Core Viewpoint - Baosheng International's Q1 2025 financial report indicates a significant decline in revenue and profit, reflecting the severe challenges faced by the traditional sports retail industry in China [1][4]. Financial Performance - The company's revenue for Q1 2025 was approximately 5.107 billion yuan, a decrease of 5.4% compared to the same period last year [1]. - Profit attributable to equity holders fell by 18.2% to about 138 million yuan [1]. - The gross profit margin was reported at 32.74%, while the net profit margin was only 2.91%, indicating limited profitability [6]. - The decline in profit was more pronounced than the revenue drop, with a year-on-year decrease of 20.65% in profit attributable to equity holders [6]. - As of December 31, 2024, the company's inventory reached 4.946 billion yuan, accounting for 52.6% of current assets, highlighting increased operational risks due to high inventory levels [6]. Market Dynamics - Online sales continue to outperform offline retail, driven by the company's commitment to enhancing its omnichannel capabilities [4]. - Despite the strong performance of online channels, foot traffic in physical stores remains volatile due to changing consumer behaviors and intense promotional environments [3][4]. - The number of stores in Greater China has decreased from 5,883 at the end of 2019 to 3,448 by December 31, 2024, reflecting a net reduction of 2,435 stores over five years [4]. Competitive Landscape - The shift towards direct-to-consumer (DTC) models by brands like Nike and Adidas poses a direct threat to traditional agents like Baosheng International [4][5]. - Brands are increasingly opening large flagship stores in prime locations, which diverts customers from traditional agents and pressures their pricing power [5]. - The expansion of self-operated channels allows brands to better control product pricing and marketing strategies, further squeezing the bargaining power and profit margins of agents [5]. Strategic Challenges - The company faces significant challenges in adapting to the evolving retail landscape and the pressures from brand direct sales strategies [4][6]. - Maintaining a strong financial position amidst declining revenues and profitability will require the company to seek new growth drivers and business models [6].

12 May 2025 Pou Sheng International 2025 1Q Results Disclaimer Yue Yuen and Pou Sheng have taken every reasonable care in preparing this presentation. However, please be reminded that the information, materials, opinions and statements contained or referred to in this presentation are all provided on an "as is" basis. None of the aforesaid information, materials, opinions and statements constitutes or will be viewed as investment advice or an offer, or a solicitation, recommendation or suggestion by Yue Yue ...

Financial Performance - For the three months ended March 31, 2025, the company reported revenue of approximately RMB 5,107.1 million, a decrease of 5.4% compared to RMB 5,400.3 million in the same period last year[9] - The gross profit for the same period was RMB 1,672.2 million, down 6.8% from RMB 1,794.0 million, resulting in a gross margin of 32.7%, a decline of 0.5 percentage points year-on-year[9] - Operating profit decreased by 16.9% to RMB 230.5 million from RMB 277.3 million, with an operating margin of 4.5%, down 0.6 percentage points year-on-year[9] - The net profit for the period was RMB 148.6 million, representing an 18.2% decrease from RMB 181.7 million in the previous year[9] - Profit attributable to the company's owners was RMB 138.4 million, down 20.6% from RMB 174.4 million year-on-year[9] - The total comprehensive income for the period was RMB 148.8 million, compared to RMB 182.7 million in the previous year[5] Financial Position - The company maintained a strong financial position with excellent net cash levels despite a challenging economic backdrop[7] Sales Performance - Online sales continued to outperform offline retail, driven by the company's commitment to enhancing its omnichannel capabilities[7] - The company is dynamically managing its store portfolio to improve sales conversion rates amid fluctuating foot traffic in physical stores[7] Accounting Standards - The company has adopted revised Hong Kong Financial Reporting Standards effective from January 1, 2025, with no significant impact on its financial performance[6]

