Shenzhou International Group Holdings Limited (02313)

Equity Research Report　|　Industry: Vertically Integrated ODM/OEM Manufacturing of Knitted Apparel　|　Report Date: September 13, 2026　|　Main price data as of the Hong Kong stock market close on September 11, 2026; certain technical indicators, including moving averages, RSI and MACD, as of September 10, 2026; shareholder interests, Stock Connect and short-selling data are subject to disclosure lags and are respectively as of September 7, September 8 and August 28, 2026.

This report was automatically compiled and generated by AI based on publicly available information. It is for reference only and does not constitute investment advice.

1. Executive Summary

Shenzhou International recorded revenue of RMB 14.1792 billion in the first half of 2026, down 5.3% year on year; net profit attributable to the parent was RMB 1.9046 billion, down 40.0% year on year, while gross margin declined from 27.1% in the first half of 2025 to 22.6%. Profit declined significantly faster than revenue, mainly due to the appreciation of the RMB against the US dollar, increases in labor and raw-material costs, the ramp-up of new capacity in Vietnam and Cambodia, the sharing of US tariff costs, and the reversal from a net foreign-exchange gain to a net foreign-exchange loss of RMB 506.2 million. This indicates that the current core issue has shifted from order scale to margin recovery.

The company continues to possess integrated capabilities spanning fabric production, knitting, dyeing and finishing, and garment manufacturing, with production facilities in mainland China, Vietnam and Cambodia. Revenue increased 8.1% to RMB 30.9937 billion in 2025, of which sportswear revenue was RMB 20.9666 billion, accounting for 67.7%. However, sportswear revenue declined 10.7% year on year in the first half of 2026, while revenue from the United States and the European Union declined approximately 11.7% and 8.9%, respectively. Revenue from casualwear and underwear increased 4.5% and 6.1%, respectively, reflecting a clear divergence in business performance.

Customer concentration remains high: the top five customers accounted for 86.48% of sales in 2025, while the top five customers accounted for 93% of trade and bill receivables at the end of 2025. Trade and bill receivables amounted to RMB 6.9438 billion and inventories to RMB 7.0740 billion, indicating substantial working-capital utilisation. The company declared an interim dividend of HKD 0.88 per share in the first half of 2026, down 36.2% year on year, but the payout ratio remained approximately 61.5%. The controlling shareholder acquired a total of 13.78 million shares between September 1 and September 7, increasing its interest to 43.50%. This may indicate continued confidence in the company’s long-term competitiveness, but does not confirm that earnings have already reversed.

As of September 11, 2026, the share price closed at HKD 36.04, close to the 52-week low of approximately HKD 34.94 and down approximately 17% from approximately HKD 43.38 on August 11. Valuation is approximately 8x to 10x earnings under different methodologies, representing a relatively low historical level based on the data presented. However, the share price remains below the 50-day, 100-day and 200-day moving averages, and MACD is below the zero line. Trading volume of approximately 5.67 million shares during the September 11 rebound was lower than that on recent high-volume trading days. The current movement is therefore closer to a technical rebound from a low level, with no confirmation yet of a medium-term trend reversal.

2. Company Overview

2.1 Basic Information

2.2 Main Businesses and Product Mix

• Sportswear: Revenue of RMB 20,966.573 million in 2025, accounting for 67.7% of total revenue and increasing 5.9% year on year. It remained the largest business, driven mainly by demand in Europe and the United States.
• Casualwear: Revenue of RMB 8,410.981 million in 2025, accounting for 27.1% of total revenue and increasing 16.7% year on year, primarily due to procurement demand from Japan and other overseas markets.
• Underwear: Revenue of RMB 1,403.026 million in 2025, accounting for 4.5% of total revenue and declining 2.3% year on year, mainly due to lower procurement demand in Japan.
• Other knitted products: Revenue of RMB 213.152 million in 2025, accounting for 0.7% of total revenue and declining 3.4% year on year.
• Production and supporting operations: Covers fabric production, knitting, dyeing and finishing, accessories and garment manufacturing. The second fabric plant in Vietnam is planned to have daily fabric capacity of approximately 200 tonnes and remained in the equipment installation and commissioning stage at the end of 2025.
• Regional production: Domestic bases focus on high-end manufacturing, process R&D, automation and supply-chain management, while the Vietnam and Cambodia bases undertake a greater share of incremental garment capacity and regional delivery functions.

