Investment Rating - The report assigns a "Buy" rating for the company, indicating a positive outlook based on product development and channel innovation driving performance growth [5][8]. Core Insights - The company is positioned as a leading player in the domestic sports apparel market, with ongoing channel upgrades and sustained investment in research and development enhancing brand strength and operational efficiency [8]. - The forecasted net profit for the company is expected to grow from 1.315 billion RMB in 2025 to 1.670 billion RMB by 2027, reflecting year-on-year growth rates of 14.50%, 12.75%, and 12.63% respectively [6][8]. Summary by Sections Market Performance - As of June 27, 2025, the closing price is HKD 4.99, with a market capitalization of HKD 10,317.73 million and a debt-to-asset ratio of 26.72% [3]. Financial Forecast and Valuation - Revenue projections for 2025-2027 are 11,540.03 million RMB, 13,113.23 million RMB, and 14,773.90 million RMB, with corresponding growth rates of 14.56%, 13.63%, and 12.66% [6][8]. - The company’s price-to-earnings ratio is forecasted to decrease from 9.85 in 2023 to 5.67 by 2027, indicating an attractive valuation compared to peers [6]. Investment Logic - The company is leveraging traditional store upgrades and the introduction of "super stores" to capture the attention of new-generation consumers, which is expected to drive revenue growth [10]. - Continuous investment in research and marketing is enhancing the brand's professional image and recognition among target demographics [10]. - A stringent supply chain selection process is expected to improve operational efficiency [10]. Company Overview - The company has been deeply involved in the sports apparel sector for over 20 years, enhancing its brand image through partnerships with major international sporting events [15]. - The company’s revenue and gross profit have shown consistent growth, with 2024 revenue reaching 10.1 billion RMB, a year-on-year increase of 19.59% [18]. Channel and Product Upgrades - The company is focusing on channel upgrades, with a total of 7,115 stores globally by 2024, reflecting a 1.73% year-on-year increase [49]. - The children's business segment is growing rapidly, with revenue contribution increasing from 18.20% in 2020 to 23.20% in 2024 [61]. - Online sales are also on the rise, with a 12.21% increase in revenue from online channels in 2024 [64]. Market Trends - The global sports apparel market is expected to grow at a compound annual growth rate (CAGR) of 7% from 2023 to 2027, with emerging markets driving significant growth [32]. - The domestic sports apparel market is projected to reach 598.9 billion RMB by 2025, with a CAGR of 11.62% from 2021 to 2025 [33].

Market Overview - The market experienced a strong performance yesterday but faced a quick decline today, with the Hang Seng Index closing down 0.61% [1] - UBS warned that the current short squeeze in the US stock market may be nearing its end, with their tracked short squeeze index rising 43% recently [1] - Apollo Global's chief economist predicts a slowdown in US GDP growth to 1.2% by 2025, with inflation remaining around 3% and unemployment potentially rising to 4.4% or higher [1] Economic Indicators - Concerns were raised by Jerome Powell regarding the reliability of economic data collected by US government agencies, suggesting potential overestimations due to budget cuts [1] - The Hong Kong Monetary Authority bought HKD 94.2 billion (approximately RMB 86.13 billion) to support the currency, indicating liquidity tightening in the market [2] Sector Performance - The securities sector failed to maintain its upward momentum, with leading firms like Guotai Junan International seeing a drop of over 4% [3] - The Hong Kong government announced a new policy to promote digital assets, aiming to position the city as a global innovation hub in this field [3] - Consumer sectors are gaining attention, with the "Hong Kong Happy Shopping Festival" set to offer over HKD 1.9 billion in discounts, attracting significant participation from brands [5] Company Developments - Rongchang Bio announced a deal with VorBio for USD 125 million in cash and warrants, but the market reacted negatively, viewing the price as too low [4] - Li Ning's major shareholder has been increasing their stake, which is expected to support the company's operational stability [8] - Li Ning's revenue from running products is projected to grow by 25% in 2024, with core categories like running, basketball, and training accounting for 64% of retail revenue [9] Stock Movements - Stocks in the aviation sector are expected to rise due to increased ticket bookings for the summer travel season, with domestic bookings up about 5% year-on-year [7] - The military sector saw gains following comments from Trump regarding potential conflicts, with companies like China Shipbuilding Defense and AVIC rising over 6% and 1.68% respectively [6] - The weakening US dollar has led to a rise in commodity stocks, with companies like Minmetals Resources and China Hongqiao seeing increases of over 4% [5]

