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Recently, the footwear giant Jiuxing Holdings issued an announcement:

The Group's unaudited consolidated revenue for the three months ended June 30, 2021 increased by approximately 58.1% from the same period last year to US$392.1 million, and for the six months ended June 30, 2021, it increased by 36.1% from the same period last year to US$695.5 million. The increase in US dollars was mainly due to the low base factor that was severely affected by the new crown pneumonia epidemic in the first six months of 2020, and the rebound of the group's orders in 2021.

The group expects that the net profit for the six months ended June 30, 2021 will be no less than 30 million U.S. dollars (approximately 190 million yuan), and the six months ended last year (June 30, 2020) will achieve a net loss of approximately $5.2 million. The improvement in performance was mainly due to the increase in orders due to the low base caused by the severe impact of the new crown pneumonia epidemic in the first half of 2020, and the increase in revenue.

Morgan Stanley released a research report that raised its target price by 9% from HK$11 to HK$12, and gave it an “overweight” rating. The company’s footwear shipments reached 14.5 million pairs in the second quarter, an increase of 54% year-on-year. Favorable orders recovered; the shipment of footwear in the first half of the year was 26.5 million pairs, an increase of 30% year-on-year, partially reflecting the low base effect of the same period last year.

Yamato published a report stating that:

In the analyst conference call, the management of Jiuxing Holdings remained relatively cautious about the prospects. Even though its visibility of orders in the fourth quarter of 2021 increased, and many listed customers have raised their guidance, Jiuxing did not increase its annual shipments as a result. 10% year-on-year growth guideline.

The bank believes that an important reason for the management's conservative stance is the uncertainty of the new crown epidemic in Vietnam. For example, Yue Yuen, another large shoe manufacturer, recently closed its factory in Ho Chi Minh City for 10 days due to the new crown epidemic in Vietnam.

However, Daiwa Index still expects the management to increase its full-year shipment guidance to 50.8 million pairs in its August interim results.

The bank maintained a target price of HK$12 for Jiuxing, downgraded its rating from buy to outperform, and lowered its earnings per share forecast from 2022 to 2023 by 3% to 4%. Furthermore, if the Group of Seven (G7) implements the world's lowest tax rate, Jiuxing's tax exposure is expected to increase further.