Financial Performance - For the fiscal year ending December 31, 2024, the company's revenue was RMB 18,453,923, a decrease of 8.0% compared to RMB 20,064,497 in 2023[12] - Gross profit for the same period was RMB 6,308,950, down 6.6% from RMB 6,755,980 in the previous year[12] - Operating profit decreased by 3.6% to RMB 709,226 from RMB 735,861 in 2023[12] - The profit attributable to the company's owners was RMB 491,497, a slight increase of 0.2% from RMB 490,425[12] - The gross profit margin improved to 34.2%, up 0.5 percentage points from 33.7%[12] - The company reported a 22.4% decrease in cash and cash equivalents, totaling RMB 1,419,052 compared to RMB 1,827,563 in 2023[12] - In 2024, the company recorded operating revenue of RMB 18,453.9 million, a decrease of 8.0% compared to 2023[43] - Gross profit for 2024 was RMB 6,308.9 million, down 6.6% year-on-year, with a gross margin increase of 0.5 percentage points to 34.2%[46] - Sales and distribution expenses for 2024 were RMB 5,136.1 million, accounting for 27.8% of operating revenue, a slight decrease from 27.9% in 2023[47] - Operating profit decreased by 3.6% to RMB 709.2 million, with an operating profit margin slightly improving by 0.1 percentage points to 3.8%[48] - Financial income for 2024 was RMB 50.0 million, while financing costs decreased by 26.6% to RMB 67.8 million[49] - The net profit attributable to the company's owners was RMB 491.5 million, with a profit margin of 2.7%, up 0.3 percentage points year-on-year[50] Market Environment - In 2024, the retail sales of clothing, footwear, and knitted goods in China grew by only 0.3%, while overall retail sales increased by 3.5%, indicating a challenging market environment[35] - The company reported a nearly 30% year-on-year decline in foot traffic to physical stores, although the in-store conversion rate improved, partially offsetting the negative trend in same-store sales[37] - The total number of directly operated stores in Greater China decreased from 4,093 at the beginning of the year to 3,448 by the end of 2024, reflecting a net reduction of 75 stores[39] - The company's omnichannel sales contributed approximately 28% to total sales in 2024, helping to mitigate the impact of weak foot traffic in physical stores[40] - The group anticipates that the retail environment will remain volatile and challenging in 2025, focusing on balancing sales momentum and profit margins[56] Strategic Initiatives - The company is focusing on digital transformation and operational excellence to enhance store efficiency and optimize channel mix[27] - The company upgraded its ERP system to improve decision-making efficiency and operational excellence[29] - The company is expanding its market presence in lower-tier cities through enhanced collaboration with wholesale partners[28] - The company continues to enhance its digital capabilities and optimize its store layout to improve customer experience and operational efficiency[39] - The company is committed to advancing digitalization and robust channel strategies while deepening strategic partnerships with brand partners[30] - The company aims to balance sales momentum with profitability as a primary objective in the upcoming challenging year of 2025[30] - The group aims to enhance operational efficiency and implement a digital transformation strategy, including the launch of a new multi-brand outlet store "Victory Warehouse" to provide high-quality products at great value[56] - The group plans to expand its product categories and market segments, including opening new single-brand stores for Crocs, Saucony, and Pony 1972, and targeting the outdoor market with Jack Wolfskin and Dynafit[57] Corporate Governance - The company has a strong focus on corporate governance, with independent directors actively participating in various committees[66][67] - The board of directors includes experienced members with backgrounds in finance, management, and corporate governance, enhancing strategic planning and development[68][69][70][71][72][73] - The company maintains transparency in its operations and governance, adhering to regulatory requirements and best practices in corporate governance[66][67] - The board consists of eight directors, including three independent non-executive directors, ensuring compliance with listing rules regarding board composition[170] - The roles of the Chairman and the CEO are separated to ensure a balanced distribution of power and authority within the board[172] - The board is committed to maintaining high standards of corporate governance to enhance shareholder returns and ensure effective management[166] Employee and Talent Management - The company is committed to expanding its talent pool and providing competitive compensation and development opportunities to attract and retain skilled employees[85] - The company has established effective retention systems and succession planning to address the risk of losing key management personnel[85] - The company has arranged suitable directors and officers liability insurance for its directors and senior management[123] - The company provides ongoing professional development for directors to enhance their knowledge and skills[181] Environmental, Social, and Governance (ESG) Initiatives - The company is actively involved in environmental, social, and governance (ESG) initiatives, reflecting its commitment to sustainable practices[75] - The group has established a climate change policy and is actively monitoring regulatory changes related to carbon emissions[89] - The company has implemented measures to reduce carbon emissions and improve energy efficiency as part of its ESG initiatives[95] - The group has established a dedicated ESG team to manage environmental risks and promote sustainable practices[95] Shareholder Information - The company proposed a final dividend of HKD 0.01 per share and a special dividend of HKD 0.01 per share, totaling an annual dividend of HKD 0.06 per share, with a payout ratio of 60%, doubling from last year[30] - The company declared an interim dividend of HKD 0.02 per share and a special dividend of HKD 0.02 per share, totaling approximately HKD 213.0 million for the six months ended June 30, 2024, compared to HKD 98.5 million for the same period in 2023[79] - The total dividend for the year 2024 is expected to be HKD 0.06 per share, with a payout ratio of 60%, up from 30% in 2023[79] Risk Management - The company is addressing potential risks from natural disasters and public health crises that could impact its retail operations[87] - The company has made significant investments in technology infrastructure to mitigate risks related to IT and data security, including regular testing and maintenance plans[84] - The group has made significant investments in logistics and delivery infrastructure to enhance operational efficiency and reduce costs[87]

