Core Insights - The Chinese sports market is entering a deep competitive phase, with major domestic brands like 361 Degrees, Xtep, Li Ning, and Anta reporting mid-term performance [1] - 361 Degrees has shown exceptional performance with a revenue increase of 11%, surpassing Xtep's 7.1% and Anta's 5.4%, indicating a unique strategic path leading to robust growth [1] - Xtep's net profit grew by 21.5% due to successful multi-brand operations, while Anta continues to lead in revenue scale with its extensive multi-brand strategy [1] - Li Ning is experiencing a slowdown in revenue growth but is focusing on profitability and channel optimization for future strategic positioning [1] Strategic Directions - Xtep is focusing on deepening its presence in the running segment by establishing 70 running clubs and accumulating 2.4 million members, although its specialized segment's revenue of 785 million yuan has yet to significantly impact overall performance [2] - Li Ning is optimizing inefficient stores and concentrating on core segments like running and cross-training, trading short-term profits for long-term brand upgrades, despite a decline in ROE [2] - 361 Degrees is innovating internally and expanding externally, maintaining R&D investment at 3%-4% and launching over 230 new shoe SKUs, while also entering the children's sports market with over 2,494 stores [2] Globalization Efforts - Chinese sports brands are transitioning from "Made in China" to "Created in China" and "Value Export," with Anta leveraging its multi-brand strategy to enhance global presence through acquisitions like Jack Wolfskin [3] - 361 Degrees is strengthening its international influence by partnering with top global sports events and achieving a 94% growth in cross-border e-commerce, alongside significant increases in overseas orders [3] - Xtep's subsidiary Saucony's 32.5% growth reflects the effectiveness of establishing professional barriers in niche markets, while Li Ning is preparing for the upcoming Olympic cycle after strategic adjustments [3] - The ongoing competition among domestic sports brands emphasizes the importance of strategic endurance, technological innovation, and a global perspective for future growth [3]

Investment Rating - The report maintains a "Positive" outlook on the textile and apparel industry, highlighting the resilience of the sportswear segment and potential growth opportunities in various sub-sectors [2][3]. Core Insights - The textile and apparel sector underperformed the market, with the SW textile and apparel index rising 2.5%, lagging behind the SW All A index by 1.4 percentage points [3][4]. - Recent industry data indicates a 2.9% year-on-year increase in retail sales for clothing, shoes, and textiles, totaling 837.1 billion yuan from January to July 2025 [3][30]. - Exports of textiles and apparel reached 170.74 billion USD in the same period, showing a modest 0.6% increase, while clothing exports declined by 0.3% [3][30]. - Cotton prices have shown a slight decline, with the national cotton price B index at 15,243 yuan/ton, down 0.2% [3][35]. Summary by Sections Textile Sector - Nobon Co. is highlighted for its strong growth potential due to its focus on personal care and new tobacco products, benefiting from low penetration rates and a young consumer base [3][9]. - The report emphasizes the importance of self-owned brands and the potential for breakthroughs in the new tobacco sector, particularly for Nobon [3][9]. - The textile manufacturing sector is expected to recover as the trade environment becomes more favorable for quality manufacturers [10]. Apparel Sector - The sportswear segment demonstrated the best resilience, with companies like Li Ning, Anta, and 361 Degrees showing revenue growth of 3%, 7%, and 11% respectively, despite facing headwinds [11][24]. - Li Ning's mid-year report showed a revenue increase to 14.82 billion yuan, although net profit fell by 11% [11][24]. - The report recommends several companies for investment, including Anta Sports, Li Ning, and 361 Degrees, as they are expected to benefit from improving domestic demand [3][11]. Market Dynamics - The report notes that domestic consumption recovery is a key focus for 2025, with various regions implementing measures to stimulate consumer spending [14]. - The performance of international brands is also discussed, with companies like Deckers and Asics reporting significant growth in their respective markets [16][21]. Key Recommendations - The report suggests investing in high-quality domestic brands and companies with strong growth potential in the textile and apparel sector, particularly in the sportswear and personal care segments [3][10][11].

