Shenzhou Int’l (2313 HK, HK$43.14, HK$64.8bn): A definite winner of the FIFA World Cup
Shenzhou International (SZI) is a leading global player in apparel manufacturing.  It has established long‑term partnerships with renowned sports brands including the “Big Three” in football namely Nike, Adidas and Puma.  In FY25, the three brands combined to account for over 53% of SZI’s revenue at about 23%, 20% and 10% of SZI’s total, respectively.

According to recent online images, 37 of the 48 teams participating in the world’s largest football tournament will be wearing products from the “Big Three” brands, including the tournament favorites. 

In FY25, SZI’s revenue from sportswear amounted to almost RMB21bn (+6% YoY) accounting for about 67.7% of its total revenue.  Within this segment, its football apparel has gained significant market recognition with revenue rising 28% YoY.  This outperformance is believed to be partly driven by the demand from the upcoming FIFA World Cup 2026. Therefore, we believe SZI is a definite winner in the apparel part of the game regardless of which country will lift the World Cup at the end. 

Our views: SZI is a prudently managed company.  Despite the profit pressure in FY25, there was improvement in cash flow.  The sector is experiencing a "volume‑up, price‑down" dynamic, with average export prices for knitted and woven garments declining by roughly 8% and 9%, respectively.  However, the Mgt indicated that the company's ASP remained relatively stable, with earnings pressure stemming primarily from FX movements and the sharing of US tariff costs.
We believe Shenzhou's core strength in the industry embodied in its solid relationship with customers, global production footprint (in Cambodia and Vietnam) as well as its keen commitment to ESG and green energy initiatives.  Over the past decade, both revenue and net profit have grown at a CAGR of around 8%.
With key valuation metrics at relatively low levels compared to historical ranges and a dividend yield of around 6%, the upcoming FIFA World Cup could be a catalyst to spur sportswear demand. The company is trading at 9x FY26 P/E and 1.4 FY26 P/B. (Research Department)