LAI YIH (6890.TW) Model Update

We update our model to factor in 3Q26 results and full financials. 3Q earnings came as a miss dragged mostly by larger opex and higher non-op loss, offsetting better GPM. Looking into 4Q26E, we expect sales to grow 24% q/q reflecting the stronger seasonality and GPM to expand 1.7ppt q/q to 17.6%, driven by larger shipment of HOKA products. The preliminary sales outlook for 2027E shared by mgmt is to grow at high single digit to low teens y/y with HOKA remaining the key driver while Adidas and Converse being flat y/y. We lower our earnings estimates 9-13% for 2026-2028E mainly reflecting higher opex assumptions. We also slightly trim our TP to NT$160 (from NT$177) based on 13x 4Q26-3Q27E EPS, slightly down from 13.5x reflecting still high inventory level of footwear resulting in slower order recovery. We remain on the sidelines in view of lack of positive catalysts in sight.