The Zhitong Finance App learned that Citi released a research report stating that it gave Shenzhou International (02313) a “buy” rating, with a target price of HK$108. As Adidas's results for the first quarter of 2024 were better than expected and the 2024 revenue guidance was raised, it was raised from the previous middle single digits to the medium to high single digits, which is expected to have a slight positive impact on Shenzhou.
The bank said that Adidas accounted for 14.8% of Shenzhou's total revenue in 2023, leading to a double-digit increase in Shenzhou international orders. At the same time, Adidas also had the highest order growth in 2024 among Shenzhou International's top four customers. Shenzhou's biggest customer, Nike, is the weakest growing customer this year, yet Citi still predicts that Nike orders will grow by single digits, which is higher than Nike's 1% sales growth guide for FY2024.
Citi believes that Adidas China's good prospects are more important to Shenzhou because it is a major contributor among the top four customers of the Shenzhou factory in China. Citi predicts that Adidas's overall orders in Shenzhou will show a double-digit increase, which should be higher than Shenzhou's 15% increase in comprehensive production capacity. Since the growth rate of Adidas is the largest of the four major customers, Adidas raised the guidelines to strengthen Citi's confidence in the Shenzhou model predictions.