CICC has released a research report indicating it is largely maintaining its FY27 earnings forecast of RMB 1.069 billion for JNBY (03306) while introducing an FY28 projection of RMB 1.131 billion. The current share price corresponds to price-to-earnings ratios of 8.8x and 8.7x for FY27 and FY28, respectively, with the firm keeping its Outperform rating on the stock.

Given the company's steady performance, CICC has also maintained its target price of HK$24.97, which translates to 10.4x and 10.3x forward P/E ratios for FY27 and FY28, implying approximately 19% upside from current levels. Here are the key takeaways from CICC's analysis.

FY26 Results Align with Expectations

The company reported its FY26 (July 2025 to June 2026) results with revenue reaching RMB 6.05 billion, up 9.0% year-on-year, and net profit attributable to shareholders at RMB 1.0 billion, representing an 11.7% increase. These figures were in line with what the investment bank had anticipated. The company declared a final dividend of HK$1.06 per share along with a special dividend of HK$0.75 per share. Combined with the interim dividend of HK$0.52 per share, the full-year payout ratio stands at approximately 110%.

High-Value Member Base Expands, Online Channel Shows Strong Momentum

On the membership front, the number of member accounts with annual purchases exceeding RMB 5,000 grew by approximately 30,000 to over 360,000 in FY26. Breaking down by channel, direct-operated, distribution, and e-commerce revenues increased by 11%, 1%, and 21% year-on-year to RMB 2.30 billion, RMB 2.30 billion, and RMB 1.45 billion, respectively. The online channel contributed nearly half of the total revenue growth for the fiscal year.

During FY26, the company added a net 9 direct-operated stores, bringing the total to 501, while distribution stores saw a net decrease of 8 to 1,617. The company continues to optimize store locations and close underperforming outlets. By brand, JNBY, jnby by JNBY, LESS, and Croquis recorded year-on-year revenue changes of +7.6%, +6.5%, +17.4%, and -1.1%, reaching RMB 3.24 billion, RMB 880 million, RMB 730 million, and RMB 710 million, respectively. Emerging brands collectively grew 32.2% year-on-year to RMB 480 million, with their revenue contribution rising 1.4 percentage points to 7.9%.

Profitability Improves, Inventory Levels Decline

Gross margin expanded by 1.0 percentage point year-on-year to 66.6% in FY26, primarily driven by margin improvements of 2.4 and 1.5 percentage points in the online and distribution channels. The selling expense ratio increased 0.4 percentage points to 36.0%, mainly due to the higher revenue contribution from direct-operated and online channels. The administrative expense ratio rose 1.1 percentage points to 10.7%, largely attributed to increased design and R&D investment as well as higher staff compensation. Overall, the FY26 net margin attributable to shareholders improved by 0.4 percentage points to 16.5%.

On the operational side, inventory turnover days at the end of FY26 increased by 5 days to 166 days, while net inventory value declined 2.9% year-on-year to RMB 910 million.

Future Outlook

CICC believes that the company's strong member loyalty and multi-brand cultivation capabilities should support steady earnings growth. Additionally, the company's under-construction Shuangpu logistics park, with an expected construction period of 3-4 years, is anticipated to enhance product supply breadth and operational efficiency once completed.

Key Risks

Potential risks include intensifying competition, retail sales falling short of expectations, and weaker-than-anticipated member expansion and consumer purchasing power.