M N 14 Mar 2024 CMB International Global Markets | Equity Research | Company Update 361 Degrees (1361 HK) Resilient outlook backed by rising popularity Target Price HK$6.25 361 Degrees’s FY23 result was roughly inline but we are delighted to see its dividend payout ratio resumed to 40%. Going forward in FY24E, we are still (Previous TP HK$6.23) confident, thanks to: 1) its wholesale business nature (supported by 80%+ sell Up/Downside 36.6% through rate), 2) resilient retail sales growth (20%+ in Jan-Feb 202 ...

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 6.12 HKD, compared to the last closing price of 4.34 HKD [1][3]. Core Insights - The company's performance in 2023 exceeded expectations, with revenue reaching 8.423 billion HKD, a year-on-year increase of 21.0%, and a net profit of 961 million HKD, up 28.7% year-on-year. The dividend payout ratio was 40.2%, with a dividend of 0.204 HKD per share, slightly above expectations [1][3]. - The growth in children's clothing was particularly strong, with revenue from adult and children's clothing increasing by 17.4% and 35.7% respectively, reaching 6.33 billion HKD and 1.96 billion HKD [1][3]. - The company is expected to achieve revenue exceeding 10 billion HKD in 2024, with a projected growth rate of 15%-20% for the year [3][4]. Summary by Sections Financial Performance - In 2023, the company reported a revenue of 8.423 billion HKD, a 21% increase year-on-year, and a net profit of 961 million HKD, reflecting a 29% increase [4]. - The diluted earnings per share for 2024, 2025, and 2026 are projected to be 0.46, 0.56, and 0.65 HKD respectively, with corresponding price-to-earnings ratios of 9.1, 7.5, and 6.5 [4]. Market Position and Strategy - The company has been focusing on enhancing its core product offerings and optimizing its distribution channels, which has led to a significant increase in market share within the domestic sportswear industry [3][4]. - The report highlights the company's strategic initiatives in e-commerce and the expansion of its children's clothing line as key drivers for future growth [3][4]. Future Outlook - The company anticipates a strong start to 2024, with expectations of double-digit growth in sales driven by successful product launches and marketing strategies [3][4]. - The report projects net profits for 2024, 2025, and 2026 to be 1.162 billion HKD, 1.348 billion HKD, and 1.556 billion HKD respectively, indicating a positive growth trajectory [4].

Financial Performance - Revenue increased by 21.0% to RMB 8.42 billion[23] - Profit attributable to equity holders rose by 28.7% to RMB 960 million[23] - The company's revenue for the fiscal year 2023 reached RMB 8,423.3 million, representing a year-on-year growth of 21.0%[41] - Profit attributable to equity holders increased to RMB 961.4 million, up 28.7% compared to the previous year[41] - The gross profit margin improved to 41.1%, compared to 40.5% in 2022[35] - The operating profit margin also increased to 16.4%, up from 15.4% in the prior year[35] - The company proposed a final dividend of HKD 0.139 per share, equivalent to RMB 0.127, with a payout ratio of 40.2%[41] Business Expansion and Market Strategy - The company aims for market expansion through collaborations with well-known IPs and international sports stars[14] - The company aims to leverage the opportunities presented by the 2024 Olympic year to enhance its brand and product offerings, focusing on innovation and consumer engagement[50] - The company is focused on integrating online and offline channels to enhance retail performance and optimize operational efficiency[49] - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share by 2025[91] - The company is exploring partnerships with local brands to enhance its product offerings and reach[91] Product Development and Innovation - The company has launched new products in the competitive running segment, including professional carbon plate running shoes[14] - The company is committed to deepening research and innovation to strengthen its professional sports product offerings and enhance brand image[50] - The company continues to innovate in product technology, enhancing its competitive edge in the market[104] - The company launched the "Trajectory 4.0" and "Trajectory 5.0" series, which quickly sold out upon release, indicating strong consumer demand for new products[67] - The children's sportswear segment is experiencing rapid growth, with 361º Children's sales outlets increasing to 2,545, a net increase of 257 compared to the end of 2022[47] E-commerce and Online Sales - E-commerce business revenue grew by 38.0% to RMB 2.33 billion[23] - E-commerce sales revenue