Investment Rating - The report downgrades Topsports' rating to HOLD, with a target price of HK$ 2.82, based on a 12x FY2/25E P/E [2]. Core Views - Topsports' 1H25 results were in line with the profit warning, showing a YoY sales drop of 8% to RMB 13.1 billion and a net profit decline of 35% YoY to RMB 874 million [2]. - The outlook for 2H25E is grim, with management expecting sales to drop by high single digits YoY and net profit to plunge by 35% to 45% YoY [2]. - The decline in gross profit margin to 41.1% (down 3.6 percentage points) was larger than expected, but was mitigated by stronger cost control [2]. - The company is experiencing significant challenges due to a drop in offline traffic and increased retail discounts, alongside a higher share of lower-margin e-commerce sales [2]. Financial Summary - Revenue for FY25E is projected at RMB 26.693 billion, reflecting an 8% decline YoY, while FY26E revenue is expected to recover slightly to RMB 27.665 billion [10]. - The net profit for FY25E is estimated at RMB 1.314 billion, a decrease of 41% from FY24, with a diluted EPS of RMB 0.212 [10]. - The gross margin is expected to be 39.1% for FY25E, down from 41.8% in FY24, indicating ongoing margin pressure [10]. - The company declared a dividend per share (DPS) of RMB 16.0, implying a payout ratio close to 100% [2]. Earnings Revision - Adjustments to net profit estimates for FY25E, FY26E, and FY27E are -11%, -13%, and -11% respectively, reflecting weaker-than-expected sales and increased retail discounts [6]. - The report highlights a significant drop in operating profit for FY25E, projected at RMB 1.710 billion, down 39% YoY [10]. Market Context - The report notes that Topsports is heavily reliant on the Nike brand, which is undergoing reforms that may take 1 to 2 years to yield positive results [2]. - The industry is facing destocking risks, with major brands like Nike and Li Ning increasing promotions during peak sales periods [2].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company reported FY25H1 results showing a revenue of 13.055 billion yuan, down 7.9% year-on-year, and a net profit of 874 million yuan, down 34.7% year-on-year, primarily due to increased promotional efforts and deeper discounts leading to a decline in gross margin [2] - The company continues to enhance its brand matrix, optimize offline stores, and strengthen membership operations, with significant growth in online sales through platforms like Douyin [2][3] - Despite the challenging retail environment, the long-term growth potential in the sports sector remains, supported by stable cash flow and high dividend payouts [3] Financial Performance Summary - FY2023A total revenue was 27.074 billion yuan, with a year-on-year decline of 15.07%. For FY2024A, revenue is projected to increase to 28.950 billion yuan, a growth of 6.93% [1] - The net profit for FY2023A was 1.837 billion yuan, with a year-on-year decrease of 24.93%. The forecast for FY2024A is a net profit of 2.213 billion yuan, reflecting a growth of 20.49% [1] - The latest diluted EPS for FY2023A was 0.30 yuan per share, with projections of 0.36 yuan for FY2024A and a decline to 0.21 yuan for FY2025E [1][11] - The company’s gross margin for FY25H1 was 41.1%, down 3.6 percentage points year-on-year, attributed to increased promotional activities and a higher proportion of lower-margin wholesale sales [3] - The inventory as of FY25H1 was 6.12 billion yuan, an increase of 6.4% year-on-year, with inventory turnover days rising to 145 days [3]