Core Viewpoint - The Shanghai Consumer Protection Commission conducted a comparative test on 30 models of children's multifunctional scooters, revealing that 12 samples did not meet safety standards, raising concerns about the safety and reliability of various brands including 361 Degrees and Flying Pigeon [1][2][3]. Group 1: Test Results - 12 out of 30 samples failed to meet safety standards, with issues related to handlebar strength, gaps, and mechanical accessibility [2][3]. - 11 samples had failed locking mechanisms for the handlebar, posing a risk of accidents during use [3][5]. - 4 samples had gaps in the wheels and moving parts that could pinch fingers, including models from 361 Degrees and Easywalker [5][6]. Group 2: Specific Brand Issues - 361 Degrees scooters showed a risk of handlebar locking device failure, which could lead to falls or injuries during high-speed use [3][12]. - Flying Pigeon scooters had issues with handlebar looseness, which could expose sharp edges and increase the risk of injury [7][14]. - A sample from the brand "Ruitong" had packaging that was too thin, posing a suffocation hazard for children [9][10]. Group 3: Compliance with Upcoming Standards - 22 out of 30 samples did not comply with the upcoming national standard regarding the distance between the front wheels and the scooter body, which should be less than 25mm or greater than 45mm [11]. - The report emphasizes the need for manufacturers to address these safety concerns and improve product designs to meet the new standards [11]. Group 4: Company Responses - 361 Degrees stated they were unaware of the test results and would report the findings to relevant personnel for further investigation [12]. - Flying Pigeon also claimed ignorance of the test results and indicated they would follow up with additional information [14].

Summary of 361 Degrees Conference Call Company Overview - **Company**: 361 Degrees - **Industry**: Sportswear and Apparel Key Points and Arguments 1. Sales Performance and Market Trends - In Q1 2025, orders showed low single-digit growth, with April orders being lower due to pre-holiday consumption patterns. Consumer spending has shifted more towards travel [2][3] - Offline sales remained stable during the May Day holiday, while online channels experienced a strong growth of nearly 40% [2][3] - The discount rate at retail terminals was around 30%, with inventory turnover ratio stable at 4.5 to 5 times [2][3] 2. Impact of Tariffs and Pricing Strategy - The impact of US tariffs on terminal consumption was not significant, as the US market contributed less than 2% to total revenue. The release of upstream OEM capacity has improved domestic brands' bargaining power [2][7] - New product prices are expected to remain stable in 2025, with growth in orders primarily driven by demand for sports equipment in lower-tier cities [2][8] 3. Development of Super Stores - Since the opening of the first super store in December 2024, nearly 30 stores have been established, with plans to increase to over 40 by the end of June and 80-100 by year-end [4][5] - Super stores offer a one-stop shopping experience with a wide range of products, catering to various consumer needs [4][6] 4. Product Mix and Consumer Engagement - The product mix in super stores includes high-end products, mid-range new items, and discounted seasonal products, with a multi-tier pricing strategy to meet diverse consumer demands [6] - The company is preparing for an investor open day to showcase the new consumption model [5] 5. E-commerce and Profitability - E-commerce channels have a higher gross margin but face significant discounting, leading to lower net profit margins compared to offline sales. E-commerce contributed 26% to revenue in 2024, with expectations for future growth [2][22] - The average discount for new products online is between 40% to 50%, influenced by promotional activities [23] 6. Future Outlook and Growth Projections - The company maintains a sales revenue growth guidance of 10% to 15% for 2025, with confidence in achieving this target based on current order trends [12][13] - The company plans to enhance brand and product operations to improve market valuation, which is currently perceived as low compared to industry averages [24] 7. Consumer Behavior and Product Feedback - Consumers are increasingly favoring travel-related spending, impacting retail sales growth. However, the company’s product quality improvements have led to high consumer satisfaction [3][14] - Popular products include the Flyburn 4 running shoes and the Joker One basketball shoes, indicating strong market demand [18] 8. Inventory Management and Discounts - The average discount rate in super stores is slightly below 30%, ensuring competitive pricing without significant inventory issues [17] - The company is considering launching exclusive products for super stores to attract consumers [20][21] 9. Marketing Strategies - The company has set specific goals for the 618 shopping festival, focusing on targeted marketing and promoting key product lines [15] 10. Overall Market Competition - The competitive landscape remains intense, with both international and domestic brands vying for market share. The company leverages its R&D investments to maintain product appeal and consumer loyalty [3][11] This summary encapsulates the key insights from the conference call, highlighting the company's performance, strategic initiatives, and market dynamics.