grew by 38.0% year-on-year to RMB 2,325.5 million, accounting for approximately 27.6% of total revenue[114] - During the "618" shopping festival, 361º e-commerce channels achieved a cumulative sales increase of approximately 43%[103] - The company aims to enhance brand image and sales through e-commerce platforms like Tmall and JD, while also leveraging data analytics for product development[102][104] Brand Positioning and Marketing - 361º has positioned itself as a "youth sports expert" with its children's brand, emphasizing professional functionality and health technology[6] - The company aims to enhance brand value and influence while promoting the spirit of "more love" globally[56] - The company has signed prominent athletes as brand ambassadors, including Chinese women's football player Li Mengwen and basketball player Li Yuan, to strengthen its presence in various sports[44] - The company has been recognized with multiple awards, including the Best Investor Relations Company in Hong Kong[18] Operational Efficiency and Cost Management - The debt ratio decreased to 2.2%, down from 2.4% in 2022[35] - Inventory turnover days improved to 93 days, compared to 91 days in the previous year[35] - The average wholesale price of footwear and apparel rose by 3.0% and 0.5% year-on-year, respectively, due to price adjustments and the introduction of higher-priced new products[112] - The company plans to continue diversifying its supply chain to control production costs more effectively[118] Corporate Governance and Social Responsibility - The company has complied with all relevant environmental laws and regulations, ensuring no significant waste or pollution was produced during the year[156] - Charitable donations made by the group during the year amounted to RMB 13,731,000, a decrease from RMB 14,261,000 in 2022[166] - The group has maintained good relationships with employees, suppliers, distributors, and authorized retailers throughout the year[158][159][160][161] Future Outlook - The group is optimistic about the development of the Chinese sports industry in 2024, driven by major international and domestic sports events, including the Paris Olympics[145] - The group plans to strengthen its online and offline sales channels to meet changing consumer shopping demands and experiences[145] - The group will increase investments in e-commerce to create differentiated online brand advantages while expanding and upgrading offline stores[145]

Investment Rating - The report initiates a BUY rating on 361 Degrees with a target price (TP) of HK$6.23, based on a 10x FY24E P/E ratio, indicating a potential upside of 43.5% from the current price of HK$4.34 [4]. Core Insights - The report highlights a turnaround driven by star products and sponsorships, forecasting a 16% sales CAGR and a 20% net profit CAGR from FY22 to FY25, compared to previous growth rates of 7% and 20% from FY19 to FY22 [2][27]. - 361 Degrees is positioned as the 4th-largest domestic sportswear brand in China, with a market share of 3.1% in 2022 and a robust store network of approximately 5,480 adult stores and 2,288 kids stores [2][19]. Summary by Sections Company Overview - 361 Degrees is recognized as the 4th-largest domestic sportswear company in China, established in 2003 and listed on the HKEX in 2008, with significant sales and net profit figures of RMB7.0 billion and RMB747 million in FY22 [19][23]. Key Positives and Growth Drivers - The brand's successful rebranding strategy initiated in 2019 has led to improved market share and financial performance, with retail sales growth accelerating since FY21 [27][28]. - Significant improvements in product offerings, particularly in running and basketball segments, have been noted, with a focus on R&D and innovative designs [41][53]. - The e-commerce segment has shown remarkable growth, with a sales CAGR of 23% from FY19 to FY22, and is expected to continue its upward trajectory [38][35]. Financial Forecast - Revenue is projected to grow from RMB6.96 billion in FY22 to RMB10.97 billion by FY25, with net profit expected to increase from RMB747 million to RMB1.27 billion over the same period [3][9]. - The report anticipates a P/E ratio decline from 9.0x in FY22 to 6.2x by FY25, indicating an attractive valuation compared to industry averages [3][4]. Market Position and Strategy - The company has effectively utilized sponsorships and endorsements to enhance its professional image and connect with younger consumers, which is crucial for market share expansion [59][60]. - The strategic focus on lower-tier cities has been beneficial, as these markets are expected to show resilience in consumer spending [20][22].