2.3 Position in the Industry Chain and Cost–Profit Structure

Shenzhou International occupies the midstream manufacturing and vertically integrated segment of the textile and apparel value chain. Compared with a pure garment-processing factory, the company improves supply-chain coordination through vertical integration from fabric and knitting through dyeing and finishing, accessories and garment manufacturing. However, its revenue is primarily derived from procurement orders placed by international brands, and it does not possess the brand premium associated with end-market retail brands.

• Major procurement and cost items include cotton and cotton yarn, chemical fibres and related yarns, greige fabric and other fabrics, dyeing and finishing auxiliaries, garment accessories, and production costs such as labor, energy, depreciation, logistics and environmental treatment.
• At the end of 2025, raw-material inventories were RMB 1,430.541 million, work in progress was RMB 3,673.162 million, finished goods were RMB 1,970.306 million and total inventories were RMB 7,074.009 million.
• The largest supplier accounted for 17.39% of group purchases in 2025, while the top five suppliers accounted for 30.65%. These figures relate to 2025; the research notes do not provide data for other years, and the latest annual report should be consulted for details.
• The company controls costs through centralised procurement, supplier management, sourcing at the raw-material origin and quota management for materials during production. As prices of cotton, chemical fibres and yarns remain market-driven, the company remains a price taker for some raw materials and cannot fully pass costs on to customers.
• Key upstream pressures include fluctuations in cotton and chemical-fibre prices, the impact of crude-oil prices on chemical-fibre costs, rising labor costs in Vietnam and Cambodia, foreign-exchange mismatches between US-dollar sales and RMB procurement, and changes in shipping, logistics and trade policies.
• Downstream customers mainly comprise global sportswear, casualwear and underwear brands. The 2025 annual report disclosed customers anonymously as Customer A, Customer B, Customer C and so forth; specific brand names cannot be individually matched solely based on the official annual report.
• Revenue from the largest customer in 2025 was RMB 9,080.179 million, or approximately 29.3% of total revenue; revenue from the second-largest customer was RMB 7,532.045 million, or approximately 24.3%; revenue from the third-largest customer was RMB 6,434.424 million, or approximately 20.8%. The top three customers therefore accounted for approximately 74.4%, while the top five accounted for 86.48% of sales. These concentration figures are based on the 2025 annual-report methodology; the research notes do not provide data for other years, and the latest annual report should be consulted for details.
• At the end of 2025, the largest customer accounted for 42% of trade and bill receivables, while the top five customers accounted for 93%, indicating that receivables and credit risk were highly concentrated among major customers. The company believes that the major customers are globally recognised brands with long-standing relationships, and therefore considers the related credit risk to be generally manageable.
• International brand customers place large orders and generally have sound credit quality, supporting capacity utilisation and recurring orders. However, brand owners have greater bargaining power over design, marketing, channels and end-market pricing, and suppliers may face annual price reductions, cost-sharing requirements, quality certifications and supply-chain compliance requirements.
• In 2025, some tariff costs associated with the US market were shared by the company and its customers, indicating that the company lacks full cost pass-through capability. The research notes identify Nike, Uniqlo, Adidas and Puma as major customers in 2024, but these names and the estimate that the four largest customers accounted for approximately 80.7% of sales were sourced from a single brokerage report rather than directly disclosed in the 2025 annual report. They cannot replace the official anonymous customer data.
• As of December 31, 2025, trade and bill receivables were RMB 6,943.819 million, equivalent to approximately 22.4% of full-year revenue of RMB 30,993.732 million. Based on a static estimate using the year-end balance, receivables turnover was approximately 82 days, with the principal credit period being within six months. Inventories of RMB 7,074.009 million corresponded to approximately 113 days of cost of sales based on cost of sales of RMB 22,828.372 million. Trade payables of RMB 1,382.544 million corresponded to approximately 22 days of purchases or cost of sales. Receivables were significantly higher than trade payables, indicating that more working capital was tied up by downstream brand customers and that the company could not fully offset downstream payment terms through upstream supplier credit. The 82-day, 113-day and 22-day figures are static estimates based on year-end balances and are not substitutes for formal turnover metrics calculated using average balances.
• Customer concentration was significantly higher than supplier concentration: the top five customers accounted for 86.48% of sales in 2025, compared with 30.65% of purchases for the top five suppliers; at the end of 2025, the top five customers accounted for 93% of trade and bill receivables. Customer names were disclosed mainly on an anonymous basis. These ratios follow the 2025 annual-report methodology; the research notes do not provide other annual concentration data that can be cross-checked, and the latest annual report should be consulted for details.

