Market Overview - The textile and apparel sector has shown a performance in line with the broader market since August, with textile manufacturing outperforming branded apparel, recording increases of 4.2% and 3.4% respectively [13][19] - Key companies leading the upward trend include Xtep International (+9.4%), Bosideng (+8.5%), and Li Ning (+8.1%) [13][19] Brand Apparel Insights - In July, the retail sales of clothing grew by 1.8% year-on-year, reflecting a slight deceleration compared to the previous month [21] - E-commerce sales saw a significant rebound, particularly in outdoor apparel, with growth rates of 26% for outdoor clothing and 11% for sportswear [21][28] - Notable brands with double-digit growth include Descente (+63%), Puma (+41%), and Lululemon (+39%) [21] Textile Manufacturing Insights - Vietnam's textile exports accelerated in July, with a month-on-month growth of 16.7%, while China's textile exports showed a modest increase of 0.5% [2] - The PMI for Vietnam, Indonesia, and India rose by 3.5, 2.3, and 0.7 respectively, indicating improved manufacturing conditions [2] - The cotton prices have shown slight fluctuations, with domestic prices decreasing by 0.7% and international prices increasing by 1.8% since August [2] Company Performance and Forecasts - Non-sport apparel brands have generally faced challenges due to macroeconomic conditions, leading to a decline in revenue and increased inventory impairment [4] - Sports apparel brands have maintained robust fundamentals, with management teams optimistic about meeting annual performance targets despite a slowdown in growth [4] - Companies like Shenzhou International and Huayi Group are expected to show significant earnings resilience post the current low point in Q2 and Q3 [4][7] Investment Recommendations - Focus on companies with strong fundamentals and low valuations, particularly those with high performance in mid-year reports [3][7] - Recommended stocks include Anta Sports, Xtep International, and Li Ning for branded apparel, and Shenzhou International and Huayi Group for textile manufacturing [7][8]

Core Viewpoint - 招银国际 has raised the net profit forecast for Xtep International (01368.HK) for the fiscal year 2025 by 3%, while lowering the forecast for 2027 by 3% to reflect better-than-expected interim earnings, lower-than-expected gross margin, and better-than-expected operating profit margin from Saucony [1] Group 1: Profit Forecasts - The net profit forecast for Xtep International for fiscal year 2025 has been increased by 3% [1] - The net profit forecast for fiscal year 2027 has been decreased by 3% [1] Group 2: Ratings and Target Prices - 招银国际 maintains a "Buy" rating for Xtep International, raising the target price from HKD 7.20 to HKD 7.39 [1] - In the past 90 days, 23 investment banks have issued "Buy" ratings for the stock, with an average target price of HKD 7.05 [1] Group 3: Market Position and Financial Metrics - Xtep International has a market capitalization of HKD 17.112 billion, ranking 7th in the apparel and home textile industry [2] - Key financial metrics for Xtep International include a Return on Equity (ROE) of 15.66%, a net profit margin of 13.36%, and a gross margin of 44.95% [3]

Core Viewpoint - 招银国际 has raised the net profit forecast for Xtep International (01368) for the fiscal year 2025 by 3%, while lowering the forecast for fiscal year 2027 by 3% to reflect better-than-expected interim earnings, lower-than-expected gross margins, and better-than-expected operating profit margins for Saucony [1] Group 1 - The company maintained a "Buy" rating for Xtep International, increasing the target price from HKD 7.2 to HKD 7.39 [1] - Xtep International's performance in the first half of the year exceeded expectations, and despite concerns about the macro environment, the company is expected to achieve its cautious full-year guidance, with overall sales growth and net profit growth of over 10% [1] - Saucony's sales are projected to increase by 30% to 40%, with the third quarter retail sales growth trend appearing favorable [1] Group 2 - Management indicated that the retail sales growth rate for both the core Xtep brand and the Saucony brand accelerated year-on-year in July [1]

Core Viewpoint - 招银国际 has raised the net profit forecast for Xtep International (01368) for the fiscal year 2025 by 3%, while lowering the forecast for fiscal year 2027 by 3% to reflect better-than-expected interim earnings, lower-than-expected gross margins, and better-than-expected operating profit margins for Saucony [1] Group 1 - The company maintained a "Buy" rating for Xtep International, increasing the target price from HKD 7.2 to HKD 7.39 [1] - Xtep International's performance in the first half of the year exceeded expectations, and despite concerns about the macro environment, the company is expected to achieve its cautious full-year guidance, with overall sales growth and net profit growth of over 10% [1] - Saucony's sales are projected to increase by 30% to 40%, with the third quarter retail sales growth trend appearing favorable [1] Group 2 - Management indicated that the retail sales growth rate for the core Xtep brand and Saucony brand accelerated year-on-year in July [1]

