[ET Net News Agency, 6 November 2019] Jefferies Research initiated coverage on Shenzhou
International Group Holdings (02313) with a "buy" rating and a target price of HK$126.
The research house said Shenzhou's 2019 revenue growth deceleration was likely driven by
the winding down of the retail business, soft orders in 1H as the trade war hit
procurement managers' sentiment as well as Nike's shifting adoption of woven fabric.
Jefferies witnessed recovering confidence from Spring & Summer 2020 orders. It expects
Shenzhou to invest further in automation tools. This new equipment will enable better
flexibility, helping Shenzhou adapt to a more volatile order profile as well as more
frequent design changes (e.g. Express Lane).
Jefferies forecast Shenzhou to deliver an average earnings growth of 20% in 2020 and
2021. (KL)