Shenzhou International occupies a midstream manufacturing and vertically integrated position in the textile and apparel value chain. It is neither an end-market brand owner with brand premiums nor a pure low-end garment OEM. Profit improvement depends mainly on higher utilisation and production efficiency at new capacity in Vietnam and Cambodia, domestic automation upgrades, a higher proportion of functional fabrics and higher-value-added products, procurement and raw-material cost control, and the mitigation of tariff, origin and logistics risks through the global production footprint, rather than simply increasing product prices.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

The latest reporting period is the unaudited interim results for the six months ended June 30, 2026, announced on August 25, 2026. The interim financial statements were reviewed by the company’s audit committee. Financial amounts are primarily presented in RMB, while Hong Kong stock dividends and valuation data are presented in Hong Kong dollars (HKD).

Revenue declined only moderately in the first half of 2026, but profitability came under significant pressure. Gross profit was RMB 3.1975 billion, down 21.2% year on year, while gross margin declined from 27.1% in the first half of 2025 to 22.6%. Profit before tax was RMB 2.0399 billion, down approximately 43.9% year on year. The decline in profit was primarily attributable to gross-margin compression caused by labor costs, raw materials, tariff sharing and RMB appreciation, as well as the reversal from a net foreign-exchange gain of RMB 126.4 million in the first half of 2025 to a net loss of RMB 506.2 million in the first half of 2026. Government incentive income also declined from RMB 274.3 million to RMB 112.0 million. Net other expenses and income amounted to a loss of RMB 497.1 million in the first half of 2026. By product, sports-related products accounted for approximately 63.8% of revenue and declined 10.7% year on year; casualwear accounted for approximately 27.9% and increased 4.5%; and underwear accounted for approximately 7.0% and increased 6.1%. The company declared an interim dividend of HKD 0.88 per share, down 36.2% year on year. The total interim dividend was approximately HKD 1.3225 billion, equivalent to approximately RMB 1.1487 billion, and UOB Kay Hian estimated the payout ratio at approximately 61.5%. Revenue increased but net profit attributable to the parent declined in 2025. Excluding the one-off gain of approximately RMB 330.6 million from the disposal of an interest in a subsidiary in 2024, comparable net profit attributable to the parent declined approximately 1.4% year on year in 2025.

3.2 Earnings Forecasts

Forecast data are sourced from etnet consensus estimates, S&P Global Market Intelligence data cited by StockAnalysis, TipRanks data, single-institution forecasts from DBS/Analec, a China Merchants Securities report and selected brokerage views. All forecast earnings amounts are presented in RMB based on the original methodology in the research notes; target prices and share prices are presented in HKD. Samples, update dates, net-profit definitions and foreign-exchange assumptions differ across sources, and the figures should not be regarded as a unified market consensus. The etnet consensus includes 16 brokerage ratings, but some reports predate the first-half 2026 results and may not fully reflect the latest earnings downgrades. StockAnalysis has not yet provided complete revenue and EPS figures for 2027 and 2028.

3.3 Valuation and Institutional Ratings

At the September 11, 2026 close, the share price was HKD 35.98, up 2.04% on the day. Valuations vary across data sources. Hang Seng Bank data as of approximately 13:32 on the day showed a share price of HKD 35.94, a market capitalisation of approximately HKD 54.0 billion, a P/E ratio of approximately 8.2x, a P/B ratio of approximately 1.3x and a dividend yield of approximately 5.899%. Lixinger data as of September 10, 2026 showed a trailing P/E ratio of 10.19x, a P/B ratio of 1.23x, a dividend yield of approximately 5.90%, total market capitalisation of approximately HKD 53.004 billion, a historical P/E percentile of approximately 6.51%, a historical median P/E of approximately 14.83x and a 20th-percentile P/E of approximately 12.11x. Based on 2025 basic EPS of RMB 3.88 and the RMB/HKD exchange rate of approximately 1.09–1.10 used in the research notes, EPS converts to approximately HKD 4.23–4.27, implying a static P/E of approximately 8.4x–8.5x at a share price of HKD 35.98. Based on the etnet forecasts and the same exchange-rate assumption, 2026 forecast EPS of RMB 3.275 converts to approximately HKD 3.57–3.60, implying a forward P/E of approximately 10.0x–10.1x; 2027 forecast EPS of RMB 3.819 converts to approximately HKD 4.16–4.20, implying approximately 8.6x–8.7x; and 2028 forecast EPS of RMB 4.2365 converts to approximately HKD 4.62–4.66, implying approximately 7.7x–7.8x. According to etnet, the 2026 target-price range is approximately HKD 40.00–74.10. Looking only at institutions that updated their views after the interim results, target prices are generally concentrated between HKD 40 and HKD 63.80. Overall, Shenzhou International’s current valuation is at a relatively low historical level, but valuation recovery depends on order recovery in the second half, demand from sportswear customers, gross-margin improvement, RMB exchange-rate movements, and the extent to which tariff and labor costs can be passed on to customers and reflected in end-market prices. Differences in P/E ratios are also affected by exchange rates, the TTM earnings definition, whether adjusted profit is used and the data update date. The first-half 2026 financial statements are unaudited, and final full-year figures may be adjusted.

