1H26 Results Miss with Lower Margins; Stay EW

Research evidence excerpt

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M

Update

August 20, 2026 01:39 PM GMT

Stella International Holdings Ltd | Asia Pacific

Morgan Stanley Taiwan Limited+

Terence Cheng

Equity Analyst

1H26 Results Miss with Lower

Margins; Stay EW

Morgan Stanley Asia Limited+

Lillian Lou

Equity Analyst

AlphaSignals Earnings Reaction

Unchanged

Modest shortfall

Modest revision lower

Impact to our thesis

Financial results versus consensus

Direction of next 12-month

consensus EPS

Source: Company data, Morgan Stanley Research

Stella International Holdings Ltd (1836.HK, 1836 HK)

China/Hong Kong Consumer | Hong Kong

Key Takeaways

It keeps 2026 shipment and ASP targets at flat YoY, with some improvement

Stock Rating

Industry View

Price target

Up/downside to price target (%)

Shr price, close (Aug 20, 2026)

52-Week Range

Sh out, dil, curr (mn)

Mkt cap, curr (mn)

EV, curr (mn)

Avg daily trading value (mn)

HoH in 2H26 GPM.

Fiscal Year Ending

12/25 12/26e 12/27e 12/28e

It still commits to 70% cash payout ratio, on top of US$60mn capital return to

EPS (US$)**

Prior EPS (US$)**

EPS (US$)§

Revenue, net (US$ mn)

EBITDA (US$ mn)

ModelWare net inc (US

$ mn)

P/E

P/BV

RNOA (%)

ROE (%)

EV/EBITDA

Div yld (%)

FCF yld ratio (%)**

Leverage (EOP) (%)

0.17

1,570

201

138

0.18

0.17

1,570

203

147

0.19

0.18

1,665

222

159

0.21

0.20

1,766

243

176

11.2

1.4

20.7

12.3

5.2

11.0

1.9

(38.9)

10.2

1.3

19.7

13.2

4.9

6.3

7.6

(37.8)

9.4

1.2

20.1

13.5

4.3

6.9

10.6

(39.6)

8.5

1.1

21.5

14.1

3.7

7.5

11.8

(41.9)

Stella keeps defining 2026 as a year of investments (and adjustments, in our

view)...

...with inevitable volatility in capacity utilization and one-off items, affecting

profitability.

shareholders.

However, we stay EW before apparent earnings recovery track kicks in.

1H26 details:

(=) 1H26 revenue of US$787mn grew 1.5% YoY with footwear ASP up 1.8% (higher

proportion of high-ASP sports shoes, some for the World Cup). Shipments were flat,

slightly ahead of our estimate and consensus.

(-) GPM of 20.3%, the lowest since 1H22, dropped 2.3ppt YoY, below our 22.5%

estimate and consensus of 22.7%. This reflects:

• Increased raw material costs (+6% YoY);

Equal-weight

In-Line

HK$14.50

2

HK$14.15

…