运营改善已显现，但仍需等待新催化因素

EEKA Fashion|03709.HK COMPANY UPDATE Operational improvements are visible, butwaiting fornew catalysts H F NGO, Brian, CFA SENIOR ANALYSTbrianngo@westbullsec.com.hk+8523896 29652701–2703,27/F, Infinitus Plaza, 199 Des Voeux RdCentral, Sheung Wan, HK BUY HK$10.66 EEKA Fashion (03709.HK)reported total revenue ofRMB 6,285.8mn in 2025, down 4.6% YoY, while La Koradior and FUUNNYFEELLN continued to deliver double-digit growth. GMremained at a high level of 76.6%, withonly limited changesacrossbrands. Profit attr.declined 15.3% YoY to RMB397.00mn, and theGroupdeclared a dividend of HK$0.35 per share. EEKA Fashion(03709.HK) Ongoingchanneloptimization withstablegrowth:Total store count declinedto 1,739, including 1,356self-operated stores.Thechannel strategy remains centered on closing low-efficiency small stores while increasing the contribution from largerstores inshopping malls and outlets. In 2025, the proportion of stores>200m²increased to 35%, while thestores locatedin MixC malls rose to 66.China’s retail sales of apparel, footwear, knitwear and textiles rebounded by>10% in the first twomonths of 2026, suggesting some improvementsin demand.The growth differential between department stores andspecialty stores narrowed. At this stage, the Group has notadjusted its strategy in response to short-term volatility, stablegrowth, improvement in storeefficiency, and optimization of thechannel mix remain the key priorities. Stock Rating(Previous Rating)BUY(BUY)Target Price(Previous TP)HK$10.66(HK$ 11.00)Current PriceHK$ 6.5852-Week RangeHK$ 6.18–HK$ 10.98Market cap. (HKD, bn)HK$ 4.7 E-commerceis becoming increasingly important:E-commerce revenuegrew 12.0% YoY, with its contribution to totalrevenue rising to 21.6%. Douyin and WeChat VideoChannelsmaintained relatively rapid growth, while the proportion ofregular-priceditemssold through Tmall continued to improve. Across major online platforms, revenue growth and grossmargin performance were broadly in line with 1H results.The Group has also stepped up online advertising and promotionalinvestments, underscoring its strategic push to transform e-commerce from a stock clearance model into a moresophisticated operating model focused on brand building, member engagement, andregular-pricedsell-through. Potential changes in the wholesale channel:After years of contraction, management has highlighted the future developmentplan for thewholesalechannel, including the possibility of introducing new franchise terms and revised managementmechanisms. The objective is to fill regions whereself-operated stores are less efficient and to improve penetration in lower-tier markets.This implies that the discount structure could become more flexible, while distributor geographic coverageand store numbers may gradually expand. That said, managementappears set to begin with only small-scale trials in 2026. Inventoryremainselevated, butisshowingimprovement:The Group’s inventory level remains relatively high, although theinventory mix improved slightly versus 1H. Finished goods as a percentage of total inventory declined to 86%. Meanwhile,the number of SKCs further decreased to 5,338, while the contributionfrom core selling items increased, indicating that theGroup is continuing to actively optimize its inventory structure. Operationalimprovementsarevisible, butwaiting for new catalysts:Relative to 1H, there were no major changes in theGroup’s overall operating profile. We continue to seeimprovement in areas such as inventory management and operatingefficiency, while thedividend yield should continue to providesupport for valuation.We arestillwaiting for: i) a clearerrecovery in sales, and ii) the emergence of a second growth curve, such as menswear or overseas markets. We thereforelower our target price to HKD10.66 per share to reflect a longer-than-expected recovery timeline. Peers comparison Risk factors ◼Prolonged weakness in traditional department store channels◼Slower-than-expected growth in the shopping mall channel◼Ongoing challenges in inventory management◼A weak macroeconomic backdrop in China, leading to softer consumption demand◼Limited upside from further operating efficiency gains◼Failure to maintain the dividend payout ratio Financial Statement West Bull Securities is a dedicatedsmall/mid cap stock brokerage house. Find our research on: Alphasense, FactSet, Capital IQ,Refinitiv, Wind, Choice, Hibor, iFinD,發現報告. Ratings of West Bull Securities: STRONGBUY:absoluteupside of >50% over the next 12 monthsBUY:absoluteupsideof >10% over the next12monthsHOLD: absolute return of-10% to +10% over the next 12 monthsSELL: absolute downside of >10% over the next 12 monthsSTRONGSELL: absolute downside of >50% over the next 12 months Investors should assume that WestBull Securities is seeking or will seek investment banking or other related businesses with thecompanies in this report. Analyst certification:The views expressed in this report accurately reflect the analyst’s p