4. Recent News and Announcements

4.1 2026 Interim Profit Warning and Results Announcement: Significant Declines in Revenue and Profit

On August 7, 2026, Shenzhou International issued a profit warning, expecting profit attributable to owners of the parent for the six months ended June 30, 2026 to decline approximately 38%–43% year on year, versus a base of RMB 3.176836 billion in the same period of 2025. On August 25, 2026, the company announced unaudited interim results: sales revenue of approximately RMB 14.179177 billion, down 5.3% year on year; gross profit of approximately RMB 3.197464 billion, down 21.2%; gross margin of 22.6%, down 4.5 percentage points; profit attributable to owners of the parent of approximately RMB 1.904563 billion, down 40.0%; and basic EPS of RMB 1.27, down 39.8%.

4.2 Reasons for the Earnings Decline: Foreign Exchange, Costs, Overseas Capacity Ramp-Up and Weak Demand

The company stated that the average RMB/US dollar exchange rate appreciated approximately 4% from the same period of the previous year, while export revenue is primarily denominated in US dollars and the financial statements are presented in RMB. New employees and related costs increased following capacity expansion in Vietnam and Cambodia, while some new capacity remained in the ramp-up stage. Costs of chemical-fibre raw materials such as yarn rose alongside international oil prices. Macroeconomic uncertainty, tariff policies and inflation risks caused brand customers to adopt a more cautious ordering approach. In the first half of 2026, the company recorded a net foreign-exchange loss of approximately RMB 506.16 million, compared with a net foreign-exchange gain of approximately RMB 126.43 million in the same period of 2025.

4.3 Divergence in Product and Regional Revenue Performance

In the first half of 2026, sports-related products remained the largest source of revenue, accounting for approximately 63.8% and declining 10.7% year on year. Casualwear accounted for approximately 27.9% and increased 4.5%, while underwear accounted for approximately 7.0% and increased 6.1%. By sales destination, revenue from the United States was approximately RMB 2.257066 billion, down approximately 11.7% year on year; revenue from the European Union was approximately RMB 2.760752 billion, down approximately 8.9%; and revenue from mainland China was approximately RMB 3.457143 billion, down approximately 5.2%.

4.4 Interim Dividend Reduced but Payout Ratio Remained High

The board declared an interim dividend of HKD 0.88 per share for 2026 on August 25, 2026, down approximately 36.2% from HKD 1.38 per share in the same period of 2025. The total dividend was approximately HKD 1.322496 billion, representing approximately 61.5% of interim net profit attributable to the parent. The interim payout ratio remained high, but the year-on-year decline in per-share dividends reflects the maintenance of shareholder returns while earnings were under pressure. Dividend payments may also constrain the amount of cash flow available to support capacity expansion and working capital.

4.5 Key Dates for the Interim Dividend

The ex-dividend date for the 2026 interim dividend was September 8, 2026; the deadline for registration of transfers was 16:30 on September 9, 2026; the period during which the register of members was closed was September 10–15, 2026; the record date was September 15, 2026; and the payment date was September 24, 2026.

4.6 Controlling Shareholder Continues to Acquire Shares, Interest Rises to 43.50%

Company chairman and major shareholder Ma Jianrong acquired Shenzhou International shares through Splendid Steed Investments Limited, which he controls, on a series of dates between September 1 and September 7, 2026: 5.60 million shares on September 1, 1.38 million shares on September 2, 1.36 million shares on September 3, 2.68 million shares on September 4 and 2.76 million shares on September 7, for a total of 13.78 million shares. The relevant interest increased from approximately 42.96% to 43.50%. The average transaction price disclosed on September 7 was HKD 36.803 per share, involving approximately HKD 101.6 million. The acquisitions took place after the profit warning, the 40.0% year-on-year decline in interim profit and the dividend reduction. This may reflect the controlling shareholder’s confidence in long-term competitiveness and operational improvement in the second half, but does not confirm that operations have already reversed or that earnings have bottomed.

