HK Stock Market Move | SHENZHOU INTL(02313) rose more than 4% recently, despite the management's conservative sales expectation. However, Citigroup remains optimistic about the company's high 26-year order growth.

SHENZHOU INTL (02313) rose more than 4%, rising 4.6% to HKD 65.9 as of press time, with a turnover of HKD 200 million. On the news front, recently, according to market media reports, the major shoe material manufacturer Rishenghua mentioned at its annual meeting before the Chinese New Year in 2025 that with the recovery of orders from international shoe manufacturers such as Nike in the second half of the year, combined with the gradual release of new products this year, both revenue and profits are expected to trend positively. Citigroup previously stated that Nike's guidance for a low single-digit decline in revenue in the third quarter of fiscal 2026 was in line with market expectations of a 1% decline. In the second quarter performance, the North American market showed a strong recovery with a 9% increase in revenue, largely driven by a 24% growth in wholesale business, but this growth was largely offset by a 16% decline in revenue in the Greater China region. The bank believes that if SHENZHOU INTL's stock price experiences a correction due to Nike's cautious outlook, it will be a better buying opportunity. The bank continued to point out that the management of SHENZHOU INTL has recently given conservative expectations, anticipating that sales growth in the second half of 2025 will slow to the mid-single digits, lower than the bank's previous expectation of high single digits. The bank believes that the management's forecast already reflects the impact of Nike's cautious outlook. However, the bank expects Nike's sales orders for SHENZHOU INTL in 2026 to remain flat rather than decline. Based on visibility of orders from the four major customers, SHENZHOU INTL is still expected to achieve a high single-digit sales growth in 2026.