- We reiterate our BUY rating for STK despite cutting our target price (TP) by 15% as we reduce our 2024F/25F/26F NPAT by 27%/21%/16%, respectively, which is partly offset by rolling our TP horizon from mid-2024 to end-2024 and raising our target P/E from 8x to 10x.

- Management expects Q4 2023 business results to be similar to Q3 2023, delaying its expectation for a recovery due to weak demand. While most brand owners’ inventory levels are now healthy, concerns over weakening consumption continue to dampen new orders.

- STK and its fabric customers are expanding capacity to prepare for potential orders relocated from China. Discussions with brands are ongoing but new orders have not yet materialized. 

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