Daiwa has reiterated its "Buy" rating on Shenzhou International (02313), citing attractive current valuation despite short-term headwinds. The target price was lowered from HK$79 to HK$73. The company's performance in the second half of 2025 fell below expectations, with revenue growing 2.2% year-on-year, while gross margin declined by 1.8 percentage points to 25.6%, a two-year low. This was significantly weaker than market expectations for broadly stable margins. Daiwa attributed the margin miss primarily to tariffs, appreciation of the renminbi, rising labor costs, and inefficiencies. Looking ahead to 2026, the brokerage noted that order momentum remained weak in January-February but improved in March. It forecasts mid-single-digit percentage growth in full-year sales volume, with average selling prices expected to see a slight year-on-year decline due to renminbi appreciation and ongoing adjustments by key customers Nike and Puma.