Taobo's revenue recording an 8% increase in fiscal year 2024 and a marginal profit margin expansion of 90 basis points, the company's profit after tax will increase by 22% year-on-year. Revenue is mainly driven by the expansion of its store size and sales efficiency, and it is expected that the store expansion plan will shift to net opening in the second half of this fiscal year. Bank of America Securities added that Taobo's strategy of reducing retail discounts and shifting the sales mix to retail may be partially offset by the normalization of brand subsidies. Measures such as operating leverage and cost savings may further support the expansion of the company's profit margin, and it is expected that Taobo's operating income will increase by 10% and net profit will increase by 14%.