4.7 Institutional Interest Changes Diverge from the Controlling Shareholder’s Purchases

J.P. Morgan Chase & Co. disclosed on September 2, 2026 that it had reduced its long position by approximately 4.2853 million shares. Following the disclosure, its long position was approximately 119.4152 million shares, representing approximately 7.94% of issued shares. This contrasted with the controlling shareholder’s continued purchases during the same period, indicating that institutional position changes were not uniform. The relevant institutional interest may include derivative interests and should not be interpreted simply as a change in physical shareholdings.

4.8 No New Share Repurchases, Cancellations or Treasury-Share Changes Identified in August 2026

According to the monthly return on movements in securities for the month ended August 31, 2026, filed by the company on September 1, the total number of issued shares was 1,503,222,397. Issued shares excluding treasury shares amounted to 1,502,835,997, while treasury shares amounted to 386,400. There were no new shares issued, shares cancelled or changes in treasury shares during August 2026, and the company confirmed that the public-float requirement had been satisfied. Accordingly, the monthly return disclosed on September 1 did not show any new share repurchase or cancellation by the company during August 2026. The company’s most recent repurchase took place between March 31 and April 2, 2026, involving a total of 386,400 shares, which have since been held as treasury shares.

4.9 No New Material M&A, Asset Transactions or Regulatory Penalty Announcements Identified

As of September 13, 2026, the principal disclosures on the Hong Kong Stock Exchange’s announcement list for company 02313 during August and September 2026 related to the profit warning, interim results, dividend, monthly return on movements in securities and disclosure of interests. No new material acquisition, asset disposal, change of control or regulatory penalty announcement was identified. The previously traceable connected transaction announcement was a lease-related connected transaction in December 2025. It is not a recent September 2026 development, and there is currently no evidence of a new material development in September 2026.

4.10 Brokerage View: Positive Ratings Maintained but Target Prices Reduced

On September 10, 2026, JPMorgan maintained an “Overweight” rating on Shenzhou International but reduced its target price from HKD 70 to HKD 60. The bank expected revenue to improve gradually in the second half, with earnings broadly stabilising before a significant recovery in 2027, while the pace of gross-margin recovery remained the main uncertainty. Reports citing JPMorgan indicated that the current share price implied a 2027 forward P/E of approximately 9x and an interim payout ratio of approximately 61.5%. As of September 9, 2026, selected brokerage forecasts and ratings compiled by etnet showed that Morgan Stanley, Nomura, Daiwa, Citi, JPMorgan and HSBC were among the institutions maintaining mostly buy or overweight ratings, with target prices generally ranging from HKD 53 to HKD 63.80. These figures are brokerage forecasts rather than official company guidance and do not constitute a strict statistical measure of multi-institution consensus.

4.11 Market Focus on Second-Half Orders, Capacity Efficiency, Foreign Exchange and Tariffs

The core variables currently attracting market attention include whether orders recover in the second half; whether production efficiency at new capacity in Vietnam and Cambodia improves; RMB/US dollar exchange-rate movements; trends in chemical-fibre raw-material and oil prices; US tariffs and customer cost-sharing mechanisms; and sportswear demand, particularly whether demand in Europe and the United States improves. As of September 13, 2026, the company had not disclosed second-half 2026 order value, gross-margin guidance or full-year earnings guidance. The assessment of second-half recovery therefore mainly comes from brokerage analysis and the company’s qualitative descriptions of the operating environment, and should not be regarded as a confirmed earnings trend.

5. Share-Price Performance and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

Shenzhou International closed at HKD 36.04 on September 11, 2026, only approximately 3.1% above the 52-week low of approximately HKD 34.94, after declining approximately 17% from approximately HKD 43.38 on August 11. Although a rebound occurred in the short term, trading volume of approximately 5.67 million shares was significantly below that on recent high-volume trading days, indicating insufficient confirmation from market participation. Technically, the share price remains below the MA50, MA100 and MA200, while MACD is below the zero line, showing that medium- and short-term momentum remains weak. RSI of approximately 33–34 is near the oversold area and may support intermittent low-level recovery, but does not confirm a reversal. Specific Bollinger Band values are unavailable, so the short-term position is primarily inferred from recent highs and lows, moving averages and the 52-week low.

5.3 Short-Term Outlook (Next Week; Scenario Analysis for Reference Only)

⚠️ Risk warning: The following is a subjective scenario analysis based on closing data as of September 11, 2026, historical prices and publicly available technical indicators. It does not constitute investment advice or a certain forecast of future price movements.

