Summary of Conference Call Company and Industry - The conference call involved **Xtep International**, a company in the **sportswear industry** focusing on running products and brand development. Key Points and Arguments 1. **Sales Performance**: The sales trend is in line with expectations, with healthy levels of discounts and inventory management [2][3] 2. **Brand Strengthening**: The company has been actively promoting new brands, particularly Saucony, through enhanced product offerings and channel strategies [2][4] 3. **Product Mix**: The goal is to increase the apparel segment to approximately 20% of total sales, with aspirations to reach 30% in the future [3] 4. **Store Expansion**: New store concepts, such as the "Moon Concept Store," have been launched to enhance brand image and attract customers [3] 5. **Saucony's Growth Targets**: Saucony aims to double its revenue and operational efficiency over the next three years, with projected revenue growth from 1 billion to over 2 billion [4] 6. **Direct-to-Consumer (DTC) Strategy**: The company is initiating a DTC strategy, planning to reclaim 100 to 400 stores over the next two years, which will involve significant costs [12][13] 7. **Cash Management**: The company has been reducing cash reserves, primarily due to high interest rates in Hong Kong, and is focusing on improving operational efficiency through DTC [11][12] 8. **Running Product Matrix**: The running shoe segment has seen over 25% growth, with a significant portion being functional running shoes [6][7] 9. **Market Positioning**: Xtep has established a strong presence in marathons, with the highest wearing rate among participants, surpassing both international and domestic brands [8][9] 10. **Future Plans**: The company is cautious about expanding into new areas like outdoor sports, focusing instead on consolidating its position in marathons [25][26] 11. **International Expansion**: There are plans to explore markets in Southeast Asia, the Middle East, and Russia, emphasizing the importance of cost-effectiveness in pricing strategies [30][31] Other Important but Overlooked Content 1. **Brand Image and Consumer Perception**: The company is leveraging partnerships with business schools to enhance brand perception among elite consumers [5] 2. **Operational Challenges**: The transition to DTC may lead to short-term revenue impacts, but long-term benefits are anticipated [14][15] 3. **Franchise and Dealer Relationships**: The company is managing a complex relationship with its dealers, with some looking to retire, prompting the DTC shift [11][16] 4. **Future Leadership**: Discussions about succession planning and leadership roles within the company were mentioned, indicating a focus on long-term stability [26][27] This summary encapsulates the key insights from the conference call, highlighting the strategic direction and operational focus of Xtep International in the competitive sportswear market.

美国耶鲁大学预算实验室4月10日发布的最新研究估算显示，美国的关税政策将使美国家庭平均每年损 失4700美元。报告显示，关税对服装和纺织品的影响尤为显著，短期内消费者将面临服装价格上涨64% 的局面。长期来看，服装价格将上涨27%。 据统计，目前美国只有2.5%的服装和1%的鞋类为本土制造，越南等亚洲国家则是美国服装鞋帽的主要 进口来源地。越南纺织服装协会的数据显示，2024年越南纺织品服装出口额达440亿美元，美国是其最 大市场，耐克、露露乐蒙等服装品牌超过35%的产能聚集在越南。随着美国所谓"对等关税"措施即将实 施，这些服装品牌将被迫提价。 智通财经APP获悉，4月11日，工业和信息化部办公厅发布关于开展纺织服装特色产业集群建设工作的 通知。 对重点培育的纺织服装特色产业集群，工业和信息化部统筹推动集群建设工作，加强集群间产业对接， 推动集群数字化转型升级，强化产业集群创意设计能力，提升特色产品附加值，提高特色产业集群的竞 争优势。 银河证券发布行业周报称，国内制造业服企布局从产能规模增长逐步向高质量增长转变，发力高质量客 户和中高端产品，而高价值产品价格具有一定的调控空间。纺织服企的国际化产能布局优势 ...