Investment Rating - The report assigns a rating of "Accumulate (downgraded)" for the company [1] Core Views - The company reported a revenue of 13.1 billion RMB for FY25H1, a decrease of 8% year-on-year, with the main brand contributing 11.4 billion RMB, also down 8% [1] - The retail revenue accounted for 10.9 billion RMB, representing 84% of total revenue, down 9% year-on-year [1] - The net profit attributable to shareholders was 870 million RMB, a decline of 35% year-on-year [1] - The company continues to enhance its online presence through live streaming and social media, with significant growth in sales on platforms like Douyin [1][3] - The company is expanding its brand partnerships and diversifying its product offerings, particularly in the outdoor sports segment [3][4] Summary by Sections Financial Performance - For FY25H1, the company reported total revenue of 13.1 billion RMB, down 8% year-on-year, with net profit of 870 million RMB, down 35% [1] - The company plans to adjust its revenue forecasts for FY25-27 to 26.9 billion RMB, 30.5 billion RMB, and 33.8 billion RMB respectively [4] Retail Strategy - The company is focusing on optimizing its store network by closing underperforming stores and enhancing the efficiency of existing ones [2] - As of FY25H1, the company had 5,813 stores, a reduction of 331 stores compared to the previous period [1] Brand Expansion - The company has initiated partnerships with brands like HOKA ONE ONE and KAILAS, and is the exclusive operator for the Canadian brand norda in China [3] - The collaboration with Fanatics aims to expand the commercialization of sports IP in the Greater China region [4]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for medium to long-term growth driven by strong retail operational capabilities [1][3]. Core Insights - The company is expected to achieve healthy and steady growth in the medium to long term, despite a downward adjustment in net profit forecasts for FY2025-FY2027 due to the current domestic apparel consumption environment [1]. - For FY2025H1, the company's revenue was 13.05 billion RMB, a year-on-year decline of 8%, and net profit was 870 million RMB, down 35% year-on-year, which was in line with expectations [1][2]. - The gross margin for FY2025H1 was 41.1%, a decrease of 3.6 percentage points year-on-year, influenced by deeper discounts and changes in channel mix [1]. - The company plans to distribute an interim dividend of 0.14 RMB per share, maintaining a high dividend payout ratio of 100%, which is an increase from 74.2% in the same period of 2023 [1][2]. Financial Summary - The financial summary indicates a decline in revenue from 36.01 billion RMB in FY2021 to an estimated 26.55 billion RMB in FY2025, reflecting a compound annual growth rate (CAGR) of -8.3% [2]. - Net profit is projected to decrease from 2.77 billion RMB in FY2021 to 1.39 billion RMB in FY2025, representing a significant decline of 37.1% [2]. - The price-to-earnings (PE) ratio is expected to decrease from 18.9 in FY2022 to 11.3 in FY2025, indicating a more attractive valuation over time [2]. Market Performance - The company's stock is currently priced at 2.76 HKD, with a market capitalization of 17.115 billion HKD [5]. - The stock has experienced a 52-week price range between 2.23 and 6.74 HKD, indicating significant volatility [5].

上 市 公 司 证 券 研 究 报 告 商业贸易 公 司 点 评 / 公 司 点 评 报告原因：有业绩公布需要点评 | --- | --- | |--------------------------|-------------------------------| | 市场数据： | 2024 年 10 月 24 日 | | 收盘价（港币） | 2.76 | | 恒生中国企业指数 | 7359.14 | | 52 周最高/最低（港币） | 6.96/2.11 | | H 股市值（亿港币） | 171.15 | | 流通 H 股（百万股） | 6,201.22 | | 汇率（人民币/港币） | 1.0899 | 一年内股价与基准指数对比走势： -51% -1% 49% HSCEI 滔搏 资料来源：Bloomberg 证券分析师 王立平 A0230511040052 wanglp@swsresearch.com 刘佩 A0230523070002 liupei@swsresearch.com 研究支持 刘佩 A0230523070002 liupei@swsresearch.com 联系人 刘佩 (8621)23 ...

