Investment Rating - Buy (Maintained) [1] Core Views - The company's main brand showed accelerated growth in Q4 2024, with e-commerce performing particularly well, driven by extended Double 11 promotions [8] - Saucony continued its strong growth trajectory, with Q4 2024 sales up 50% YoY and full-year growth exceeding 60% [8] - The company is expected to further expand its running shoe product matrix in 2025, including the launch of the 7th generation of the 160 series and other segmented products [8] - The main brand's discount rate improved YoY, and inventory levels remained healthy at around 4 months [8] - The company is expected to increase store openings in high-tier cities for Saucony in 2025, while also expanding into commuter and retro product lines [8] Financial Forecasts - Revenue is expected to grow from RMB 14,346 million in 2023A to RMB 17,520 million in 2026E, with a CAGR of 6.9% [1] - Net profit attributable to shareholders is projected to increase from RMB 1,030 million in 2023A to RMB 1,648 million in 2026E, with a CAGR of 16.9% [1] - EPS is forecasted to rise from RMB 0.38 in 2023A to RMB 0.61 in 2026E [1] - P/E ratio is expected to decline from 13.42x in 2023A to 8.39x in 2026E, indicating potential undervaluation [1] Operational Highlights - Main brand's Q4 2024 retail sales grew by high single digits YoY, with e-commerce sales up over 20% [8] - Saucony's Q4 2024 retail sales increased by 50% YoY, with full-year growth exceeding 60% [8] - The company maintained a healthy inventory turnover of around 4 months [8] - The main brand's discount rate improved to 7-7.5折 in Q4 2024, compared to the previous quarter [8] Market Data - Closing price: HKD 5.60 [6] - 52-week range: HKD 3.68 - HKD 7.13 [6] - P/B ratio: 1.57x [6] - Market capitalization: HKD 15,028.44 million [6] Financial Ratios - ROE is expected to increase from 11.62% in 2023A to 13.43% in 2026E [9] - Gross margin is projected to improve from 42.17% in 2023A to 44.43% in 2026E [9] - Net profit margin is forecasted to rise from 7.18% in 2023A to 9.41% in 2026E [9] - Debt-to-asset ratio is expected to decline from 48.50% in 2023A to 43.90% in 2026E [9]

Investment Rating - The report maintains a "Buy" rating for the company, with a target PE of 10x for 2025 [4][5] Core Views - The company's main brand, Xtep, achieved high single-digit year-over-year (YoY) growth in Q4 2024, with retail discounts ranging between 70-75% and inventory turnover days around 4 months, indicating stable operations [3] - E-commerce sales grew over 20% YoY in Q4 2024, driven by product structure optimization and the "Double 11" shopping festival, while offline sales grew at a low single-digit rate [3] - Saucony, a sub-brand, saw a 50% YoY growth in Q4 2024 and over 60% growth for the full year, with potential for long-term scale expansion due to improved product mix and store optimization [9] - The company is expected to achieve over 20% YoY growth in net profit attributable to shareholders in 2024, supported by the successful divestment of the KP business [9] Financial Performance and Projections - Revenue is projected to decline by 7.2% YoY in 2024 but rebound with 11.4% and 11.6% growth in 2025 and 2026, respectively [10] - Net profit attributable to shareholders is expected to grow by 20.5% YoY in 2024, followed by 11.9% and 12.5% growth in 2025 and 2026 [10] - Gross margin is forecasted to improve from 42.2% in 2023 to 44.7% in 2026, while net margin is expected to remain stable at around 9.4% from 2025 onwards [7] - ROE is projected to increase from 11.6% in 2023 to 12.2% in 2024, then stabilize at around 12% in the following years [10] Operational Highlights - The company optimized its offline store structure in 2024 by opening larger stores and closing smaller ones, with the proportion of ninth-generation stores gradually increasing [3] - Inventory levels remained healthy, with channel inventory turnover days at around 4 months by the end of Q4 2024, reflecting efficient retail operations and inventory management [9] - The company continued to enhance its e-commerce business by increasing the proportion of high-value-for-money products, contributing to strong online sales growth [3]