Group 1 - 361 Degrees International Limited announced that six shareholders established family trusts to transfer approximately 65.60% of the company's equity, reflecting a shift in wealth inheritance concepts among Chinese family businesses [1] - The establishment of family trusts is part of a broader trend in China, with the recent implementation of equity trust property registration in Beijing, indicating the growth of domestic family trust services [1] - A recent case in Beijing involved a family trust set up by Mr. Xu to address family business issues, allowing him to gradually participate in decision-making while his parents retained control, ensuring a smooth transition [1] Group 2 - The trust structure provides strong protection for family business equity, allowing efficient completion of capital increases or equity transfers while isolating family business equity from personal debts [2] - The 2024 Hurun Wealth Report indicates that there are 5.128 million affluent families with assets of 6 million yuan in China, with 206,600 high-net-worth families and 130,000 ultra-high-net-worth families, highlighting the demand for wealth management and inheritance solutions among high-net-worth individuals [2] - Family assets are identified as core and challenging to inherit, making family trusts a suitable solution for entrepreneurs [2] Group 3 - Family trusts are rapidly developing as a key tool for wealth management and inheritance among high-net-worth individuals, with significant growth reported by various trust companies [3] - For instance, Jianxin Trust reported a family wealth management scale of 125.5 billion yuan in 2024, an 11% increase from the previous year, while Ping An Trust's family trust scale exceeded 50 billion yuan, serving over 2,800 clients [3] - When selecting a family trust service provider, factors such as the trust company's stability, asset allocation capabilities, and family affairs management abilities should be considered [3]