Group 1: Financial Support for Sports Consumption - China UnionPay and the National Sports Administration jointly released the "2025-2027 Financial Support for Sports Consumption Activities Plan" to enhance sports consumption [3][4] - The plan focuses on three main areas: deepening platform-based collaboration, creating a "Payment+" ecosystem, and enhancing digital capabilities to boost consumer confidence in sports [3][4] Group 2: Strategic Partnerships in Sports and Technology - 361 Degrees and robot company Stand have formed a strategic partnership to integrate AI technology with the sports industry, establishing a joint venture and a "Future Sports Exploration Laboratory" [5] - The collaboration aims to optimize production processes and enhance consumer experience through smart retail solutions [5] Group 3: Financial Performance of Xtep Group - Xtep Group reported a 7.1% year-on-year increase in revenue for the first half of 2025, reaching 6.838 billion yuan, with the main brand's revenue growing by 4.5% [6][7] - The group's gross profit margin stood at 45.0%, and net profit attributable to shareholders increased by 21.5% to 914 million yuan [6][7] Group 4: New Product Launches and Collaborations - KELME and the Asian Football Confederation launched the new official match ball for the 25/26 AFC Elite League and AFC Second Division, symbolizing a new chapter in their partnership [8] - Juventus and Giorgio Armani announced a collaboration to design formal wear for the Juventus first team, enhancing the club's connection with the fashion world [9]

Investment Rating - The industry rating is "Recommended" [5] Core Insights - The report highlights that Amer Sports' Q2 performance in the Greater China region saw a revenue increase of 42%, exceeding market expectations, with a total revenue of $12.36 million, a year-on-year growth of 23.46% [2][16] - The gross margin reached a historical high of 58.7%, with a net profit margin of 5.5%, reflecting a significant improvement in profitability [2][16] - The report indicates that the company has raised its full-year guidance, expecting a revenue growth of 20%-21% for the fiscal year 2025, up from a previous estimate of 15%-17% [2][16] Summary by Sections Company Performance - Amer Sports reported Q2 revenue of $12.36 million, net profit of $0.18 million, and adjusted net profit of $0.36 million, with year-on-year growth of 23.46% and a return to profitability [2][16] - The company experienced a gross margin of 58.7% and an operating net profit margin of 5.5%, both showing increases of 2.7 and 2.6 percentage points respectively [2][16] - The performance by business segments showed growth in functional apparel (23%), outdoor (35%), and ball sports (11%) [2][16] Regional Performance - Revenue growth in the Greater China region was 42%, while the Asia-Pacific region grew by 45%, the Americas by 6%, and EMEA by 18% [2][16] - For the first time, Greater China achieved the highest revenue scale in a single quarter [2][16] Channel Performance - Direct-to-Consumer (DTC) sales increased by 40%, while wholesale sales grew by 9% [2][16] - The total number of self-owned stores increased by 40%, with a notable growth of 142 stores in the ball sports category [2][16] Other Company Updates - Xtep International reported a revenue of 6.838 billion yuan and a net profit of 914 million yuan for H1 2025, with a year-on-year growth of 7.1% and 21.5% respectively [3][17] - Crystal International achieved a revenue of $1.229 billion and a net profit of $98 million for H1 2025, with a year-on-year growth of 12.4% and 16.8% respectively [3][17] - Huayi Group reported a revenue of 12.661 billion yuan, with a net profit decline of 11.06% for H1 2025, attributed to pressure from existing clients and production adjustments [4][18] Market Trends - The report notes a slight improvement in the growth rate of sports and leisure apparel on the Taobao and Tmall platforms in July 2025, with children's clothing and bags showing significant growth [8] - The cotton price index in China remained stable, with a slight decrease of 0.16% in the recent week, while the year-to-date increase was 3.4% [9][34]

Core Viewpoint - In H1 2025, the main brand Xtep achieved revenue of 6.053 billion yuan, a growth of 4.5%, with e-commerce maintaining double-digit growth. The inventory turnover days at the end of Q2 2025 were around 4-4.5 months, slightly increasing from Q1 2025. The professional sports segment, including Saucony and Merrell, generated revenue of 785 million yuan, a growth of 32.5%, with Saucony experiencing over 30% growth in sales. The operating profit for the professional sports segment was 79 million yuan, a significant increase of 236.8% [1][2][3]. Brand Performance - Xtep's main brand saw growth driven by children's products and e-commerce, with e-commerce accounting for over 30% of total revenue. The company plans to gradually implement a Direct-to-Consumer (DTC) strategy in H2 2025. The number of adult Xtep stores was 6,360, a decrease of 22 stores from the beginning of the year, while children's stores numbered 1,564, down by 20 stores. The brand's gross margin was 43.6%, a slight decrease of 0.3 percentage points, primarily due to a higher proportion of lower-margin children's products [2][4]. - The professional sports segment, including Saucony and Merrell, maintained rapid growth, with Saucony's sales increasing by over 30%. The gross margin for this segment was 55.2%, down by 1.6 percentage points, attributed to a higher proportion of commuting products. The number of Saucony stores reached 155, an increase of 10 stores from the beginning of the year [3][4]. Financial Performance - The company's total revenue for H1 2025 was 6.838 billion yuan, a growth of 7.1%, with a net profit of 914 million yuan, an increase of 21.5%. The proposed interim dividend is 0.18 HKD per share, with a payout ratio of 50% [1][4]. - Excluding the impact of the divested KP business, the net profit growth was 6.4%. The overall gross margin was 45.0%, with the operating profit margin at 19.1%, an increase of 0.4 percentage points [4]. Future Outlook - For H2 2025, Xtep plans to reclaim distribution rights for approximately 400-500 stores, with an expected short-term revenue impact. Saucony will accelerate its offline expansion, focusing on high-quality commercial areas in first and second-tier cities, planning to open 30-50 new stores [1][4]. - The company maintains a profit growth guidance of over 10% for 2025, with projected revenues of 14.32 billion, 15.26 billion, and 16.37 billion yuan for 2025-2027, reflecting growth rates of 5.5%, 6.6%, and 7.2% respectively [5].