Investment Rating - The report maintains an "Outperform" rating for Xtep International (01368 HK) [1][6] Core Views - Xtep's main brand achieved high single-digit retail sales growth in Q4 and full year 2024, with online sales growing over 20% and offline sales growing low single-digit [2][3] - Saucony brand achieved over 60% growth in 2024, exceeding management guidance [2][3] - KP brand's divestiture is expected to enhance Xtep Group's profitability, with 2024 net profit target highly achievable [6] - 2024-2026 net profit forecast is adjusted to 1 25/14 0/15 6 billion yuan, representing year-over-year growth of 20 9%/12 5%/10 9% [6] Operational Performance - Xtep main brand's Q4 retail discount improved to 7-7 5折 compared to 7折 in the same period last year [3] - Year-end inventory-to-sales ratio improved to 4 months, down from 4-4 5 months in the same period last year [3] - Saucony achieved approximately 50% growth in Q4 2024 [3] - January trends show positive momentum with main brand achieving double-digit growth, partly driven by earlier Chinese New Year [3] Financial Projections - 2024-2026 revenue forecast: 13 738/14 902/16 196 billion yuan [7] - 2024-2026 net profit margin forecast: 9 1%/9 4%/9 6% [7] - 2024-2026 ROE forecast: 13 1%/13 8%/14 2% [7] - 2024-2026 PE ratio forecast: 11 3x/10 0x/9 0x [7] Valuation - Maintains reasonable valuation range of 6 1-6 6 HKD, corresponding to 11-12x 2025 PE [6] - Comparable company valuation shows Xtep trading at lower PE multiples than Anta and Li Ning [8] Strategic Focus - Company focuses on running category expertise, with main brand targeting mass market and Saucony targeting "dual elite" segment [6] - KP brand's divestiture expected to improve profitability, as it incurred annual operating losses of around 180 million yuan in 2022-2023 [6]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [6][34][38]. Core Viewpoints - The company is positioned as a leading domestic sportswear brand focusing on the running segment, leveraging continuous R&D investments to achieve technological advancements in footwear and apparel, thereby establishing high competitive barriers. The company is also enhancing brand competitiveness through differentiated channel strategies and effective marketing, indicating significant long-term growth potential [6][34][38]. - The financial forecasts predict the company's net profit attributable to shareholders for 2024, 2025, and 2026 to be 12.64 billion, 13.95 billion, and 15.99 billion RMB, respectively, representing year-on-year growth rates of 22.73%, 10.36%, and 14.65% [5][34][41]. Financial Summary - The company's revenue for FY2023 is projected at 14.35 billion RMB, with a year-on-year growth of 10.94%. For FY2024, revenue is expected to reach 14.86 billion RMB, reflecting a growth of 3.61%. The forecast for FY2025 and FY2026 is 15.41 billion and 16.94 billion RMB, with growth rates of 3.69% and 9.91%, respectively [5][25][34]. - The gross profit margin is expected to improve from 42.20% in FY2023 to 44.27% in FY2026, indicating a positive trend in profitability [5][25][34]. Market and Industry Insights - The running culture in China is growing, with a significant increase in marathon events and participants, which is expected to drive demand for running-related products. The number of certified marathon events in 2023 reached 699, nearing pre-pandemic levels, highlighting a robust recovery in the running community [136][139]. - The domestic sportswear market is witnessing a shift towards leading national brands, with the market share of top brands like Anta, Li Ning, and Xtep increasing significantly. The market concentration is expected to continue as consumer preferences evolve towards domestic brands [139][140]. Company Strategy and Development - The company has been focusing on expanding its online channels, which have shown a growth rate exceeding 20% year-on-year, contributing to over 30% of the main brand's revenue. This shift is expected to become a new growth driver for the company [21][22]. - The company actively sponsors marathon events and has signed multiple sports celebrities as brand ambassadors, reinforcing its professional image in the running segment and enhancing brand recognition among consumers [22][34]. Competitive Positioning - The company is strategically positioned in the running footwear market, with its main brand catering to both mass and elite consumer segments. The introduction of specialized brands like Saucony and Merrell targets professional runners and outdoor enthusiasts, further diversifying its market reach [34][126]. - The report highlights that the company's average PE ratio for 2024 is projected at 11.4X, which is lower than the industry average of 14.0X, suggesting potential undervaluation relative to its peers [34][41].