361度（1361 HK） | 2024年2月20日 香港股市 │消费行业 公司点评 361 度 (1361 HK) 未评级 “消费降级”趋势的受益者 股票资料 产品矩阵完善 现价 3.79 港元 成立于2003年的361度集团是集品牌、研发、设计、生产、经销为一体的综合性体育用 品公司，其产品包括运动鞋、服装及相关运动配件等。其主品牌“361º”专注提供成人 总市值 7,837 百万港元 跑步、篮球、综训及运动生活等品类的产品，主打产品包括鞋类和服饰，2022 年分别占 流通股比例 35.7 % 收入41.0%和35.2%。跑鞋产品覆盖了初阶入门、进阶突破和专业竞速等系列。公司产品 已发行总股本 2,068 百万 线还包括休闲鞋、滑板鞋、女子训练领域产品等。子品牌“361º儿童”为3-14岁儿童和 青少年提供鞋类和服装产品，收入占比 20.7%，2022 年鞋类/服饰/儿童品类收入分别同 52周价格区间 3.18 – 5.30 港元 比增长12.7%/14.0%/30.3%。 3个月日均成交额 7.90 百万港元 自研核心技术提升产品竞争力 主要股东 丁氏家族 65.4% 公司在球鞋产品上研发了减震、控制、 ...

Financial Performance - The company's revenue increased from RMB 3,653.8 million to RMB 4,311.5 million, representing an 18.0% growth[5]. - Profit attributable to equity holders rose from RMB 550.9 million to RMB 703.6 million, marking a 27.7% increase[5]. - Gross profit increased by 18.5%, from RMB 1,515.6 million to RMB 1,796.5 million[5]. - Operating profit grew by 28.6%, from RMB 771.9 million to RMB 992.8 million[5]. - The basic earnings per share increased from RMB 26.7 to RMB 34.0, reflecting a 27.3% rise[5]. - The total equity attributable to equity holders increased by 11.5% to RMB 8,860.9 million[7]. - The company reported a net profit for the period of RMB 766,245 thousand, a 27.0% increase from RMB 604,257 thousand in the prior year[145]. - Total comprehensive income for the period was RMB 769,607 thousand, up from RMB 609,866 thousand in the same period last year[145]. - The company reported a basic earnings per share of approximately RMB 703,646,000 for the six months ended June 30, 2023, compared to RMB 550,914,000 for the same period in 2022, reflecting an increase of 27.6%[171]. Market and Brand Development - The company operates 5,642 authorized retail stores in mainland China, with a total of 1,187 overseas sales outlets[9]. - 361° Group celebrates its 20th anniversary and aims to enhance brand building by leveraging its sponsorship experience in major sports events[14]. - The company has established a deep connection with the Asian Games, becoming the first Chinese sports brand to sponsor the Olympics and four consecutive Asian Games[16]. - The upcoming Hangzhou Asian Games is expected to provide significant development opportunities for the company, as it aims to strengthen its brand positioning and consumer engagement[25]. - The company emphasizes a professional, youthful, and international brand positioning to enhance its influence and drive business development[35]. - The company has signed sponsorship deals with major sports figures and events, including the national triathlon team and marathon champions, to strengthen its brand image in the running sector[47]. - The company has engaged in multi-dimensional exploration in the sports fashion sector, including a fashion show at Shenzhen Fashion Week in April 2023[49]. Product Development and Innovation - The company has launched new running shoe series "Fei Ran" 2.0 and 2.5, enhancing its professional image in the running sector, with a notable 4th place in the "Breaking 3" runner rate at the Xiamen Marathon[17]. - The company has expanded its children's sportswear segment, positioning itself as a "youth engagement expert" and maintaining a high growth trend in the children's market[20]. - The company has introduced various co-branded products targeting younger demographics, achieving strong sales performance through innovative collaborations[45]. - The company launched the upgraded "Feiran II" professional racing shoes, which won the "Best Sports Technology" award at the 9th Sports