Citigroup released a report stating that it has initiated a 90-day positive catalyst observation for Stella Holdings (01836.HK), estimating that the company will announce earnings in mid-July. The bank expects the company's first-half net profit to increase by about 41% year-on-year to $79 million, compared to $56 million in the first half of last year.

The bank believes that Stella Holdings' strong performance during the period is mainly due to the key customer's capacity utilization rate, which has increased from 65% to 70% in the first half of last year, and recovered to 80% in the first half of this year, promoting sales of the company's sports business division. The company continues to optimize its product portfolio, and luxury and fashion businesses with high gross margins are expected to further contribute to revenue; seasonal bullish factors, as the second quarter is usually the peak season for sports and fashion footwear sales.

The bank reiterated its 'buy' rating on Stella Holdings and raised its target price from HKD 18 to HKD 19.6, expecting strong revenue growth. It is predicted that the annual revenue growth rate from 2024 to 2026 will be 4.3%, 9.9% and 10.1%, respectively, and the predicted revenue will be USD 1.556 billion, USD 1.71 billion and USD 1.884 billion, with a compounded annual growth rate of 10%. These figures are 0%, 2.9% and 1.6% higher than those originally expected by the bank. In addition, the bank expects the company's net profit to reach USD 168 million, USD 191 million and USD 220 million from 2024 to 2026, respectively, which is 6%, 8% and 5% higher than the market's expected figures, meaning that the annual growth rates will be 18.8%, 14.1% and 14.8%, and the compounded annual growth rate will be 14.5%. These figures are 3%, 7% and 4% higher than those originally expected by the bank.