Huaxi Securities has issued a research report maintaining a "Buy" rating on JNBY. The firm forecasts the company's revenue for FY26-FY28 to be 6.004 billion yuan, 6.396 billion yuan, and 6.806 billion yuan, representing year-on-year growth of 8.21%, 6.53%, and 6.41%, respectively. Net profit attributable to shareholders is projected to be 971 million yuan, 1.040 billion yuan, and 1.115 billion yuan, with year-on-year increases of 8.72%, 7.08%, and 7.24%. The corresponding earnings per share (EPS) forecasts for FY26-FY28 are 1.00 yuan, 1.93 yuan, and 2.09 yuan. Based on the closing price of HK$20.08 on February 26, 2026, the price-to-earnings (P/E) ratios are estimated at 9.4x, 9.1x, and 8.3x for FY26-FY28, respectively. The main points from Huaxi Securities' report are as follows.

For the first half of FY2026, the company reported revenue, net profit, and operating cash flow of 3.376 billion yuan, 676 million yuan, and 996 million yuan, representing year-on-year growth of 7.0%, 11.9%, and 21.1%, respectively. Government subsidies for the period amounted to 50.211 million yuan. Excluding the impact of these subsidies, net profit was 626 million yuan, reflecting a 15.5% year-on-year increase. The company declared an interim dividend of HK$0.52 per share, resulting in a dividend yield of 5.18%.

The LESS brand demonstrated a swift recovery in growth, while the CROQUIS brand continued to show weakness. Online sales experienced accelerated growth. By brand, revenue for JNBY, CROQUIS, jnby by JNBY, LESS, and emerging brands in FY2026 H1 was 1.860 billion yuan, 389 million yuan, 495 million yuan, 394 million yuan, and 237 million yuan, with year-on-year growth rates of 5.7%, 0.4%, 4.1%, 16.3%, and 22.4%, respectively. The number of stores for these brands was 992, 297, 527, 271, and 54, showing year-on-year changes of +3.3%, -6.0%, +1.9%, +4.6%, and +3.8%. Store efficiency was 1.87 million yuan, 1.31 million yuan, 940,000 yuan, 1.45 million yuan, and 4.40 million yuan per store, with year-on-year growth of 2.2%, 6.5%, 2.2%, 10.7%, and 18.0%, respectively. The menswear brand CROQUIS continued to underperform despite a low base, undergoing store closures and adjustments, a trend consistent with the broader industry. In contrast, the womenswear brand LESS exhibited recovery in both store expansion and store efficiency.

By channel, direct-operated, distributor, and online revenue for FY2026 H1 was 1.180 billion yuan, 1.442 billion yuan, and 753 million yuan, increasing by 5.7%, 0.3%, and 25.1% year-on-year, respectively. The number of direct-operated and distributor stores was 512 and 1,651, up 4% and 1% year-on-year. Store efficiency for direct-operated stores and average shipments per distributor store were 2.30 million yuan and 870,000 yuan per half-year, changing by +1.3% and -1.1% year-on-year. According to company disclosures, comparable same-store sales for offline retail stores declined by 2.2% in FY2026 H1.

As of December 31, 2025, members contributed over 80% of total retail sales, remaining stable year-on-year. The number of active member accounts reached 590,000, a 9% increase year-on-year. The number of member accounts with annual purchases exceeding 5,000 yuan surpassed 340,000, growing by 3%.

Both gross profit margin and net profit margin attributable to shareholders increased, rising by 1.4 and 0.9 percentage points, respectively. The slower growth in the net profit margin compared to the gross margin was primarily due to increases in the administrative expense ratio and income tax expense ratio, coupled with a decrease in financial income. The gross profit margin for FY2026 H1 was 66.5%, an increase of 1.4 percentage points year-on-year. By brand, the gross profit margins for JNBY, CROQUIS, jnby by JNBY, LESS, and emerging brands were 69.4%, 67.5%, 60.2%, 70.5%, and 48.8%, increasing by 1.8, 2.0, 1.8, 1.7 percentage points and decreasing by 3.6 percentage points, respectively. By channel, the gross profit margins for direct-operated, distributor, and online channels were 73.7%, 61.0%, and 65.8%, increasing by 0.1, 2.0, and 1.6 percentage points year-on-year, respectively. The net profit margin attributable to shareholders for the first half of FY2026 was 20.0%, an increase of 0.9 percentage points year-on-year.

Regarding expense ratios, the selling, administrative, and financial expense ratios for FY2026 H1 were 32.4%, 9.2%, and 0.17%, changing by +0.1, +0.6, and -0.17 percentage points year-on-year. The increase in administrative expenses was mainly due to higher expenditures in the product design and research and development departments. The ratio of other income to revenue increased by 0.47 percentage points, primarily driven by increased fair value gains from venture capital investment funds. The ratio of income tax to revenue increased by 0.2 percentage points year-on-year.

Inventory at the end of FY2026 H1 stood at 1.02 billion yuan, a 9.4% increase year-on-year. Within this, finished goods, materials in outside processing, and raw materials increased by 3.2%, decreased by 30.8%, and increased by 9.5%, respectively. Accounts receivable were 220 million yuan, remaining largely flat. The accounts receivable turnover days were 9 days, a reduction of 1 day year-on-year. Accounts payable were 308 million yuan, a 29.2% increase, with accounts payable turnover days at 44 days, a reduction of 12 days year-on-year.

In the short term, the company's sales have continued to grow rapidly since the beginning of the year. The growing brands and emerging brands still have significant room for store expansion. Future improvements in store efficiency are anticipated through an increased proportion of larger stores, the addition of multi-brand collective stores, the conversion of underperforming direct-operated stores to franchises, and the boost in off-store sales driven by fan economy initiatives. In the medium to long term, strong customer loyalty is expected to support a steady or increasing gross profit margin, while economies of scale are likely to lead to lower expenses, potentially driving further growth in the net profit margin.

Potential risks include product competitiveness falling short of expectations, which could impact terminal sales efficiency, volume, and sell-through rates; intensified industry competition; slower-than-expected growth of new brands; and systemic risks.