Investment Rating - The investment rating for the company is "Outperform the Market" [5][3]. Core Views - The company experienced a revenue decline of 8.0% year-on-year in 2024, totaling 18.454 billion yuan, primarily due to weak offline foot traffic and channel restructuring. However, net profit showed resilience, increasing by 0.2% to 491 million yuan, supported by improved gross margin and effective cost management strategies [1][3]. - The company is focusing on enhancing its online channels, with the proportion of revenue from all-channel sales rising to 28%, a 16% increase year-on-year. Key drivers include significant growth in sales through Douyin and the integration of local live streaming with national inventory [2][3]. - The management outlook for 2025 indicates stable revenue and profit, with a target of maintaining the number of direct stores around 3,300 and increasing the all-channel revenue share to 30% [2][3]. Summary by Sections Financial Performance - In 2024, the company reported a total revenue of 18.454 billion yuan, with a net profit of 491 million yuan. The gross margin improved by 0.5 percentage points to 34.2% due to strict discount control and inventory optimization [1][4]. - The fourth quarter of 2024 saw a revenue decline of 3.2% year-on-year, with a net profit drop of 17.3% to 150 million yuan, attributed to the same challenges faced throughout the year [1][2]. Operational Insights - The company reduced its direct store count by 75 to 3,448, while the average store area increased slightly. The average monthly sales per square meter and per store declined significantly due to poor customer traffic [2]. - The company plans to open 100 new stores in 2025, contributing to revenue growth from new brands that have been incubated over the past one to two years [2][3]. Future Projections - The company expects stable revenue and profit for 2025, with net profit projections of 492 million yuan, reflecting no growth compared to 2024. The target price is maintained at 0.59 to 0.69 HKD, corresponding to a PE ratio of 6-7x for 2025 [3][4].

Investment Rating - The investment rating for the company is "Outperform the Market" [5][3][25] Core Views - The company experienced a revenue decline of 8.0% year-on-year in 2024, totaling 18.454 billion yuan, primarily due to weak offline foot traffic and channel restructuring. However, net profit showed resilience, increasing by 0.2% to 491 million yuan, supported by improved gross margin and effective cost management strategies [1][3][25] - The company is focusing on enhancing its online channels, with the proportion of revenue from all-channel sales rising to 28%, a year-on-year increase of 16%. Key drivers include a doubling of sales on Douyin and the integration of localized live streaming with national inventory [2][3][25] Summary by Sections Financial Performance - In 2024, the company achieved a gross margin of 34.2%, up 0.5 percentage points year-on-year, due to strict discount control and inventory optimization. Operating profit margin increased by 0.1 percentage points to 3.8%, while net profit margin rose by 0.3 percentage points to 2.7% [1][3][25] - The fourth quarter of 2024 saw a revenue decline of 3.2% year-on-year to 4.47 billion yuan, with net profit dropping 17.3% to 150 million yuan, attributed to the same factors affecting overall performance [1][2] Future Outlook - Management projects stable revenue and profit for 2025, with a target of maintaining revenue at the same level as 2024. The gross margin and operating profit margin are expected to remain stable, with a focus on adjusting the number of direct stores based on market trends [2][3][25] - The company plans to increase the all-channel revenue share to 30% and aims to open 100 new stores for new brands, which are expected to contribute positively to revenue [2][3] Valuation - The target price for the company is set between 0.59 and 0.69 HKD, corresponding to a price-to-earnings ratio (PE) of 6-7x for 2025. The net profit forecasts for 2025-2027 are 490 million, 540 million, and 600 million yuan, reflecting a growth of 0%, 11%, and 10% respectively [3][4][25]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 0.70, indicating a potential upside of 22.8% from the current price of HKD 0.57 [4][8]. Core Insights - The company is expected to see a marginal improvement in performance, with a high probability of earnings recovery in 2025. This is supported by a low valuation and an increased dividend yield, which provides significant upside potential compared to downside risks [8]. - The revenue trend is anticipated to reverse starting in the second quarter of 2024, with management expecting a return to healthier inventory levels in the industry by April. The company aims for its 2025 revenue to remain stable year-on-year [8]. - There is potential for a slight improvement in operating profit margins in 2025 due to expected retail discount improvements and increased sales of new products. However, the growth of e-commerce may continue to impact channel structure [8]. - The company is likely to maintain a high dividend payout ratio in 2025, with an expected dividend yield exceeding 10%, providing a safety net for the stock price [8]. Financial Forecasts - Revenue projections for the company are as follows: - 2023: RMB 20,064 million - 2024: RMB 18,454 million - 2025: RMB 18,592 million - 2026: RMB 19,272 million - 2027: RMB 19,782 million - The net profit attributable to shareholders is projected to increase from RMB 490 million in 2023 to RMB 684 million in 2027, reflecting a compound annual growth rate [3][10]. - The company’s price-to-earnings (P/E) ratio is expected to decrease from 5.6x in 2024 to 4.0x in 2027, indicating a more attractive valuation over time [3][10]. Market Performance - The company's stock has a 52-week price range of HKD 0.48 to HKD 0.69, with a current market capitalization of HKD 3,036 million [4][8]. - The average daily trading volume over the past three months is HKD 0.7 million, suggesting moderate liquidity in the stock [4].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 0.70, indicating a potential upside of 22.8% from the current price of HKD 0.57 [4][8]. Core Insights - The company is expected to see a marginal improvement in performance, with a high probability of earnings recovery in 2025. This is supported by a low valuation and an increased dividend yield, which provides significant upside potential compared to downside risks [8]. - The revenue trend is anticipated to reverse starting in the second quarter of 2024, with management expressing confidence in achieving year-on-year revenue growth in the latter half of 2024 [8]. - The operating profit margin for 2025 is projected to improve slightly due to better retail discounts and an increased sales proportion of new products, despite potential challenges from e-commerce growth affecting channel structure [8]. - The company is likely to maintain a high dividend payout ratio in 2025, with an expected dividend yield exceeding 10%, providing a safety net for the stock price [8]. Financial Forecasts - Revenue is forecasted to decline from RMB 20,064 million in 2023 to RMB 18,592 million in 2025, with a year-on-year change of -8% in 2024 and a slight recovery of 1% in 2025 [3][10]. - The net profit attributable to shareholders is projected to increase from RMB 490 million in 2023 to RMB 523 million in 2025, reflecting a significant growth of 450% in 2023, followed by modest growth rates in subsequent years [3][10]. - The price-to-earnings ratio is expected to decrease from 5.6x in 2023 to 4.0x in 2027, indicating a more attractive valuation over time [3][10]. Market Performance - The company's stock has a 52-week price range of HKD 0.48 to HKD 0.69, with a current market capitalization of HKD 3,036 million [4][6]. - The average daily trading volume over the past three months is HKD 0.7 million, suggesting moderate liquidity in the stock [4][6].