Investment Rating - The industry investment rating is maintained as "Positive" [5] Core Insights - The report indicates that major US consumer companies are cautious about future fiscal year expectations, primarily due to tariff pressures and consumer downgrading trends in the US market. However, companies like Walmart and Lululemon express a more optimistic outlook for the Chinese market [3][23] - Recommendations include buying leading sportswear brand Anta Sports (02020), and considering Li Ning (02331), Xtep International (01368), and Tabo (06110) for buying or holding. Additionally, long-term prospects are favorable for resilient leading manufacturers such as Shenzhou International (02313), Weixing Co., Ltd. (002003), and Huali Group (300979) [3][23] Summary by Sections US Consumer Giants Performance - Walmart's FY26 revenue growth guidance is 3-4%, with a same-store sales increase of 23.1% in FY25Q4, driven by strong e-commerce and new store openings [10][13] - Target expects FY25 revenue growth of about 1%, with same-store sales remaining flat, facing pressure from tariffs and operational costs [14][15] - Dollar General anticipates FY25 revenue growth of 3.4-4.4%, with core consumers facing economic challenges and a notable trend of consumer downgrading [17][18] - Nike projects a mid-double-digit revenue decline for FY25Q4, with significant inventory issues and a 15% revenue drop in the Greater China region [19][20] - Lululemon expects FY25 revenue growth of 5-7%, with a strong growth forecast of 25-30% in the Greater China region [21][22] Investment Recommendations - The report suggests a cautious approach towards US consumer giants due to tariff pressures and consumer behavior changes, while highlighting positive growth prospects in China for certain brands [3][23]

Investment Rating - The industry investment rating is "Positive" and maintained [8] Core Insights - The brand sector shows steady recovery in Q1 under consumer promotion policies, with most companies achieving positive growth, outperforming expectations. The performance varies across sub-sectors, with mid-to-high-end menswear showing strong growth, sports retail maintaining steady growth, and mass brands also experiencing a rebound. Profitability varies due to differentiated cost control and operational leverage [2][4][16] - The manufacturing sector faces short-term pressure as downstream inventory has reached healthy levels, but demand from major export countries is weakening. In Q1, demand from the US and Japan shows marginal weakening. Most brands and retailers have returned to healthy inventory levels, but weak overseas demand is expected to limit replenishment momentum, affecting order elasticity in the related supply chain [2][4][17] Summary by Relevant Sections Brand Sector - Q1 retail sales of clothing and textiles increased by 3.3% year-on-year, with a month-on-month increase of 3.6 percentage points [20] - Mid-to-high-end menswear brands are leading in retail growth, while the sports sector continues to show steady growth. Mass apparel brands are also experiencing a recovery [20][27] Manufacturing Sector - The manufacturing sector is under short-term pressure due to weak demand from major export markets and healthy inventory levels. The overall order placement is cautious, with expectations of further pressure from tariff forecasts [4][28] Key Company Performance - **Wanjian Medical**: Expected Q1 revenue growth of 30%-40%, driven by non-woven products and strong brand power in sanitary napkins [5][40] - **Zhejiang Natural**: Anticipated Q1 revenue growth of 25%-35%, with net profit expected to increase by 50%-100% [5][40] - **Weixing Co.**: Expected Q1 revenue growth of 10%-15% and double-digit net profit growth [5][40] - **Anta Sports**: Expected Q1 revenue growth in the high single digits, with FILA brand showing mid-to-low single-digit growth [6][20] - **361 Degrees**: Anticipated Q1 revenue growth of 10%-15% for adult apparel and around 15% for children's clothing, with e-commerce growth of about 20% [6][20] Inventory and Demand Trends - The inventory levels of most brands and retailers have returned to a healthy state, with the wholesale inventory destocking nearing completion. However, weak overseas demand is expected to limit replenishment momentum [4][28]