① Key Technical Levels

② Scenarios for the Coming Week (Subjective Weights, Not Statistical Probabilities)

• Low-level consolidation (relatively higher weighting, approximately six-tenths; a subjective heuristic weighting based on the current technical and funding picture, not a statistical probability): Price range of HKD 34.8–36.9. The trigger would be the share price holding the HKD 34.8–35.3 support area but failing to break the HKD 36.3–36.9 resistance area decisively, with turnover remaining around HKD 150 million–250 million. Low RSI may generate intermittent rebounds, but with medium-term moving averages still trending downward, the pattern would resemble a recovery within a weak range.
• Weaker decline (medium weighting; a subjective heuristic weighting based on the current technical and funding picture, not a statistical probability): Price range of HKD 33.5–35.0. The trigger would be a decisive closing-price break below HKD 34.8 accompanied by volume rising above approximately 8 million shares, or turnover expanding continuously above approximately HKD 300 million. A high-volume break below the area around the 52-week low would indicate insufficient support and could initiate a new bottom-finding process.
• Stronger rebound (low-to-medium weighting; a subjective heuristic weighting based on the current technical and funding picture, not a statistical probability): Price range of HKD 36.9–38.0. The trigger would be the closing price regaining HKD 36.9 and remaining above it for one to two consecutive trading days, while daily volume reaches approximately 8–10 million shares and turnover reaches approximately HKD 300 million or more. If HKD 36.9 is breached with volume confirmation, the HKD 37.3–37.8 area may be watched in the short term. A further break above HKD 38 could represent a phased recovery in the short-term downtrend, but the ability to stabilise near the 50-day moving average would still need to be monitored.

③ Funding and Liquidity Background

As of September 11, 2026, trading volume was approximately 5.67 million shares and estimated turnover based on the closing price was approximately HKD 204 million. The recent average volume cited in the research notes was approximately 5.67–7.57 million shares, depending on the data source and statistical period; volume on recent high-volume trading days was approximately 13–21 million shares. Public market-data sources showed single-day turnover of approximately 0.31%–0.49%; based on approximately 1.503 billion total shares and volume of 5.67 million shares, the estimate was approximately 0.38%. This represents relatively low-to-moderate turnover, and the September 11 rebound did not involve particularly strong exchange of shares. As of September 7, controlling shareholder Ma Jianrong and family members held approximately 653,976,650 shares through relevant entities, representing approximately 43.50% of issued shares. This shareholder data is subject to disclosure lag and may not fully reflect the actual holding structure on September 11. Public information indicates that institutions such as JPMorgan had previously held interests exceeding 5%, but this research did not obtain a complete and synchronously updated list of the top ten shareholders as of September 11. It therefore cannot state that public funds, social security funds or QFII remained among the top ten shareholders. The relatively high holdings of the controlling shareholder and family mean that the shares actually available for trading are smaller than total issued shares. However, given that daily turnover remained approximately HKD 204 million and turnover was approximately 0.38%, the degree of share exchange during the short-term rebound was limited. Stock Connect holdings and short-selling ratios are also subject to disclosure lags and cannot be directly equated with same-day capital flows.

A volume-confirmation signal that can be monitored is as follows: if the share price breaks above HKD 36.9 again during the coming week, with daily volume consistently exceeding approximately 8 million shares and turnover reaching approximately HKD 300 million or more, short-term fund participation could be considered materially stronger than at present. If the rebound continues on volume of approximately 5–6 million shares, the degree of confirmation would remain relatively limited.

④ Points to Monitor (Observation Framework Only, Not Trading Instructions)

• Monitor whether HKD 34.8–35.3 continues to provide short-term support and whether the strong-support area of HKD 34.0–34.9 is breached on increased volume.
• Monitor whether the closing price can decisively break through the HKD 36.3–36.9 resistance area, followed by the HKD 37.3–37.8 area.
• Monitor whether volume during an advance expands from approximately 5–6 million shares to more than 8 million shares and whether turnover reaches approximately HKD 300 million or more.
• Monitor whether MACD narrows from the negative range and whether RSI recovers from around 30 to above 40. These are observation considerations only and are not instructions to buy, sell or hold.

The above scenario analysis is based on closing data as of September 11, 2026, historical prices and technical-indicator calculations. Short-term share prices may also be affected by news, capital flows and broader-market conditions. Technical indicators are inherently lagging and limited, and do not guarantee future price movements or constitute trading advice. Investors should make independent judgments based on the latest market information and assume their own investment risks.