Investment Rating - The investment rating for the company is "Outperform the Market" [6] Core Views - The report highlights that the divestiture of KP Global is expected to enhance profits, with a projected dividend yield of 12.3% for 2024. The divestiture is anticipated to be completed by the end of November 2023, which will simplify the company's business structure and focus resources on running, thereby improving profitability [4][7] - The main brand's revenue growth in Q3 has slowed down, attributed to consumer fatigue, but the report expects the revenue growth of the main brand to remain stable, with children's products outperforming adult products [6][7] - The report indicates that the Sakoni brand has shown significant growth, with a revenue increase of over 50% year-on-year in Q3, and is expected to continue contributing positively to profits [6][7] Summary by Sections Financial Performance - The company reported a revenue of 14,346 million HKD in 2023, with a projected increase to 14,966 million HKD in 2024, reflecting a year-on-year growth of 4.32% [8] - Net profit for 2023 is estimated at 1,044 million HKD, with projections of 1,263 million HKD for 2024, indicating a year-on-year growth of 21.05% [8] - The gross margin is expected to improve from 42.17% in 2023 to 42.81% in 2024 [8] Valuation and Estimates - The report assigns a PE valuation range of 12-13X for 2024, with a corresponding fair value range of 6.14-6.65 HKD per share [7] - The company is expected to maintain a dividend payout ratio of 50%, leading to a projected dividend of 0.70 HKD per share in 2024 [8] Market Position - The report notes that the company has a complete and professional running product matrix, with Sakoni entering a profitable phase, which is expected to create a strong second growth curve in the medium to long term [7]

Investment Rating - The investment rating for the company is "Buy" and is maintained [5]. Core Views - The company reported a steady growth in revenue, with the main brand showing a single-digit year-on-year increase, while the Saucony brand experienced over 50% growth. The revenue performance aligns with expectations [3]. - Inventory levels remain healthy, with a stock-to-sales ratio of approximately 4 months, consistent with the previous quarter. The discount level is at 75%, which is considered healthy, indicating that the overall discount and inventory levels are leading the industry [4]. - Looking ahead, the company is expected to perform well in Q4 with a favorable consumption trend in October, and the professional sports brand Saucony is anticipated to continue its high growth, contributing positively to performance. Despite short-term consumer pressure, the separation of KP is expected to enhance earnings [4]. Summary by Sections Retail Data - The company released its Q3 retail data, indicating that the main brand's revenue grew in single digits year-on-year, while Saucony's revenue grew by over 50%, meeting expectations [3]. Inventory and Discounts - The inventory remains healthy with a stock-to-sales ratio of about 4 months, and the discount level is at 75%, which is considered a healthy benchmark in the industry [4]. Future Outlook - The company is projected to achieve net profits of 1.275 billion, 1.462 billion, and 1.620 billion yuan for the years 2024, 2025, and 2026 respectively, reflecting year-on-year growth rates of 24%, 15%, and 11%. The current price corresponds to P/E ratios of 11, 10, and 9 times for the respective years [4][6].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HK$6.95, representing a 24% increase from the previous target price of HK$5.61 [1][7]. Core Insights - The company's brand, Xtep, has shown a month-to-date (MTD) revenue growth of over 10% in October, indicating a strong performance that is expected to meet the annual guidance [4][6]. - For the fiscal year 2024, the overall revenue and net profit attributable to the parent company are projected to grow by 1.5% and 21.3%, reaching RMB 14.56 billion and RMB 1.25 billion, respectively [6][9]. - The report highlights that the company's inventory and discount levels are healthy, with expectations for continued improvement in gross margin [5][6]. Financial Projections - The revenue forecast for 2024 has been adjusted to RMB 14.56 billion, reflecting a 3.6% decrease from previous estimates, while the net profit forecast has been adjusted to RMB 1.25 billion, a decrease of 3.0% [9]. - The earnings per share (EPS) for 2024 is projected at RMB 0.47, with subsequent years showing growth to RMB 0.53 in 2025 and RMB 0.59 in 2026 [8][9]. - The report anticipates a gross margin improvement of 2.1 percentage points to 44.2% for 2024, alongside a net profit margin increase of 1.4 percentage points to 8.6% [6][9].

