UBS has released a research report lowering its profit forecast for SHENZHOU INTL (02313) by 9% to 12% for the years 2026 to 2028, reflecting an anticipated slower recovery in gross margin. The target price has been reduced from HK$69 to HK$50, while the "Neutral" rating is maintained. Given a dividend yield of 5%, the stock is expected to trade within a range with limited downside potential. SHENZHOU INTL's net profit for the second half of last year fell 20% year-on-year, significantly missing the bank's and market expectations of 22% and 23%, respectively, primarily due to foreign exchange losses and a decrease in government subsidies. In terms of core business, operating profit for the latter half of the year declined 5% year-on-year, falling short of the bank's and market expectations by 10% and 14%, respectively. Sales in the second half increased 2% year-on-year, with volume rising by a mid-single-digit percentage, while the average selling price decreased by 0.8% to 0.9%. The report noted that management expects a 5% growth in production capacity by 2026, views the outlook for casual wear orders as more favorable than that for sportswear, and anticipates new customer orders in the second half of this year.