Core Insights - The apparel industry in China is experiencing a slowdown in growth, with retail sales of clothing reaching 1,071.62 billion yuan in 2024, reflecting a mere 0.1% increase year-on-year, a significant decline of 15.3% compared to 2023 [1] - Among 25 selected publicly listed companies in the apparel sector, only 7 reported increases in both revenue and net profit, while 10 companies experienced declines in both metrics [1][2] Revenue and Profit Overview - In 2024, 15 companies reported a decline in net profit, and 13 saw a decrease in revenue. Notably, 10 companies experienced declines in both revenue and net profit [2] - Companies with declining performance include: - Baoxini: Revenue of 5.153 billion yuan, down 1.91%; net profit of 495 million yuan, down 29.07% [2][3] - Hailan Home: Revenue of 20.957 billion yuan, down 2.65%; net profit of 2.159 billion yuan, down 26.88% [2][3] - Sanfu Outdoor: Revenue of 800 million yuan, down 5.45%; net profit loss of 21 million yuan, down 158.83% [2][3] - Anzheng Fashion: Revenue of 2.034 billion yuan, down 6.23%; net profit loss of 124 million yuan, down 365.03% [2][3] - Aimer: Revenue of 3.163 billion yuan, down 7.71%; net profit of 163 million yuan, down 46.56% [2][3] Losses and Underperformance - Six companies reported losses, including: - Ge Li Si: Loss of 310 million yuan [4][5] - Sanfu Outdoor: Loss of 21 million yuan [4][5] - Anzheng Fashion: Loss of 124 million yuan [4][5] - Xinhe Shares: Loss of 67 million yuan [4][5] - Meibang Clothing: Loss of 195 million yuan [4][5] - Annai: Loss of 115 million yuan [4][5] Performance Rankings - The top three companies in revenue growth are: - 361 Degrees: 19.6% growth [7] - Tanshan: 14.44% growth [7] - Anta Sports: 13.6% growth [7] - The bottom three in revenue growth are: - Meibang Clothing: -49.79% [7] - Annai: -20.7% [7] - Xinhe Shares: -20.1% [7] Net Profit Growth Rankings - The top three companies in net profit growth are: - Urban Beauty: 197% growth [9] - Anta Sports: 52.4% growth [9] - Tanshan: 48.5% growth [9] - The bottom three in net profit growth are: - Meibang Clothing: -715.45% [9] - Ge Li Si: -392.99% [9] - Anzheng Fashion: -365.03% [9]

Investment Rating - The investment rating for the company is "Buy" and is maintained [8]. Core Views - The company reported a robust retail operation data for Q1 2025, with offline retail sales growth of 10%-15%, children's clothing sales growth of 10%-15%, and e-commerce sales growth of 35%-40%, outperforming peers [6][8]. - The company has maintained a stable discount and inventory level, with an estimated discount rate of around 70% and a stock-to-sales ratio of 4.5-5 months [8]. - The company has opened 10 super stores, each with an area of no less than 800 square meters, which are expected to contribute to future retail growth through high-quality products and enhanced shopping experiences [8]. - The company anticipates strong performance in the 2025 ordering session, with a high certainty of revenue growth for the year. The product matrix and product strength are expected to continue improving, with ongoing channel structure optimization [8]. - The company is projected to achieve net profits of 1.31 billion, 1.48 billion, and 1.65 billion yuan for 2025-2027, with corresponding P/E ratios of 6, 5, and 5 times, significantly lower than other sports goods companies [8][10]. Summary by Sections Retail Performance - The company reported a year-on-year growth of 10%-15% in offline retail and children's clothing sales, and a 35%-40% increase in e-commerce sales for Q1 2025, leading the industry [6][8]. Inventory and Discount Management - The company maintains a stable discount rate of approximately 70% and a stock-to-sales ratio of 4.5-5 months, indicating effective inventory management [8]. New Store Development - The establishment of 10 super stores is expected to enhance retail performance by providing high-quality products and improved shopping experiences [8]. Financial Projections - The company forecasts net profits of 1.31 billion, 1.48 billion, and 1.65 billion yuan for 2025-2027, with P/E ratios significantly lower than industry peers, indicating a strong investment opportunity [8][10].

Core Insights - The China Guardian Spring Auction 2025 features nearly 6,800 art pieces, including significant works by renowned artists such as Zhang Daqian and Qi Baishi [1][2] - The auction is divided into two phases, with the first phase focusing on 20th and contemporary art, antiques, jewelry, and more, while the second phase will highlight Chinese calligraphy, rare books, and coins [1][2] Group 1: Auction Details - The first phase of the auction runs from May 7 to May 13, showcasing categories like contemporary art, porcelain, and jewelry [1] - The second phase will take place from May 21 to May 28, featuring Chinese paintings, rare books, and collectibles [1] Group 2: Featured Artists and Works - Notable works in the 20th-century art section include Wu Dayu's "Soul of Flowers" and several pieces by Wu Guanzhong, such as "Parrot Paradise" [1][2] - The auction also includes significant Western artworks, such as Francis Bacon's "Portrait I" and Andy Warhol's iconic portraits [2] Group 3: Chinese Modern and Contemporary Art - The modern and contemporary Chinese painting section will present 1,260 pieces, including Zhang Daqian's "Eclipse" and works by Qi Baishi [2] - The auction commemorates the 160th anniversary of Huang Binhong with six of his works, including "Traveling on the Shu River" [2] Group 4: Ancient Chinese Art - The ancient Chinese painting section features over 400 pieces, including works by Qiu Ying and the Yongzheng Emperor [3]

