Citi: Supor (002032.SZ): China Gross Margin Continues to Strengthen Despite Export Uncertainty
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Citi reiterates its Buy on Zhejiang Supor (002032.SZ) with a CNY 53.8 target price, implying 33.9% expected price return from the CNY 40.190 price as of August 31, and 39.4% total return including a 5.5% expected dividend yield. 1H26 results matched the pre-disclosed figures: revenue fell 1% y/y to CNY 11.4bn and net profit declined 8% to CNY 868m. Domestic revenue rose 1% to CNY 7.9bn with gross margin up 1.2ppt to 28.9%—the key margin lever—while export revenue fell 5% to CNY 3.5bn with gross margin down 1.2ppt to 13.8%, below the roughly 18% guided under the SEB framework agreement. Management sees no inflection in SEB orders yet amid weak US/Europe demand and intense competition, making the FY26 related-party transaction target (+5% y/y) hard to achieve, while raw-material cost pressure should persist through 2H26E. Domestic competition is expected to stay fierce in 4Q26E and 2027E, but a dual-track strategy of premium innovation plus cost-competitive launches should extend domestic margin improvement in 2H26E; OPM protection is the core FY26 KPI. Supor announced a 2026–28E dividend plan with a 60% payout floor. Per AVC, 1H26 small kitchen appliance retail sales fell 5% while Supor's domestic sales edged up. The target price is based on 22x 2026E PE, a roughly 20% premium to Chinese small-appliance peers.