Business Annual Summit[81]. - The newly launched "Zen" series basketball shoes, including "Zen 5," incorporate advanced materials for improved performance and support[86]. - The company plans to increase R&D spending to enhance product functionality and design integration[85]. - As of June 30, 2023, the company held 406 patents, with 863 technical personnel involved in product development, including 436 in footwear[85]. Sales and Distribution - The company reported a 43% year-on-year increase in total e-commerce sales during the "618" promotional period, highlighting the effectiveness of its online retail strategy[23]. - The company aims to leverage e-commerce channels to maximize sales during online sales events, contributing to overall revenue growth[136]. - E-commerce business generated revenue of RMB 1,079.2 million, representing about 25.0% of total revenue, with a year-on-year increase of 38.0%[74]. - The company continues to expand its retail network and optimize channel structures, encouraging distributors and authorized retailers to open new stores and upgrade existing ones[40]. - The company plans to enhance its product layers and brand image while ensuring high-quality development of its business and supply chain[25]. Financial Position and Cash Flow - Cash and cash equivalents decreased by RMB 306.5 million to RMB 3,550.4 million as of June 30, 2023, compared to the end of 2022[121]. - The company's debt-to-asset ratio increased to 4.2% as of June 30, 2023, compared to 2.4% at the end of 2022[123]. - The net cash generated from operating activities was RMB 2.2 million for the six months ended June 30, 2023, a significant decrease from RMB 23.4 million in the same period of 2022[120]. - The company reported a net cash outflow from financing activities of RMB 345,836,000, compared to RMB 5,489,000 in the same period last year[151]. - The company’s trade receivables aging analysis showed that RMB 3,279,639,000 was within 90 days, compared to RMB 2,136,041,000 as of December 31, 2022, indicating a significant increase in timely collections[178]. Cost and Expense Management - The cost of sales increased by 17.6% to RMB 2,515.0 million, with internal production costs rising by 17.3% and outsourced product costs increasing by 17.8%[96]. - Selling and distribution costs rose by 25.5% to RMB 757.6 million, driven by increased advertising and promotional activities to boost sales and brand awareness[111]. - Administrative expenses increased by 16.6% to RMB 285.5 million, accounting for approximately 6.6% of total revenue, with R&D expenses rising by 22.6% to RMB 139.5 million[112][114]. - E-commerce business expenses increased by 65.5% due to the growth of e-commerce operations, with commissions and service fees paid to platforms rising to RMB 113.1 million from RMB 66.8 million[111]. Strategic Initiatives - The company continues to strengthen its brand by sponsoring national teams such as the China National Triathlon Team and the China National Women's Water Polo Team from 2020 to 2023[49]. - The company has established partnerships with various organizations, including being the official partner of the Beijing Zhonghe Guoan Youth Training from 2019 to 2024[67]. - The company is actively exploring new consumer trends and enhancing its influence among younger demographics through collaborations with designers and limited edition products[19]. - The company aims to enhance interaction with younger consumers through innovative product launches and collaborations[49].