Core Viewpoint - The company 361 Degrees (01361) has announced a significant equity change involving its executive directors, aimed at establishing family trusts for succession and wealth management purposes [1][2]. Group 1: Equity Change Details - The equity change involves the establishment of family trusts by Mr. Ding Wuhao, Mr. Ding Huihuang, Mr. Ding Huirong, and Mr. Wang Jiabi, with the trusts named The DWH Trust, The DHH Trust, The DHR Trust, The WJB Trust, The DJT Trust, and The WJC Trust [1]. - Prior to the equity change, the aforementioned directors held approximately 65.60% of the shares in 361 Degrees through various investment companies [1][2]. - The trusts were established in the British Virgin Islands, with the trustees holding 100% ownership of the respective companies [1]. Group 2: Implications of the Equity Change - Following the equity change, the trustee's indirect equity interest in the companies increased from zero to approximately 65.60%, although the trustee does not have voting rights in the company [2]. - The directors remain as board members of their respective investment companies and can exercise voting rights through these companies [2]. - The company has sought a ruling from the executive officers regarding the equity change, confirming that it does not trigger a mandatory general offer under Rule 26.1 of the Takeovers Code [2].

Investment Rating - The report maintains a "Positive" outlook on the textile and apparel industry [2]. Core Insights - The textile and apparel sector outperformed the market, with the SW textile and apparel index rising by 1.6% from April 14-18, 2025, surpassing the SW All A index by 1.3 percentage points [6]. - Retail sales of clothing and textiles showed steady improvement, with a year-on-year growth of 3.4% in the first quarter of 2025, totaling 386.9 billion yuan [30]. - Textile exports rebounded significantly in March, with a year-on-year increase of 12.9%, driven by accelerated shipments of previously placed orders [10][37]. Summary by Sections Industry Performance - The SW textile and apparel index increased by 1.6%, outperforming the SW All A index by 1.3 percentage points during the specified period [6]. - The SW apparel and home textiles index rose by 1.4%, while the SW textile manufacturing index also increased by 1.6% [6]. Retail Sales - In March, clothing retail sales grew by 3.6% year-on-year, slightly up from 3.3% in January-February [13]. - The total retail sales of clothing, shoes, and textiles for the first three months reached 386.9 billion yuan, reflecting a 3.4% increase year-on-year [30]. Export Data - In the first quarter, China exported textiles and apparel worth 66.3 billion USD, a year-on-year increase of 0.6% [37]. - March saw textile and apparel exports amounting to 23.4 billion USD, marking a 12.9% year-on-year growth [37]. Cotton Prices - As of April 18, 2025, the national cotton price index was reported at 14,252 yuan per ton, with a weekly increase of 0.2% [40]. - The main contract for Zhengzhou cotton was priced at 12,885 yuan per ton, reflecting a 0.6% increase [40]. Market Trends - The report highlights the necessity for domestic demand to improve in 2025, especially in light of changing international trade dynamics [15]. - The focus on new outdoor activities, new business models, and supportive policies is emphasized as key growth areas [15]. Company Performance - 361 Degrees reported a 10-15% year-on-year growth in its main brand for the first quarter of 2025, with e-commerce sales increasing by 35-40% [28]. - Xtep International's main brand sales grew in the mid-single digits, with a significant increase of over 40% for the Saucony brand [28]. - The annual report for Baoshihua indicated a revenue of 5.15 billion yuan, down 1.9% year-on-year, with a net profit decline of 29.1% [28].