Core Viewpoint - Xtep International reported a total revenue of 6.84 billion RMB for H1 2025, representing a year-on-year increase of 7.1%, with a net profit of 910 million RMB, up 21.5% year-on-year, indicating strong financial performance and growth potential in the sportswear market [1][2]. Financial Performance - Total revenue for H1 2025 was 6.84 billion RMB, with the main brand revenue increasing by 4.5% and professional sports revenue rising by 32.5% [1]. - The net profit attributable to shareholders was 910 million RMB, with a net profit margin of 13.4%, an increase of 1.6 percentage points year-on-year [2]. - The overall gross margin was 45%, slightly down by 0.1 percentage points from the previous year [2]. Brand and Product Performance - The main brand's revenue reached 6.05 billion RMB, accounting for 88.5% of total revenue, while professional sports revenue was 785 million RMB, making up 11.5% [1]. - Footwear revenue was 4.15 billion RMB, up 6.3%, while apparel revenue was 2.55 billion RMB, up 9.5% [1]. - The operating profit margin for the professional sports segment improved significantly by 6.1 percentage points to 10% [1]. Operational Efficiency - The company reported a 94.3% increase in net cash to 1.913 billion RMB, indicating strong liquidity [2]. - The average inventory turnover days were stable at 94 days, while accounts receivable turnover days increased by 12 days to 126 days [2]. Strategic Initiatives - As of H1 2025, the company operated 6,360 adult stores and 1,564 youth stores, with 70% of adult stores being new image stores [3]. - The company is focusing on enhancing its retail channels and expanding its presence in shopping centers and outlet stores [3]. - Xtep is strategically concentrating on the running segment, investing in R&D to strengthen its market position as the leading running brand in China [3]. Future Outlook - The company forecasts revenues of 14.48 billion RMB, 15.61 billion RMB, and 16.85 billion RMB for 2025-2027, with net profits of 1.39 billion RMB, 1.54 billion RMB, and 1.70 billion RMB respectively [3].

Core Viewpoint - Xtep International reported a 7.1% year-on-year revenue growth and a 21.5% increase in net profit attributable to shareholders for H1 2025, slightly exceeding expectations [1][2] Financial Performance - The company achieved a revenue of 6.838 billion RMB in H1 2025, with the main brand (Xtep) contributing 6.053 billion RMB, a 4.5% increase year-on-year, accounting for 88.5% of total revenue [1] - The professional sports segment (including Saucony and Merrell) saw a significant revenue increase of 32.5% to 785 million RMB, representing 11.5% of total revenue, driven by strong offline retail performance [1] - Gross margin decreased by 0.3 percentage points to 43.6%, with the main brand's gross margin also down by 0.3 percentage points [1] - Net profit attributable to shareholders rose to 914 million RMB, with a net profit margin increase of 1.6 percentage points to 13.4% [1] Dividend and Earnings Forecast - The company declared a dividend of 0.18 HKD per share, with a payout ratio of 50% [1] - Earnings per share (EPS) estimates for 2025-2027 have been revised to 0.55, 0.62, and 0.68 RMB, respectively, with a target price adjustment to 7.16 HKD [1][2] Operational Efficiency - As of H1 2025, the main brand had 7,924 stores, a net decrease of 42 stores since the beginning of the year, while Saucony increased its store count by 10 to 155 [2] - The company is focusing on enhancing its high-end brand image and expanding its product matrix with new series [2] Strategic Focus Post-Divestiture - Following the divestiture of KSWISS and Palladium, the company aims to concentrate resources on the main brand and Saucony, which is expected to lead to faster growth [2]