Financial Performance - The company's revenue increased from RMB 3,653.8 million to RMB 4,311.5 million, representing an 18.0% growth[6] - Profit attributable to equity holders rose from RMB 550.9 million to RMB 703.6 million, marking a 27.7% increase[6] - Gross profit increased by 18.5%, from RMB 1,515.6 million to RMB 1,796.5 million[6] - Operating profit grew by 28.6%, from RMB 771.9 million to RMB 992.8 million[6] - The basic earnings per share increased from RMB 26.7 to RMB 34.0, reflecting a 27.3% rise[6] - The company reported a return on equity of 8.4%, up from 7.4%[8] - The company's revenue increased by 18.0% year-on-year to RMB 4,311.5 million for the six months ended June 30, 2023, compared to RMB 3,653.8 million for the same period in 2022[88] - The group reported a net profit of RMB 766.2 million for the six months ended June 30, 2023, up 27% from RMB 604.3 million in the prior year[143] - The total comprehensive income for the period, after tax, was RMB 769,607,000, up from RMB 609,866,000 in the previous year, indicating a growth of about 26%[145] Market Expansion and Brand Development - The number of authorized retail stores reached 5,642 in mainland China, with 1,187 overseas sales points[10] - 361° Group celebrated its 20th anniversary and aims to deepen brand construction by leveraging its sponsorship experience in major sports events[15] - The company has established a deep connection with the Asian Games, becoming the first Chinese sports brand to sponsor the Olympics and four consecutive Asian Games[17] - The company has opened a flagship store in Hangzhou to enhance brand visibility and engage consumers ahead of the Asian Games[17] - The company aims to enhance its brand positioning by focusing on "professionalization, youthfulness, and internationalization" to reach a broader consumer base[26] - The company has established a comprehensive distribution management system, ensuring effective communication of brand values and product features across all retail channels[38] - The company is focusing on optimizing its multi-category product matrix to meet the diverse needs of consumers in the post-pandemic era[18] Product Innovation and Development - 361° has launched new running shoe series "Fei Ran" 2.0 and 2.5, enhancing its professional image in the running sector, with a notable 4th place in the "Breaking 3" runner rate at the 2023 Xiamen Marathon[18] - The company has expanded its children's sportswear segment, positioning itself as a "youth engagement expert" and maintaining a high growth trajectory in the children's market[21] - The "Three Track" initiative has been strengthened, with the establishment of the first national "Three Track Club" in Xiamen, enhancing brand influence among serious and elite runners[20] - The company has increased its investment in basketball, signing new ambassadors and launching youth training camps to foster interest in the sport among young people[18] - 361° has introduced a new series of skateboarding shoes in collaboration with a champion skateboarder, marking its entry into the skateboarding market[20] - The company continues to innovate in product design through collaborations with popular IPs, resulting in strong sales performance from co-branded products[45] - The company launched new professional running shoes, including the "Fei Ran II," which won the "Best Sports Technology" award at the 9th Sports Business Annual Summit[81] E-commerce and Digital Strategy - The company's e-commerce channel saw a cumulative revenue growth of approximately 43% during the "618" shopping festival[24] - The e-commerce strategy includes leveraging platforms like Tmall, JD.com, and Douyin to enhance brand visibility and sales[76] - The company aims to accelerate digital transformation in e-commerce, driven by big data to enhance business development[76] - The company is leveraging new social platforms like WeChat Mini Programs and Douyin to enhance consumer experience and expand market reach post-pandemic[38] Financial Health and Investment - Non-current assets decreased by 4.2% to RMB 1,104.2 million, while current assets increased by 4.5% to RMB 11,793.7 million[8] - The debt ratio increased from 2.4% to 4.2%, indicating a rise in leverage[8] - The company allocates 10% to 12% of its annual revenue for brand promotion and marketing, focusing on international sports events and national teams to enhance brand visibility[45] - The company plans to enhance its R&D spending to strengthen product upgrades and combine functionality with design[85] - The company is committed to integrating sustainable elements into product design, aligning with the national "dual carbon" goals and responding to consumer demand for low-carbon products[32] Sales Performance and Consumer Trends - During the May Day holiday, retail sales of the 361° main brand increased by 47% year-on-year, while retail sales of the 361° children's brand surged by 72%[24] - The rise of the "Guochao" trend is providing significant opportunities for local sports goods companies, driven by increased consumer confidence and cultural pride[32] - The company focuses on the mass market, providing