Investment Rating - The investment rating for the company is "Buy" with a 6-month target price maintained at 5.53 HKD [1] Core Insights - The report highlights that Xtep International's main brand has achieved a retail sales growth in the mid-single digits year-on-year, with a discount rate of approximately 75% and an inventory turnover of about four months [1] - The subsidiary brand Saucony has shown remarkable performance with retail sales growth exceeding 50% year-on-year [1] - The company is strategically focusing on its running business by potentially divesting K-Swiss and Paladin to strengthen its market position in the running sector [1] - The new industrial park in Bengbu, Anhui, which commenced operations in May 2023, includes approximately 48,000 square meters of footwear production facilities and 25,000 square meters for apparel, aimed at meeting expanding business demands [1] Summary by Sections Company Overview - Xtep International's total share capital is 2,644.52 million shares, with a total market capitalization of 14,624.18 million HKD [1] - The company has a net asset value per share of 3.90 HKD and a debt-to-asset ratio of 46.15% [1] Financial Projections - The revenue projections for the company from 2024 to 2026 are estimated at 16 billion RMB, 17.9 billion RMB, and 19.8 billion RMB respectively [1] - Net profits are projected to be 1.21 billion RMB, 1.41 billion RMB, and 1.65 billion RMB for the same period, with corresponding EPS of 0.46 RMB, 0.53 RMB, and 0.63 RMB [1] - The expected P/E ratios are 11, 10, and 8 for the years 2024, 2025, and 2026 respectively [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's main brand experienced a slowdown in sales growth in Q3, but the overall performance remains positive with improvements in online and offline sales due to consumer promotion policies [1][2] - The subsidiary brand, Saucony, continues to show strong growth, with retail sales increasing by over 50% year-on-year [1] - The company is expected to benefit from the gradual divestment of non-core businesses, which will enhance overall profitability [1] Financial Performance Summary - **Revenue Forecasts**: - 2023A: 14,346 million - 2024E: 14,977 million (growth rate: 4%) - 2025E: 15,225 million (growth rate: 2%) - 2026E: 16,634 million (growth rate: 9%) [1][2] - **Net Profit Forecasts**: - 2023A: 1,030 million - 2024E: 1,254 million (growth rate: 22%) - 2025E: 1,352 million (growth rate: 8%) - 2026E: 1,542 million (growth rate: 14%) [1][2] - **Earnings Per Share (EPS)**: - 2023A: 0.39 - 2024E: 0.47 - 2025E: 0.51 - 2026E: 0.58 [1][2] - **Price-to-Earnings (P/E) Ratio**: - 2023A: 13.4 - 2024E: 11.0 - 2025E: 10.2 - 2026E: 9.0 [1][2] - **Price-to-Book (P/B) Ratio**: - 2023A: 1.6 - 2024E: 1.3 - 2025E: 1.2 - 2026E: 1.0 [1][2] Market Position and Strategy - The company is focusing on a multi-brand strategy, with the main brand concentrating on the running segment, which has shown significant improvements in product, brand, and channel strength [1] - The company plans to enhance the Saucony brand's market presence by expanding its franchise channels [1] - The overall discount control remains healthy, with a retail discount of approximately 25% [1]

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 6.58 [4][6]. Core Views - The company reported a steady growth in its main brand, with a year-on-year revenue increase in the third quarter of 2024, although the growth rate has slowed due to pressure on customer traffic and attachment rates [1]. - The subsidiary Saucony showed a strong performance with a 50% year-on-year revenue increase in Q3 2024, continuing its robust growth trajectory [1]. - The ongoing divestiture of KP Global is progressing well, which is expected to reduce losses and enhance profitability, allowing the company to focus on its core brands [1][2]. Summary by Sections Company Overview - The main brand's revenue growth was driven by e-commerce and children's segments, with online and children's businesses achieving high double-digit and low double-digit growth, respectively [1]. - The retail discount for the main brand was approximately 25%, and the inventory turnover ratio was about four months, indicating stable operational levels [1]. Financial Forecast - The company forecasts a net profit growth of 25.3% in 2024, reaching RMB 1.291 billion, with corresponding EPS of RMB 0.49 [2][3]. - Revenue projections for 2024 to 2026 are RMB 15.085 billion, RMB 15.621 billion, and RMB 17.309 billion, respectively, reflecting a steady growth trajectory [3][9]. Valuation Metrics - The company is valued at a PE ratio of 10.7x for 2025, with a target price adjustment of 4.6% to HKD 6.58 based on its market position and operational stability [2][6]. - The average PE ratio for comparable companies in the industry is 11.6x, indicating a favorable valuation for the company [2][6].