Core Viewpoint - The report from CMB International indicates that Xtep International's performance in the first half of the year exceeded expectations, with management confident in achieving its annual guidance [1] Group 1: Financial Performance - Xtep's core brand and Saucony brand retail sales growth accelerated year-on-year in July [1] - The company expects overall sales to show positive growth and net profit to increase by over 10% for the full year [1] - Saucony's sales are projected to rise by 30% to 40% [1] Group 2: Analyst Ratings - CMB International raised its net profit forecast for Xtep for the fiscal year 2025 by 3% [1] - The rating for Xtep is maintained at "Buy" [1] - The target price has been adjusted from HKD 7.20 to HKD 7.39 [1]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 7.16 [1][7]. Core Insights - The company reported a revenue of RMB 6.838 billion for the first half of 2025, representing a year-on-year growth of 7.1%, and a net profit attributable to shareholders of RMB 914 million, which is a 21.5% increase compared to the previous year [2][3]. - The professional sports segment, including brands like Saucony, showed significant growth with a 32.5% increase in revenue to RMB 785 million, driven by strong offline retail performance [2][3]. - The company has adjusted its earnings per share (EPS) estimates for 2025-2027 to RMB 0.55, 0.62, and 0.68 respectively, reflecting a positive outlook based on the recent performance [3]. Financial Performance Summary - Revenue for 2025 is projected to be RMB 14.52 billion, with a growth rate of 6.9% [5]. - The net profit for 2025 is estimated at RMB 1.402 billion, indicating a growth rate of 13.2% [5]. - The gross margin is expected to stabilize at 43.2% for 2025, while the net profit margin is projected to be 9.7% [5][11]. - The company plans to maintain a dividend payout ratio of 50% in the coming years, with a projected dividend yield of 4.48% for 2025 [5][11]. Operational Efficiency - The company has optimized its channels, with a total of 7,924 stores for the main brand as of the first half of 2025, reflecting a net decrease of 42 stores since the beginning of the year [3]. - The company is focusing on enhancing its brand image and expanding its product matrix, particularly in the elite sports lifestyle segment [3]. - Following the divestiture of KSWISS and Palladium, the company aims to concentrate resources on its main brand and Saucony, which is expected to lead to faster growth in the future [3].

Core Insights - The company reported a 7% revenue growth in the first half of the year, with a net profit increase of 22% driven by improved profitability in ongoing operations and reduced losses from the divestment of KP [1] - For the first half of 2025, revenue grew by 7.1% year-on-year to 6.84 billion yuan, while net profit attributable to shareholders increased by 21.5% to 910 million yuan [1] - The main brand showed steady revenue growth, while the professional sports brands experienced rapid growth [2] Brand Performance - The main brand, Xtep, saw a 4.5% year-on-year revenue increase to 6.05 billion yuan, with e-commerce channel revenue growing in double digits and accounting for over 30% of total revenue [2] - The children's business outperformed the adult segment, although the overall gross margin slightly decreased by 0.3% due to lower margins in children's products and online discounting [2] - The professional sports segment, including Saucony and Myle, achieved a 32.5% revenue growth to 790 million yuan, primarily driven by Saucony [2] Profitability and Margins - The gross margin for the professional sports segment decreased by 1.6 percentage points to 55.2%, attributed to a higher proportion of lower-margin lifestyle and OG categories [2] - Operating profit for the professional sports segment nearly tripled to 79 million yuan, with an operating profit margin increase of 6.1 percentage points to 10% [2] Strategic Initiatives - The company is deepening channel management and advancing a Direct-to-Consumer (DTC) strategy, planning to open 100-200 DTC stores by 2025 and a total of 300-400 by 2026, with a capital expenditure of approximately 400 million yuan [2] - Short-term impacts on revenue and profit margins are expected from the DTC transformation, but it is seen as beneficial for long-term growth and performance enhancement [2] Dividend Policy - The company plans to distribute an interim dividend of 0.18 Hong Kong cents per share, maintaining a payout ratio of 50%, and has consistently maintained a payout ratio of over 50% for 17 consecutive years [1]