6. Industry Structure and Competitor Analysis

6.1 Industry Overview

The global knitted-apparel manufacturing industry is generally characterised by concentrated brands, fragmented manufacturing and an ongoing migration of supply chains toward Southeast Asia. International brands possess strong bargaining power over product design, marketing, channels and end-market pricing. Manufacturers primarily compete on cost, delivery speed, quality consistency, R&D capabilities, environmental compliance and global footprint.

6.2 Competitive Landscape

• China has a complete textile industry chain, equipment base, technology and supplier system, and retains advantages in high-end fabrics, processes, automation and supply-chain coordination.
• Garment orders continue to shift toward Vietnam, Cambodia, Bangladesh and Indonesia, where labor costs, tariffs and rules-of-origin arrangements are more attractive.
• The industry is vulnerable to brand destocking, end-market retail demand, cotton and chemical-fibre prices, exchange rates, tariffs and geopolitical developments.
• Sportswear, outdoor apparel, functional fabrics, environmentally friendly materials and fast-response supply chains are relatively attractive structural-growth segments.
• Shenzhou International’s 2025 annual report indicated that China’s textile and apparel exports remained under pressure, while Vietnam’s textile and apparel exports continued to grow. The industry is simultaneously facing trends including capacity migration to Southeast Asia, rising labor costs, uncertainty over US tariff policy and supply-chain restructuring.

6.3 Major Competitors

Compared with diversified apparel manufacturers with broader product and geographic exposure, Shenzhou International’s strengths lie in knitted sportswear, fabric–dyeing and finishing–garment integration, large-scale garment capacity and deep cooperation with core international brands. Compared with upstream fabric and dyeing-and-finishing companies, it covers a longer portion of the industry chain and has greater exposure to garment orders and customer concentration among brands. Compared with sportswear suppliers such as Eclat, Shenzhou International stands out for its integrated production scale and multi-base footprint across China, Vietnam and Cambodia, while Eclat places greater emphasis on material R&D, design development and higher-value-added products.

7. Risk Factors

• High customer and receivables concentration risk: The top five customers accounted for 86.48% of sales in 2025, while the top five accounted for 93% of trade and bill receivables at the end of 2025. If major brand customers reduce orders, extend payment terms or experience changes in credit quality, revenue, cash flow and receivables collection could all be affected simultaneously.
• Sportswear and European/US market volatility: Sportswear accounted for 67.7% of 2025 revenue, but revenue declined 10.7% year on year in the first half of 2026. Revenue from the United States and the European Union declined approximately 11.7% and 8.9%, respectively. If brand customers continue to place orders cautiously, capacity utilisation and margins could come under further pressure.
• Risk of continued gross-margin deterioration: Gross margin declined from 27.1% to 22.6% in the first half of 2026. Labor costs, chemical-fibre raw-material costs, tariff sharing and the efficiency ramp-up of overseas factories all created pressure. If the company cannot pass costs on through efficiency improvements, procurement management or customer negotiations, revenue recovery may not translate into a simultaneous recovery in profit.
• Foreign-exchange risk: Export revenue is primarily denominated in US dollars while the financial statements are presented in RMB. In the first half of 2026, the average RMB/US dollar exchange rate appreciated approximately 4%, and the net foreign-exchange result changed from a gain of RMB 126.4 million in the same period of 2025 to a loss of RMB 506.2 million. Further RMB appreciation against the US dollar could continue to compress RMB-denominated gross profit and increase foreign-exchange volatility.
• Overseas capacity-expansion execution risk: The new garment factory in Cambodia remains in the efficiency ramp-up stage, while the second fabric factory in Vietnam was still undergoing equipment installation and commissioning at the end of 2025. If equipment commissioning, recruitment, production efficiency or quality-certification progress falls short of expectations, new capacity could create short-term costs without contributing corresponding revenue and profit.
• Working-capital utilisation risk: At the end of 2025, trade and bill receivables were RMB 6.9438 billion and inventories were RMB 7.0740 billion, corresponding on a static basis to approximately 82 days of receivables turnover and approximately 113 days of cost of sales. If order cadence changes or customer delivery plans are adjusted, inventory and cash-flow pressure could increase.
• Tariff and cost-pass-through risk: In the first half of 2026, some tariff costs associated with the US market were shared by the company and customers, indicating that the company cannot fully transfer external costs to customers. Further changes in tariff policy or stronger customer bargaining power could compress gross margin further.
• Risk of downward revisions to earnings and valuation expectations: Several institutions lowered target prices or earnings forecasts after the interim results. 2026 net-profit forecasts ranged from approximately RMB 4.446 billion to RMB 5.528 billion, indicating significant market dispersion. If second-half orders or margin improvement are weaker than expected, the current valuation of approximately 8x–10x earnings may not recover quickly.

