Jinwu Financial News | According to Open Source Securities Research, Teb International (01368) plans to strategically sell KP (holding Gashway and Palatin brands) to the controlling shareholder Ding Shuibo Family for US$151 million. All proceeds will be distributed as a special cash dividend (approximately HK$0.447 per share) and preserve the possibility of future benefits.
The bank pointed out that the main brand of Xtrex is aimed at the mass market, that Saucone satisfies high-end and mature customer groups, and that Melle focuses on trail running and outdoor activities, and that there is synergy between brands. After the divestment of KP, more resources will be invested in the Sauconi and Mille brands to expand product lines, increase store area, and increase marketing investment. Both Sauconie and Mille are expected to be profitable in 2024.
The bank expects the divestment to be completed by the end of August. After completion: (1) it is expected to reduce the drag on the company's profit side by 0.6/180 million yuan (RMB, same below) in 2024/2025; (2) focus on the running market and develop the three major brands: Special Step, Saucone, and Mille, and it is expected to invest more resources to develop the Sauconi and Melle brands. After the divestment of KP, reporting profits are expected to increase. At the same time, the three major brands will further amplify the synergy effects. The bank raised its profit forecast. The net profit forecast for 2024-2026 is estimated to be 12.3/15.4/1.76 billion yuan (originally 11.5/13.4/1.55 billion yuan), the corresponding EPS is 0.5/0.6/0.7 yuan, and the PE corresponding to the current stock price is 10.9/8.8/7.6 times, maintaining a “buy” rating.