Core Viewpoint - The company reported a revenue of 6.838 billion, net profit of 914 million, and operating cash flow of 774 million for H1 2025, showing a year-on-year growth of 7.1%, 21.5%, and a decline of 6.4% respectively, with net profit growth primarily driven by the sale of KP brand leading to a loss of 106 million in H1 2024 [1] Financial Performance - The company's gross margin for H1 2025 was 45.0%, a slight decrease of 0.1 percentage points year-on-year, with the mass sports and professional sports segments showing gross margins of 43.6% and 55.2% respectively [2] - Operating profit margin (OPM) increased to 19.1%, up 0.4 percentage points year-on-year, with operating profits for mass sports and professional sports segments at 1.208 billion and 79 million respectively, reflecting increases of 1.5% and 236.8% [2] - The company’s net profit margin improved to 13.4%, up 1.6 percentage points year-on-year, attributed to a decrease in administrative expense ratio by 0.8 percentage points [2] Business Segments - The mass sports segment (Xtep) and professional sports segment (Saucony, Myle) generated revenues of 6.052 billion and 785 million respectively in 2024, with year-on-year growth of 4.5% and 32.5% [1] - The number of stores for H1 2025 included 1,564 for Xtep Kids, 6,360 for Xtep, and 155 for Saucony, with net decreases of 218 and 142 for Xtep and Xtep Kids, while Saucony saw a net increase of 27 stores [1] - E-commerce business showed strong growth, achieving double-digit growth in H1 2025, accounting for over 30% of Xtep's main brand revenue [1] Strategic Initiatives - The company is focusing on a direct-to-consumer (DTC) strategy to enhance consumer interaction and brand loyalty, despite short-term negative impacts on sales [2] - Saucony plans to expand its product matrix and open new flagship and concept stores in key urban areas, aiming to improve gross margins post-acquisition of Saucony and Myle [2] - The company aims to streamline operations by selling the KP brand, reducing financial drag, and concentrating on its three main brands [2]

Core Viewpoint - The company's 1H25 performance met expectations, with a 7% increase in revenue to 6.8 billion and a 6% increase in profit to 910 million, indicating strong growth in the running and children's categories [1][3] Financial Performance - Revenue from continuing operations increased by 7% to 6.8 billion, while profit rose by 6% to 910 million, or a 21% increase when excluding losses from divested businesses in 1H24 [1] - The company declared an interim dividend of 0.18 HKD per share, corresponding to a payout ratio of approximately 50% [1] - Gross margin slightly decreased by 0.1 percentage points, with the main brand's gross margin down by 0.3 percentage points due to increased competition in online channels and a higher proportion of children's business [3] Brand Performance - The main brand's revenue grew by 5% to 6.1 billion, with children's products outperforming adult categories and online sales achieving double-digit growth, contributing over 30% to main brand revenue [1] - The professional sports segment (Saucony and Merrell) saw a 33% revenue increase to 790 million, contributing 11% to total revenue [2] Strategic Initiatives - The company is focusing on optimizing channels and accelerating the layout of shopping centers and outlet channels, closing a net of 22 adult stores and 20 children's stores in the first half of the year [1] - Management plans to gradually increase investment in Merrell by 2026/27, focusing on core products in outdoor activities [2] Inventory and Cost Management - Inventory turnover days increased by 23 days to 91 days due to pre-stocking for the marathon season and new store openings for Saucony [3] - Selling expenses increased by 1.5 percentage points, primarily due to rising platform fees and logistics costs associated with online business [3] Future Outlook - The company maintains guidance for full-year revenue growth and a net profit increase of over 10% [3] - Sales performance in July showed improvement, but August remains uncertain [3] Valuation - The EPS forecast for 2025/26 remains unchanged at 0.50/0.55 HKD, with the current stock price corresponding to 11/10 times the 2025/26 P/E ratio [3] - The target price has been raised by 5% to 7.23 HKD, reflecting a 13 times 2025 P/E ratio and an 18% upside potential [3]

Core Viewpoint - The company reported a solid performance in the first half of 2025, with revenue and net profit growth exceeding expectations, primarily due to the divestment of loss-making fashion sports brands [1][4]. Financial Performance - Revenue increased by 7.1% year-on-year to 6.84 billion yuan, while net profit rose by 21.5% to 910 million yuan, significantly outpacing revenue growth [1]. - The company plans to distribute an interim dividend of 0.18 HKD per share, maintaining a payout ratio of 50% [1]. Brand Performance - The main brand achieved a revenue of 6.05 billion yuan, a 4.5% increase, maintaining a leading position in marathon apparel with the highest wearing rate in major events [2]. - The professional sports segment saw a robust growth of 32.5% to 790 million yuan, driven by strong offline retail performance and successful marketing of new products [2]. Channel Analysis - Online sales growth outpaced offline, with e-commerce contributing over 30% to the main brand's revenue [3]. - The company is progressing well in its Direct-to-Consumer (DTC) transformation, with plans to convert approximately 500 franchise stores to self-operated ones [3]. Operational Efficiency - Inventory turnover days decreased by 9 days to 91 days, and net cash increased by 94.3% to 1.91 billion yuan, indicating a strong balance sheet [4]. - The company maintains its full-year guidance, confident in achieving over 10% growth in both revenue and net profit [4]. Strategic Focus - The company is optimizing its multi-brand matrix by divesting from fashion sports brands and focusing on core running business, which is expected to enhance competitive positioning [4].