Core Insights - Anta has revitalized FILA and Amer Sports, positioning them as cash cows and expanding the potential of domestic sports brands [1] - Xtep has emerged as Anta's most successful "student," reporting a revenue of 6.838 billion RMB in the first half of 2025, a 7.1% year-on-year increase, and a net profit of 914 million RMB, up 21.47% [2][3] Financial Performance - Xtep's revenue for the first half of 2025 reached 6.838 billion RMB, with a net profit of 914 million RMB, exceeding Goldman Sachs' forecast by 12% [2][3] - The main brand revenue for Xtep was 6.053 billion RMB, a 4.5% increase year-on-year [8] Strategic Developments - Xtep's strategy includes a "1+4" brand matrix, focusing on both fashion sports and professional sports, with a goal of achieving 20 billion RMB in main brand revenue by 2025 [4][6] - The company has shifted its focus to running, with professional sports revenue reaching 785 million RMB, a significant 32.5% increase [7][8] Market Positioning - Xtep has positioned itself as a leading brand in the running segment, with a market share of 11.5% for its professional sports brands, which includes Saucony [7] - The company has invested over 2 billion RMB in R&D, holding more than 1900 technology patents, emphasizing a technology-driven approach [10] Community Engagement - Xtep has developed a running community with over 240,000 members and 70 running clubs, enhancing brand loyalty and community engagement [15][17] - The company sponsors major marathons and has achieved high wearing rates among competitive runners, indicating strong brand presence in the running community [11][13] Future Outlook - Xtep plans to expand its product offerings, including high-performance running shoes and lifestyle products, while also enhancing its retail presence in high-end shopping centers [18][20] - The company has moved away from its previous "Five-Five" strategic plan, focusing instead on the rapid growth of its Saucony brand [20]

Core Viewpoint - Morgan Stanley's report indicates that Xtep International (01368.HK) is expected to benefit from the potential of Saucony, with projected sales and net profit compound annual growth rates of 7% and 13% respectively from 2025 to 2027 [1] Group 1: Financial Projections - Xtep's sales and net profit are projected to grow at compound annual growth rates of 7% and 13% from 2025 to 2027 [1] - The profit forecast for Xtep has been raised by 1% to 3% for the period from 2025 to 2027 [1] - The target price for Xtep has been increased from HKD 5.6 to HKD 7.4, with the rating upgraded from "Neutral" to "Overweight" [1] Group 2: Analyst Ratings - Nearly 28 investment banks have issued buy ratings for Xtep in the last 90 days, with an average target price of HKD 7.18 [1] - CMB International Capital Corporation Limited rated Xtep as "BUY" with a target price of HKD 7.20 [2] - The latest report from Dongfang Caifu Securities also gives Xtep an "Overweight" rating [1] Group 3: Company Metrics - Xtep International has a market capitalization of HKD 177.52 billion, ranking 6th in the apparel and home textiles industry [2] - Key performance indicators for Xtep include a Return on Equity (ROE) of 15.66%, a net profit margin of 13.36%, and a gross profit margin of 44.95% [3] - Xtep's debt ratio stands at 42.49%, which is lower than the industry average of 51.01% [3]

Core Viewpoint - Morgan Stanley's report indicates that Xtep International (01368) is expected to benefit from the potential of Saucony, with projected sales and net profit compound annual growth rates (CAGR) of 7% and 13% respectively from 2025 to 2027 [1] Group 1: Financial Projections - The group's earnings forecast for Xtep International has been raised by 1% to 3% for the period from 2025 to 2027 [1] - The target price for Xtep has been increased from HKD 5.6 to HKD 7.4, and the rating has been upgraded from "Neutral" to "Overweight" [1] Group 2: Saucony's Growth Potential - Saucony is expected to contribute approximately mid-double-digit sales growth by 2027, with operating profit growth projected to be mid to high double digits due to expanding operating profit margins [1] - The report is optimistic about Saucony's potential, forecasting nearly 30% sales CAGR over the next three years [1] Group 3: Retail Business Outlook - Xtep International's retail business is anticipated to improve in the second quarter, benefiting from the launch of signature products [1] - Despite intense competition, strong growth in the running product category is noted, although there are concerns about pricing pressure due to ongoing macroeconomic uncertainties [1]