Investment Rating - The report recommends "Buy" for leading sports brands like Anta Sports and Li Ning, indicating strong operational resilience and growth potential in a challenging retail environment [5][27]. Core Insights - The sports industry demonstrated strong operational resilience in 2024, with major companies like Anta Sports, Li Ning, Xtep International, and 361 Degrees showing varied revenue growth rates of +13.58%, +3.90%, -5.36%, and +19.59% respectively [1][7]. - The report anticipates continued stable growth for leading sports brands in 2025, with projections for Anta's main brand to maintain high single-digit growth and FILA to achieve mid-single-digit growth [13][14]. Summary by Sections Performance Review - Anta Sports and FILA maintained steady operations, with revenue reaching 70.826 billion CNY, while 361 Degrees capitalized on lower-tier markets, achieving a revenue increase of 19.59% to 10.074 billion CNY [1][10]. - Li Ning's revenue remained stable, with a focus on e-commerce and product diversification, leading to a 10.3% increase in online sales [9]. Marketing and Inventory Management - Anta Sports increased its sales expense ratio to 36.21%, reflecting higher investments in new product promotions and channel expansion [2][16]. - Inventory turnover days improved for Xtep International, decreasing by 10 days to 79 days, while 361 Degrees saw an increase in turnover days due to strategic inventory buildup for e-commerce [2][17]. Manufacturing Sector - Major manufacturers like Wah Lee Group and Shenzhou International reported revenue growth of 19.35% and 14.79% respectively, driven by increased demand and efficient operations [3][22]. - The overall profitability of the manufacturing sector improved, with Wah Lee's net profit margin at 15.36% and Shenzhou's gross margin increasing to 28.10% [20][21]. Investment Recommendations - The report suggests that leading sports brands like Anta Sports and Li Ning are well-positioned to outperform the industry due to their operational strengths and market strategies [5][27]. - For the manufacturing sector, Wah Lee Group is recommended as a strong player, with potential for increased market share amid industry consolidation due to external pressures [5][27].

Financial Performance - Total revenue for the year reached RMB 13,577 million, representing a growth of 6.5%[8] - Operating profit amounted to RMB 1,966 million, an increase of 9.3%[8] - Profit attributable to ordinary equity holders was RMB 1,238 million, reflecting a growth of 20.2%[8] - Revenue for 2024 reached RMB 13,577.2 million, a 6.6% increase from RMB 12,742.9 million in 2023[27] - Gross profit for 2024 was RMB 5,865.4 million, reflecting a gross margin of 43.2%, up from 41.8% in 2023[27] - Operating profit increased to RMB 1,965.5 million, with an operating margin of 14.5%, compared to 14.1% in the previous year[27] - Net profit attributable to equity holders was RMB 1,238.4 million, resulting in basic earnings per share of RMB 48.67, up from RMB 40.76 in 2023[27] - The group reported a loss from discontinued operations of RMB 67.1 million, a significant reduction from RMB 224.3 million in 2023[145] - The net profit attributable to equity holders increased by RMB 208.4 million or 20.2% to RMB 1,238.4 million, with a net profit margin improving to 9.1% from 8.1%[146] Dividends and Payouts - The final dividend per share declared was 9.5 HK cents, with a full-year payout ratio of 138.2%[8][9] - The company declared a final dividend of HKD 0.095 per share, with a total annual dividend payout ratio of 138.2%, significantly up from 50.0% in 2023[32] - Total dividends for 2024 amount to HKD 0.698, a significant increase from HKD 0.217 in 2023, representing a payout ratio of 138.2%[149] - The company maintained a high dividend payout ratio of no less than 50% over the past five years, demonstrating a commitment to shareholder returns[150] Strategic Initiatives - The company completed the strategic sale of K•SWISS and Palladium, focusing resources on the main brand, Saucony, and Merrell[23] - The company plans to leverage government economic stimulus measures to boost market confidence and consumer demand[31] - The company plans to strengthen its direct-to-consumer (DTC) strategy to enhance brand loyalty and operational efficiency, optimizing retail channel structures for better market insights[108] - The company is expanding its market presence with new flagship and concept stores, enhancing customer experience and brand visibility[89] Brand Performance - Retail sales for the main brand and Saucony recorded high single-digit and over 60% growth, respectively, indicating strong market performance[31] - Saucony, a brand under the group, achieved over RMB 1 billion in revenue for the first time in 2024, marking a significant milestone[37] - The professional sports division, Saucony, achieved revenue of RMB 1,250.3 million in 2024, a year-on-year increase of 57.2%[88] - Saucony's operating profit increased significantly to RMB 78.2 million in 2024, compared to RMB 8.4 million in 2023[88] Market Trends and Opportunities - The outdoor sports market in China presents growth opportunities for the brand Maile, which is actively expanding its e-commerce business[38] - The number of marathons held in China reached 671 in 2024, with participation exceeding 6.56 million, indicating a strong running trend[41] - E-commerce in China saw a significant recovery, with the logistics index reaching 113.7 points, a 3.6-point increase from the previous year[43] - The group anticipates steady growth in sports goods demand, supported by government measures to stimulate consumption[109] Operational Efficiency - The average inventory turnover days improved to 68 days in 2024, down from 90 days in 2023, enhancing operational efficiency[27] - The overall working capital turnover days increased to 87 days in 2024 from 83 days in 2023[151] - Inventory turnover days decreased by 22 days to 68 days in 2024, while trade receivables turnover days increased by 14 days to 120 days[159] Research and Development - Research and development expenses accounted for 2.9% of revenue, slightly down from 3.1% in 2023, reflecting a focus on cost management[27] - The new running shoe technology incorporates PISA supercritical foam for high rebound and cushioning, significantly reducing energy loss compared to traditional materials[77] Community Engagement and CSR - The company donated over RMB 58 million in sports goods and cash in 2024, including RMB 10 million in winter supplies for earthquake relief in Tibet[98] - The company provided over 710,000 hours of training to employees through its talent center, focusing on professional skills, leadership, and cultural operations[106] Investor Relations - The company actively communicated with investors to restore confidence amid macroeconomic uncertainties, enhancing transparency and two-way communication[178] - The company participated in 350 investor meetings throughout the year, including both online and offline events across North America, Europe, and Asia-Pacific[184] Future Outlook - Future outlook remains positive with expectations of stable growth in the sports industry driven by increased health awareness and sports demand[31] - The company plans to continue expanding its market presence and enhancing its retail management capabilities[179]

