Stella International (1836) H2 2025 earnings summary

Executive summary

• Revenue grew 1.6% year-over-year to US$1,570.2m, with shipment volume up 3.8%, led by the Sports category, but ASP declined 2.5%.

• Net profit declined 19.5% year-over-year to US$137.0m, reflecting macroeconomic headwinds and ramp-up costs in Indonesia and the Philippines, with net profit margin at 8.7%.

• Operating profit margin decreased to 9.5% from 11.9% due to efficiency issues, tariff impacts, and higher R&D costs.

• Maintained a strong net cash position of US$367.4m, supporting future expansion and declared total dividends of HK145 cents per share, including a special dividend.

• Acquired a high-end handbag factory in Vietnam to strengthen the luxury and fashion segment and support future growth in accessories.

Financial highlights

• Gross profit margin fell to 21.8% from 24.9% year-over-year, with gross profit at US$342.3m.

• Adjusted net profit (excluding Lanvin Group investment) dropped 20% to US$137.0m; adjusted net profit margin was 8.7%.

• EPS decreased 21.3% to US$16.6; basic EPS was HK1.29 (US$0.1655), down from HK1.65 (US$0.2113) last year.

• Total full-year dividend per share was 145 HK cents, down 15.2% year-over-year, including interim, final, and special dividends.

• Cash flows from operating activities declined 26.2% to US$194.8m; cash and cash equivalents at year-end were US$373.3m.

Outlook and guidance

• 2026 is positioned as an investment year, focusing on ramping up three new factories in Indonesia, Bangladesh, and Vietnam, adding 20m pairs of capacity.

• Profit after tax CAGR targeted at high single digits for 2026–2028, with backend-loaded net income growth expected.

• Continued commitment to return up to US$60m annually to shareholders through special dividends and share repurchases.

• Handbag business targeted as a new growth engine, with emphasis on operational excellence, cost efficiency, and shareholder returns.

• Expect ongoing macroeconomic and tariff headwinds, but strong demand from Sports and high-end Fashion customers.