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 0.90, indicating a potential upside of 53.3% from the current price of HKD 0.59 [1][2][7]. Core Insights - The report highlights that the company's profit margins have improved due to better discount control and operational efficiency, with a stable performance expected in 2025 [6]. - For 2024, the company anticipates a revenue decline of 8.0% to RMB 18.45 billion, but it expects to maintain a stable profit margin through cost control and efficiency improvements [6]. - The company plans to enhance its multi-channel strategy, including the introduction of new brands and digital transformation initiatives to capture new growth opportunities [6]. Financial Overview - Revenue projections for the company are as follows: RMB 20,064 million in 2023, RMB 18,454 million in 2024, and RMB 18,831 million in 2025, with a projected growth of 2.0% in 2025 [5][9]. - Net profit is expected to increase from RMB 490 million in 2023 to RMB 546 million in 2025, reflecting a growth rate of 11.1% [5][9]. - The company’s gross margin is projected to improve to 34.5% in 2025, up from 34.2% in 2024 [10]. Stock Performance - The stock has shown a year-to-date increase of 18.0% and has a market capitalization of approximately HKD 3,057.68 million [4][6]. - The stock's 52-week high and low are HKD 0.70 and HKD 0.48, respectively [4].

Investment Rating - The report assigns a "Buy" rating for the company, Baoshan International (3813 HK) [2][6][12] Core Insights - The company is expected to maintain stable performance in 2025, with revenue projected to be flat year-on-year. The average selling price is anticipated to grow slightly, while order volume is expected to remain stable [6][9] - The company has improved its profit margins through discount control and enhanced operational capabilities, despite a decline in revenue due to reduced foot traffic in physical stores [6][9] - The target price for the company has been adjusted down to HKD 0.90 from HKD 1.01, reflecting an 8x price-to-earnings ratio for 2025 [6][7] Financial Overview - Revenue is projected to decrease by 8.0% in 2024 to RMB 18,454 million, with a slight recovery expected in 2025 to RMB 18,831 million, representing a 2.0% year-on-year growth [5][9] - Net profit is expected to grow by 11.1% in 2025, reaching RMB 546 million, with earnings per share projected at RMB 0.11 [5][9] - The company’s gross margin is expected to improve to 34.5% in 2025, up from 34.2% in 2024, driven by effective inventory management and discount control [6][10] Stock Performance - The stock closed at HKD 0.59, with a potential upside of 53.3% to the target price of HKD 0.90 [1][7] - The stock has shown an 18.0% increase year-to-date [4] Market Position - The company is focusing on new brand development and enhancing its multi-channel strategy to adapt to market changes and capture new growth opportunities [6][9]