Investment Rating - The report maintains a "Buy" rating for key companies in the sports footwear and apparel sector, specifically recommending Anta Sports, Li Ning, Xtep International, and 361 Degrees [7]. Core Insights - The sports footwear and apparel sector is expected to achieve steady growth in 2024, with a focus on leading companies' long-term investment value [1]. - In 2024, the combined revenue of four Hong Kong-listed sports footwear and apparel companies grew by 9% year-on-year to 123.2 billion yuan, while net profit attributable to shareholders increased by 36.21% to 21 billion yuan [1][11]. - The sector's stock prices have shown volatility but are expected to rise as consumer confidence improves and national policies stimulate demand [1][39]. Summary by Sections 2024 Review - The sports footwear and apparel sector demonstrated stable growth in terminal sales and maintained healthy inventory levels [1][11]. - The combined revenue of key companies in the sector showed consistent growth across the first and second halves of 2024, with a year-on-year increase of 9% [11]. - The inventory turnover days for major companies are healthy, averaging between 4-5 months, setting a solid foundation for growth in 2025 [1][24]. 2025 Outlook - The demand resilience in the sector is expected to continue, with a forecast for steady growth driven by recovering consumer confidence and an increasing preference for functional apparel [2][44]. - The report anticipates a trend of lower growth in the first quarter of 2025, followed by an increase in subsequent quarters, contingent on overall consumer sentiment improving [2][44]. Operational Trends - Companies are focusing on enhancing product quality, optimizing channel operations, and increasing marketing efforts to capture consumer attention [3]. - Key product categories such as running and outdoor gear are driving growth, with notable increases in sales for brands like Li Ning and Saucony [2][3]. - The report highlights the importance of channel optimization and marketing investments, with companies like 361 Degrees sponsoring major events to boost brand visibility [3][44]. Key Company Analysis and Investment Recommendations - Anta Sports is highlighted as a top pick due to its strong performance and expected revenue growth of 10.5% in 2025, with a projected net profit of 13% growth [45][46]. - Li Ning is expected to maintain stable revenue but face a decline in net profit due to prior asset impairments [45]. - Xtep International is projected to grow revenue by 7% and net profit by 10.3% in 2025, benefiting from its focus on professional sports segments [45][46]. - 361 Degrees is anticipated to achieve a 14% revenue increase and a 14.2% rise in net profit, supported by its broad market positioning [45][46].