8. Conclusion and Outlook

Shenzhou International’s medium- and long-term growth drivers mainly comprise customer cooperation in knitted sportswear and functional products, supply-chain synergies from vertical integration, and gradual improvements in utilisation and production efficiency at new capacity in Vietnam and Cambodia. Casualwear and underwear both grew in the first half of 2026, indicating that the product mix has not deteriorated across the board. If sportswear orders in Europe and the United States recover in the second half, overseas capacity ramps up more effectively, and labor and raw-material pressures ease, the 2027 recovery path reflected in earnings forecasts would have a reasonable operating foundation.

Short-term earnings remain under pressure. In the first half of 2026, the decline in net profit was significantly greater than the decline in revenue, and the company has not disclosed second-half order value, gross-margin guidance or full-year earnings guidance. Institutional forecasts for 2026 net profit attributable to the parent range from approximately RMB 4.446 billion to RMB 5.528 billion, representing a wide dispersion. The market will need to verify whether order recovery, gross-margin improvement, RMB/US dollar movements, tariff sharing and production efficiency in Vietnam and Cambodia improve simultaneously.

Technically, HKD 34.8–35.3 is a reference short-term support area, while HKD 36.3–36.9 is the main reference resistance area. If the resistance area is not broken on increased volume, the share price may remain in low-level consolidation. A high-volume break below approximately HKD 34.8 could lead to another test of the area around the 52-week low. The price ranges and earnings scenarios above are observation frameworks based on the data provided and do not constitute trading advice.

Data Sources

• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0423/2026042300646.pdf
• Shenzhou International - FY24 in-line, with share gains across key customers
• Crystal International Group Limited - Regulatory Filings > Financial Reports
• Texwinca Holdings Limited
• [*

2024/25

Environmental, Social

and Governance](https://www1.hkexnews.hk/listedco/listconews/sehk/2025/0715/2025071500003.pdf?utm_source=openai)

• Investor Relations - Eclat
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0825/2026082500356.pdf
• [Annual Report

2025](https://www.hkexnews.hk/listedco/listconews/sehk/2026/0423/2026042300647_c.pdf?utm_source=openai)

• Shenzhou International (HK2313) Business Outlook_F10_10jqka
• 02313 Shenzhou International SHENZHOU INTL - Free Real-Time Stock Quote - Earnings Forecast - etnet
• Shenzhou International Group Holdings (HKG:2313) Stock Forecast & Price Targets
• Shenzhou International
• China Merchants Securities - Shenzhou International (02313.HK): 2025 profitability under pressure, steadily advancing production-efficiency improvements - 260401
• Shenzhou International Group Holdings Ltd (2313) Historical Prices - Investing.com
• 02313 SHENZHOU INTL | Underlying quotes | Hang Seng Bank
• Shenzhou International (02313) P/E | Valuation | Fundamentals - Lixinger
• Listed Company Information Title Search
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0807/2026080700424.pdf
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0825/2026082500370.pdf
• SHENZHOU INTL (2313) - Disclosure of Interests
• https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0901/2026090102989.pdf
• JPMorgan: Shenzhou International (02313) second-half orders expected to recover; target price reduced to HKD 60
• 02313.HK Shenzhou International | SHENZHOU INTL | Company Information - Earnings Forecast Overview - etnet
• https://content.etnet.com.hk/content/cpy/eng/stock_quote.php?code=2313&utm_source=openai
• Shenzhou International (2313.HK) Share Price, News, Quotes and Records - Yahoo Finance
• Shenzhou International (2313) Historical Stock Data: Historical Prices, Charts - Investing.com
• Shenzhou International (2313) Technical Analysis, Forecasts and Trading Recommendations - Investing.com
• Shenzhou International (02313) Announcements (All) - Lixinger
• Shenzhou International (HK2313) Shareholder Holdings_F10_10jqka

This report was automatically retrieved, compiled and generated by AI based on publicly available information. The information is as of the closing of the Hong Kong stock market on September 11, 2026 for the main price data; certain technical indicators, including moving averages, RSI and MACD, are as of September 10, 2026; and shareholder interests, Stock Connect and short-selling data are subject to disclosure lags and are respectively as of September 7, September 8 and August 28, 2026. Timing differences may exist. Specific data should be referenced against the company’s official announcements and authoritative data terminals. This report is for information and research reference only, does not constitute investment advice, and investors should make independent judgments and assume their own investment risks.