high-performance products for running, basketball, and fitness, while also targeting the youth sports market through its children's brand[36] - The company successfully implemented marketing strategies to diversify its product range, targeting different age groups within the youth demographic[90] Operational Efficiency - The company is focused on optimizing supply chain and logistics costs to improve operational efficiency and maintain profitability in a conservative consumer environment[38] - The average turnover period for inventory improved to 86 days from 91 days, attributed to the ongoing development in the sports industry and proactive order fulfillment by distributors[127] - The average operating cycle increased to 129 days, up from 117 days as of December 31, 2022, mainly due to a decrease in the turnover period for trade payables and notes payable[127] Corporate Governance and Management - The total employee compensation for the group was RMB 305.6 million, accounting for 7.1% of total revenue[133] - The total remuneration for key management personnel was RMB 17,369,000 for the six months ended June 30, 2023, slightly up from RMB 16,807,000 in the same period last year[194] - The company has engaged multiple brand ambassadors, including Cheng Qianyu, who achieved notable placements in recent marathons[56] - The company plans to continue expanding its market presence and investing in new product development to drive future growth[166]

Revenue Growth - Revenue increased by 17.3% to RMB 6.96 billion[24] - Children's business revenue grew by 30.3% to RMB 1.44 billion[24] - E-commerce business revenue rose by 37.3% to RMB 1.69 billion[24] - The company's revenue for the year reached RMB 6.96 billion, representing a year-on-year growth of 17.3%[35] - Profit attributable to equity holders was RMB 750 million, an increase of 24.2% compared to the previous year[35] - The group's revenue increased by 17.3% year-on-year to RMB 6,960.8 million, with the core brand contributing 77.6% of total revenue[78] - The children's business revenue grew by 30.3% year-on-year to RMB 1,442.2 million, accounting for 20.7% of total revenue[79] - E-commerce sales revenue rose by 37.3% year-on-year to RMB 1,685.4 million, representing 24.2% of total revenue[79] Profitability and Margins - Profit attributable to equity holders increased by 24.2% to RMB 747.1 million, with basic earnings per share rising to RMB 36.1 cents[29] - Gross profit margin for 2022 was 40.5%, compared to 41.7% in 2021[29] - Operating profit margin decreased to 15.4% from 18.3% in the previous year[29] - Gross profit recorded at RMB 2,820.6 million, with a gross margin decline of 1.2 percentage points to 40.5%[84] - The gross margin for footwear decreased from 43.1% to 41.2%, primarily due to increased production costs from outsourcing more orders to OEMs[84] - The gross margin for accessories decreased by 2.4 percentage points to 36.0% due to changes in product mix and increased production costs[86] - The gross margin for 361º children's business decreased by 0.3 percentage points to 40.9%[86] Store and Outlet Expansion - The number of retail stores in mainland China reached 5,480[24] - The total number of international sales outlets is 1,192[27] - As of December 31, 2022, the total number of 361º brand stores reached 5,480, representing a net increase of 210 stores compared to the previous year[53] - Approximately 76.3% of the stores are located in third-tier and below cities in China, while 4.6% and 19.1% are in first-tier and second-tier cities, respectively[53] - The ninth-generation image stores increased to 2,664, accounting for 48.6% of total stores, with a year-on-year growth of 20.4%[53] - As of December 31, 2022, there were 2,288 sales outlets for 361º Children's products, a net increase of 392 outlets compared to the previous year[64] - The number of fourth-generation image stores for 361º Children increased to 1,642, accounting for 71.8% of total stores, representing a growth of 26.4% year-on-year[64] Inventory and Supply Chain Management - The inventory turnover days decreased to 91 days from 111 days, indicating improved inventory management[31] - The company has implemented a systematic order management model to ensure smooth supply, transparent inventory, and stable retail prices[52] - The company is actively optimizing its supply chain and logistics costs to enhance operational efficiency in the post-pandemic era[52] - The average inventory turnover period increased to 91 days from 87 days in 2021, with 89.9% of inventory being finished goods, primarily for winter 2022 and spring 2023 products[97] - The proportion of internally produced footwear and apparel decreased to 33.0% from 44.2%, while outsourced products increased to 67.0% from 55.8%[82] Marketing and Brand Strategy - The company is focusing on enhancing brand value through digital transformation and optimizing customer experience across online and offline channels[36] - The company has established a strong partnership with the Asian Games, enhancing its brand visibility and international influence[37] - The company is deepening its dual-driven