The Zhitong Finance App learned that Yamato released a research report stating that it lowered its earnings forecast for Taobo (06110) per share for the current fiscal year and the next fiscal year by 11% to reflect weak consumer sentiment in China. The bank lowered Taobo's target price from HK$7 to HK$6.6, while confirming the “buy” rating. It viewed the stock as an attractive dividend dividend stock, and benefited from a recovery in basic factors.
The bank said that the company's total retail sales value has declined year on year since the current fiscal year, due to last year's high base and delayed launch of new products, even though sales have improved month-on-month since May. Management is still confident about the sales growth target for the current fiscal year. Overall discounts have increased slightly year over year since the current fiscal year, due to the shift in channel mix to online channels, even though discounts through social media traffic have improved year over year.
In addition, Taobo management will maintain an omnichannel retail strategy to drive store and area unit efficiency, while leveraging emerging sectors and new business models to drive future growth. Yamato indicates that Taobo's recovery process is uneven but dividends are attractive. It predicts dividend returns of 8%, 9.1% and 9.9% for the 2025 to 2027 fiscal year, respectively.