Shein Global (0625.HK): Waiting for the dust to settle; initiate with Underperform

We initiate coverage on Shein (0625.HK) at Underperform with a PO of HK$29 (price HK$32.94). Shein is a scaled global online fashion and lifestyle platform reaching c.160 markets with 273mn active customers and 2025 net revenue of US$41.8bn, ranking No.3 in the global fashion industry. Its vertically integrated 1P model, backed by the proprietary LATR system and 7,500+ contract manufacturers, enables small-batch launches and replenishment in as few as five days, forming a durable moat. However, earnings visibility is low given large scale but thin margins and regulatory/tariff uncertainty amid geopolitical tensions, and rising regulatory complexity is eroding its cost advantage. The company is responding with regional warehouses, localized sourcing, product mix upgrades and continual LATR enhancement, which should buffer the top line but raise fixed costs, working capital and execution complexity. We expect 2026 to remain under pressure with largely flat revenue and a recent-year low a