strategy of "professional sports + sports fashion," focusing on core product categories like running and basketball[38] - The brand's marketing strategy includes leveraging the influence of global ambassadors to engage younger demographics and expand its market presence[39] - The company allocates 9% to 11% of annual revenue for brand promotion and marketing, focusing on sponsorship of major international sports events[56] Research and Development - The introduction of innovative products, such as the "CQT Carbon Critical Technology" and new shoe models, reflects the company's commitment to research and development, enhancing its long-term value[43] - R&D expenditure accounted for 3.8% of total revenue for the year[74] - The company launched the "Fei Biao" racing shoes in March 2022, featuring the largest carbon plate structure among competitors, enhancing stability and propulsion[74] - The "CQT Carbon Critical Technology" allows for a propulsion rate exceeding 75% and an energy return rate of over 88%[76] - The company has established a dedicated research department for jump rope sports, focusing on advanced technologies like infrared tracking and high-speed imaging[67] Corporate Social Responsibility - The company donated over RMB 20 million in cash and supplies to support pandemic relief efforts, demonstrating its commitment to social responsibility[43] - Charitable donations made by the group during the year amounted to RMB 14,261,000, up from RMB 13,666,000 in 2021[120] - The company has complied with all relevant environmental laws and regulations, ensuring no significant waste or pollution was produced during the production process[110] - The company has taken measures to ensure effective resource utilization, energy saving, and waste reduction in its operations[110] Financial Health and Cash Flow - The total current assets amounted to RMB 11.28 billion, up from RMB 10.08 billion in the previous year[31] - The current ratio improved to 3.9, compared to 3.8 in the previous year, indicating better short-term financial health[31] - Net cash inflow from operating activities was RMB 380.3 million, with cash and cash equivalents totaling RMB 3,860.4 million as of December 31, 2022[93] - The company's asset-liability ratio as of December 31, 2022, was 2.4%, compared to 1.8% in the previous year[96] - The group continued to invest significantly in R&D, maintaining R&D expenses between 3% and 4% of total revenue[90] Future Outlook - The future outlook emphasizes the importance of the sports industry in economic growth, with a focus on professionalization, youth engagement, and internationalization of the brand[44] - The company anticipates that the sports industry will enter a golden period of high-quality development, driven by economic recovery and major international sports events in 2023[101] - The company plans to enhance its omnichannel sales strategy by improving online and offline collaboration, aiming to boost overall sales efficiency[101] - E-commerce is expected to be a major growth driver, with the company exploring new retail channels and leveraging WeChat mini-programs for online and offline synergy[101] Governance and Compliance - The company has adopted high standards of corporate governance, focusing on board quality, effective internal controls, and accountability to shareholders[146] - The company has complied with the corporate governance code and principles, emphasizing risk management and timely communication with shareholders[147] - The audit committee's responsibilities include reviewing the effectiveness of the external auditor and monitoring the integrity of financial reports[163] - The company has implemented a whistleblowing and anti-corruption policy to ensure compliance and ethical conduct[164] Employee Engagement and Culture - The company conducted 6 cultural training sessions for new employees in 2022, achieving a 100% pass rate in cultural competency tests[151] - The company has implemented a corporate culture manual and conducted a knowledge competition with 4,558 valid responses, indicating strong employee engagement[151] - The total employee compensation for the year ended December 31, 2022, was RMB 681.2 million, accounting for 9.8% of the company's revenue[100] - The company has a total of 7,441 full-time employees in China as of December 31, 2022[100]

Group 1 - The company released a large multimodal model, GPT-4, on March 14, which can process image content and has improved accuracy compared to the previous ChatGPT model [1]

