Cathay Haitong: Robust growth in Q1 2026 revenue, e-commerce performance shines despite a high base

In Q1 2026, revenue showed steady growth. E-commerce demonstrated impressive momentum despite a high base, while offline channels continued to optimize. Super stores were steadily expanded. The company is actively pushing new products and diversified marketing, with annual revenue expected to maintain stable growth.

Key Investment Points:

Investment advice:

We forecast net profit attributable to shareholders for 2026-2028 to be 1.45/1.59/1.74 billion yuan, corresponding to PE ratios of 8X/8X/7X respectively. Assigning a PE ratio of 10X for 2026, based on an exchange rate of 1 Hong Kong dollar = 0.87 RMB, the target price is 8.05 Hong Kong dollars. We maintain a 'Buy' rating.

In Q1 2026, revenue showed steady growth, with e-commerce continuing rapid growth despite a high base.In Q1, retail sales of the main brand increased by about 10% offline, while children's wear grew approximately 10% offline. E-commerce sales rose in the mid-teens year-over-year (growth rate in Q1 2025 was 35-40%), with online-exclusive products accounting for nearly 85%, serving as the core growth driver. Online sales are expected to continue growing rapidly in 2026, with strong medium- to long-term growth potential. Revenue contribution from e-commerce is projected to gradually rise to 50% (29% in 2025).

Offline channels continued to optimize, with super stores being steadily expanded.The offline strategy of promoting larger stores continued, with average store size steadily increasing. Super stores expanded steadily, with a net addition of 15 stores by the end of Q1. The customer base grew rapidly, with good repurchase rates. The guidance of opening 100 new super stores for the year remains unchanged.

Order meetings performed well, and we look forward to the full-year performance.Currently, the main brand maintains a discount of around 70%. Inventory-to-sales ratio is 4-4.5 times. Q2 is expected to continue steady growth. The order meeting for Q4 2026 performed well, particularly in children’s wear, with adult clothing performing slightly better than group expectations (mainly driven by volume growth).

Looking ahead to the full year, the company is expected to drive continuous and steady revenue growth through a rich pipeline of new products and diversified marketing. Risk warnings: Deterioration of the retail environment, intensified industry competition, worsening brand partnership relations.

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