The Zhitong Finance App learned that Macquarie released a research report stating that it gave Shenzhou International (02313) a “outperforming the market” rating, raised its earnings estimates for the 2024-25 fiscal year by 2% each based on the expected acceleration in revenue growth, and raised the target price from HK$89 to HK$91.

The company is expected to benefit from the restocking needs of brand customers. Due to the low base for the same period last year, production capacity growth is expected to accelerate in the first half of this year. As a result, the recruitment of employees in China and Vietnam is underway, and the number of employees in the group is expected to return to 99,000 by the end of the year. The bank pointed out that new customers in Shenzhou, such as Lulululemon and Polo, currently account for about 5% of revenue. In addition, the diversification of existing customer product categories also brings long-term growth opportunities.

The bank pointed out that the Group's recovery is being carried out in stages, and it is believed that the Group is still in the stage of prioritizing capacity utilization. Once production capacity is limited under full use, it is expected that the product portfolio can be further improved. Although revenue growth is relatively more stable, this will be beneficial to gross margin. In order to ensure the stability of the Chinese employee team after the order is resumed, the Group will increase the remuneration of first-line employees in Ningbo by 10%-15%. The bank believes this reflects the Group's optimism about future orders.