Revenue Growth - Revenue increased by 17.3% to RMB 6.96 billion[24] - The company's revenue for the year ended December 31, 2022, reached RMB 6.96 billion, representing a year-on-year growth of 17.3%[35] - The children's business recorded revenue of RMB 1,442.2 million, contributing approximately 20.7% to the group's total revenue, with a year-on-year growth of 30.3%[63] - E-commerce revenue grew by 37.3% to RMB 1.69 billion[24] - E-commerce sales revenue reached RMB 1,685.4 million, accounting for approximately 24.2% of total revenue, with a year-on-year increase of 37.3%[70] - The international business recorded revenue of RMB 123.6 million, accounting for about 1.8% of total revenue, with a year-on-year growth of 37.6%[69] - The revenue breakdown by product shows adult footwear at RMB 2,853.6 million (41.0% of total revenue), apparel at RMB 2,447.5 million (35.2%), and children's products at RMB 1,442.2 million (20.7%), with significant growth in children's products at 30.3% year-over-year[78] Profitability - Profit attributable to equity holders increased by 24.2% to RMB 0.361 per share[24] - Profit attributable to equity holders was RMB 747.1 million, an increase of 24.2% compared to the previous year[35] - Gross profit margin for 2022 was 40.5%, slightly down from 41.7% in 2021[35] - The operating profit margin decreased to 15.4% from 18.3% in the previous year[35] - Other income rose to RMB 414.9 million in 2022 from RMB 354.1 million in 2021, driven by interest income and government subsidies[85] Retail Expansion - The total number of retail stores in mainland China reached 5,480[24] - The company has over 8,000 retail outlets globally[6] - The total number of authorized retail stores in the western region is 1,247[28] - The total number of authorized retail stores in the northern region is 2,631[28] - The total number of authorized retail stores in the eastern region is 998[28] - As of December 31, 2022, the total number of 361º brand stores reached 5,480, a net increase of 210 stores compared to the previous year[53] - Approximately 76.3% of the stores are located in third-tier and below cities in China, while 4.6% and 19.1% are in first-tier and second-tier cities, respectively[53] Digital Transformation and E-commerce - The company plans to enhance consumer experience and brand value through digital transformation and channel expansion[36] - E-commerce business is rapidly developing, driven by effective product planning and operational efficiency, with collaborations on platforms like Tmall and JD.com[43] - The company is leveraging digital platforms like "You Yan You Du" mini-program, Pinduoduo, Douyin, and Xiaohongshu to enhance consumer experience post-pandemic[52] - The group plans to enhance its online sales platform, aiming for a 30% increase in e-commerce revenue[193] Innovation and Product Development - The company introduced innovative products utilizing "CQT Carbon Critical Technology," promoting a green low-carbon concept and expanding its research and innovation boundaries[43] - The group has established a dedicated research and development department for jump rope sports, focusing on advanced technologies such as infrared tracking and high-speed imaging[67] - The company has obtained 295 patents, indicating a strong focus on innovation and product differentiation[74] - The introduction of new products like "Fei Ran II" and "AG3 PRO" aligns with the company's commitment to green low-carbon development[74] Corporate Social Responsibility - The company donated over RMB 20 million in cash and supplies to support pandemic control efforts, demonstrating its commitment to social responsibility[43] - Charitable donations made by the group during the year amounted to RMB 14,261,000, up from RMB 13,666,000 in 2021[118] - The group emphasizes its dedication to providing high-performance sports products while fulfilling its social responsibilities as a national enterprise[48] Market Trends and Economic Context - In 2022, China's GDP reached RMB 12,102.07 billion, with a year-on-year growth of 3.0% despite the pandemic's impact[46] - The total retail sales of consumer goods in China amounted to RMB 43,973.3 billion in 2022, a slight decline of 0.2% year-on-year, while online retail sales grew by 4.0%[46] - The Chinese sports industry is supported by multiple government policies, enhancing its development and contributing to economic recovery[47] - The 2022 Beijing Winter Olympics and other major sports events have boosted national confidence and stimulated sports consumption[48] Corporate Governance and Management - The board of directors is responsible for overall business management, including strategy formulation, performance evaluation, and ensuring the accuracy of financial statements[151] - The company has established a diverse board with members possessing extensive industry knowledge and strategic planning experience[155] - The company has adopted corporate governance principles focusing on risk management, internal controls, and effective communication with shareholders[145] - The independent non-executive directors confirmed compliance with the non-competition agreement as of December 31, 2022[138] Future Outlook and Strategic Plans - The company aims to deepen its brand positioning of "professionalization, youthfulness, and internationalization" to enhance product quality and brand value[48] - The group anticipates a significant release of pent-up sports consumption demand in 2023, driven by economic recovery and major international sports events[99] - The company plans to continue investing in its e-commerce system and marketing efforts to capitalize on the shift towards online shopping[77] - The company aims to enhance its product upgrade plan, expecting an increase in R&D spending[74]