Investment Rating - The report maintains an "Outperform" rating for the company, with a target price of HKD 6.99 per share, reflecting a 5% upside potential [4][7]. Core Insights - The main brand shows steady growth, with a 6.5% increase in revenue to RMB 13.58 billion in 2024, driven by a 3.2% increase in Volkswagen and a 57.2% increase in professional sports revenue [4][7]. - Gross profit margin improved by 1.4 percentage points to 43.2%, with net profit rising 20.2% to RMB 1.24 billion, indicating enhanced profitability primarily from the professional sports segment and reduced losses from KP [4][7]. - The company plans to focus on direct-to-consumer (DTC) strategies and optimize retail channels, aiming to reclaim 400-500 stores by 2026, which will account for 5.0-6.3% of total stores [4][7]. Financial Summary - Revenue projections show a decline in 2024 to RMB 13.58 billion, followed by growth to RMB 14.47 billion in 2025, and further increases to RMB 15.62 billion in 2026 and RMB 17.00 billion in 2027 [3][6]. - Net profit is expected to rise from RMB 1.24 billion in 2024 to RMB 1.37 billion in 2025, reaching RMB 1.49 billion in 2026 and RMB 1.61 billion in 2027 [3][6]. - The company’s gross margin is projected to improve gradually, reaching 44.69% by 2027 [3][6]. Strategic Developments - The divestment of the fashion sports segment in November 2024 allows the company to concentrate on running and operational optimization, with professional sports expected to achieve a compound annual growth rate (CAGR) of 104.3% over the next four years [4][7]. - Saucony's revenue exceeded RMB 1 billion, and the brand is set to continue expanding its store presence and product offerings, particularly in high-end cities [4][7]. - The company plans significant capital expenditure of RMB 500 million in 2025, reflecting a 91% increase, to support its growth initiatives [4][7].

Investment Rating - The report maintains a "Recommended" rating for the textile and apparel industry [1]. Core Insights - The leading domestic sports brands, including Anta Sports, Xtep International, and 361 Degrees, have shown resilient growth in 2024, with revenues of 70.826 billion, 13.577 billion, and 10.074 billion yuan respectively, reflecting year-on-year growth rates of 13.6%, 6.5%, and 19.6% [3][6]. - The retail sales of clothing in China for January-February 2025 reached 262.4 billion yuan, a year-on-year increase of 3.3%, indicating a steady recovery in consumer demand supported by favorable policies [7][15]. - The report anticipates a quarterly improvement in clothing consumption throughout 2025, driven by ongoing consumer policy support and the effects of a low base in 2024 [7][15]. Summary by Sections 1. Industry Overview - The textile and apparel industry is experiencing stable growth, with a focus on domestic consumption recovery in early 2025 [1]. 2. Key Industry Data Review (a) Stock Market Review - The Shanghai Composite Index fell by 1.6%, while the textile and apparel sector saw a decline of 1.29% during the week of March 17-21, 2025 [11][12]. (b) Retail Performance - The total retail sales of consumer goods in China for January-February 2025 amounted to 83,731 billion yuan, with clothing retail sales contributing 2,624 billion yuan [15]. (c) Upstream Textile Exports - In February 2025, textile yarn, fabric, and related products exported amounted to 6.219 billion USD, a year-on-year decrease of 25.3% [22]. (d) Upstream Raw Materials - As of March 21, 2025, the domestic cotton price index was 14,905 yuan per ton, showing a slight increase from the previous week [31][32]. 3. Key Company Announcements - Anta Sports, Xtep International, and 361 Degrees reported significant revenue growth for 2024, with net profits increasing by 52.4%, 20.2%, and 19.5% respectively [3][6].

Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Views - The company is expected to significantly enhance its profitability in 2024 driven by its professional sports segment, with a retail transformation for its main brand commencing in 2025 [5][6] - The company plans to recover 400-500 distribution rights for its stores, focusing on direct-to-consumer (DTC) strategies to optimize retail channel structure and improve operational efficiency [6][8] Financial Data and Forecasts - Revenue is projected to grow from 13,577 million HKD in 2024 to 17,005 million HKD by 2027, reflecting a compound annual growth rate (CAGR) of approximately 8.86% [6][9] - Net profit is expected to increase from 1,238 million HKD in 2024 to 1,607 million HKD in 2027, with a net profit margin improvement from 9.1% to 9.5% over the same period [6][9] - The company’s gross margin is forecasted to rise from 43.2% in 2024 to 44.7% in 2027, indicating improved cost management and pricing power [6][9] Market Performance - The company's stock closed at 5.27 HKD on March 24, 2025, with a market capitalization of 14,622 million HKD [2][5] - The stock has experienced a price fluctuation range between 3.70 HKD and 7.13 HKD over the past year [2] Strategic Developments - The company has completed a strategic divestment of its fashion sports business, allowing it to focus on running and optimizing operations in the professional sports segment [6][8] - The company is expanding its product offerings and enhancing its brand strategy, particularly in high-end urban areas, with plans for new flagship and concept stores [6][8]