News summary
Daiwa report pointed outpennslammeriiisla5500, lowered Toubo's profit forecast for the next two years by 11%, and lowered its target price to 6pennslammeriiisla5500.6 Hong Kong dollars, maintaining a "buy" rating and optimistic about its dividend value. Dividend yields for the fiscal year 2025-2027 are expected to be 8%, 9.1% and 9.9% respectively.
Newsletter text
Daiwa predicts a downgrade in Toubo's earnings, but maintains its buy rating
Daiwa, an internationally renowned investment bank, recently lowered its profit forecast for Toubo International. According to the agency's latest report, Tobo's earnings per share are expected to fall by 11% in the current fiscal year and next fiscal year. As a direct result of this adjustment, Daiwa lowered its target share price for TOBO from HK$7 to HK$6.6 and gave an assessment of a forecast P/E ratio of 15 times.
Despite this, Daiwa maintains a "buy" rating on Tobo and believes the stock remains attractive in the current market environment, especially considering its future dividend potential. Daiwa pointed out that despite the impact of last year's high base and delayed launch of new products, Tobo's total retail sales have dropped year-on-year so far this fiscal year, sales have rebounded since May.
Management remains confident in its sales growth target for the current fiscal year and said that although the overall discount level has increased slightly, this is due to the transformation of the channel portfolio to the online market. The year-on-year improvement in social media traffic discounts also demonstrates Taobo's adaptability to marketing strategies.
Looking to the future, Daiwa believes that Tobo's growth will depend on its omni-channel retail strategy and the expansion of emerging divisions and new business models. Although the recovery process may be uneven, Daiwa expects Tobo's dividend returns to be 8%, 9.1%, and 9.9%, respectively in the 2025 - 2027 fiscal years, which also provides additional appeal to investors.