Investment Rating - The investment rating for the company is "Outperform the Market" [3][5][24]. Core Views - The company experienced a decline in revenue and net profit in the first half of the fiscal year 2025, with revenue down 7.9% year-on-year to 13.05 billion yuan and net profit down 34.6% to 870 million yuan, primarily due to weak macro demand and reduced offline foot traffic [3][24]. - Despite the challenges, the company maintains a strong cash flow, with operating cash flow net amounting to 2.61 billion yuan, a 2.5% increase year-on-year, supporting a high dividend payout ratio of 99% [3][24]. - The company is optimistic about future performance as it anticipates a recovery in consumer demand and adjustments from downstream clients, which could lead to a return to growth [3][24]. Summary by Sections Financial Performance - Revenue for the first half of fiscal year 2025 decreased by 7.9% to 13.05 billion yuan, while net profit fell by 34.6% to 870 million yuan [3][24]. - The gross profit margin declined by 3.7 percentage points to 41.1%, influenced by increased discount rates and a higher proportion of lower-margin wholesale channels [3][24]. - The company has adjusted its profit forecasts for fiscal years 2025 to 2027, now expecting net profits of 1.44 billion, 1.79 billion, and 1.92 billion yuan respectively, reflecting a significant downward revision [3][24]. Business Model Analysis - Retail and wholesale channels saw declines of 8.9% and 2.2% respectively, with online retail outperforming offline, as the share of direct online sales increased to 30% [3][24]. - The company closed over 300 stores in the first half of the fiscal year, reducing the total number of stores to 5,813, a decrease of 396 year-on-year [3][24]. Market Position and Strategy - The company continues to focus on improving store efficiency and has implemented stricter standards for new store openings and renovations [3][24]. - Membership numbers have increased, with a total of 81 million members contributing 93.7% of sales, indicating strong customer loyalty and potential for future sales growth [3][24]. Valuation - The reasonable valuation range has been adjusted to 3.80 - 4.00 HKD, down from the previous range of 6.80 - 7.20 HKD, reflecting the revised profit forecasts [3][24].

Investment Rating - The report maintains a "Buy" rating for the company, with an updated target price of HKD 3.07, representing a potential upside of 11.2% from the current price of HKD 2.76 [1][9]. Core Insights - Despite a year-on-year decline of 34.7% in net profit for 1HFY25, the company reported a 2.5% increase in operating cash flow, with a free cash flow to net profit ratio rising to 2.8x compared to 1.8x in 1HFY24, indicating strong operational capabilities and cash flow management [1]. - The management has provided a cautious full-year guidance for FY25, expecting a high single-digit decline in revenue and a net profit drop of 35%-45%, which is more severe than the decline observed in 1HFY25 [1][7]. - The company is facing significant short-term inventory and discount pressures, with management noting that retail discounts have deepened more than in the first half of the year due to ongoing challenges in foot traffic [1][7]. Financial Performance Summary - For FY2023, the company reported revenue of RMB 27,073 million, which is expected to decline to RMB 26,653 million in FY2025, reflecting a year-on-year decrease of 7.9% [3][4]. - The net profit for FY2023 was RMB 1,837 million, projected to drop to RMB 1,380 million in FY2025, indicating a significant year-on-year decline of 38% [3][4]. - The operating profit margin is expected to decrease from 9.0% in FY2024 to 6.5% in FY2025, highlighting the pressure on profitability [4][6]. Operational Insights - The company has demonstrated strong operational capabilities, successfully managing to maintain stable expense ratios despite a significant drop in net profit, which has allowed for an increase in dividend payout ratios [1][7]. - Management emphasizes that the current guidance is based on conservative estimates, suggesting that actual performance may exceed these projections due to potential positive factors not included in the guidance [1][7]. Market Context - The report indicates that the overall industry demand remains uncertain, with increased competition in the high-end sportswear market posing additional challenges [1][7].

Investment Rating - The report maintains a "Buy" rating for the company [3] Core Views - The company experienced a revenue decline of 7.9% year-on-year in FY2025H1, with a net profit drop of 34.7% to 870 million RMB, attributed to a challenging consumer environment and increased terminal discounts [1] - Despite short-term performance pressures, the company continues to implement a high dividend strategy, declaring an interim dividend of 0.14 RMB per share, resulting in a dividend payout ratio of 99% and a dividend yield of 5.4% based on the closing price on October 23 [1] - The company is expanding its brand partnerships and optimizing its store structure to ensure long-term growth, including becoming the exclusive operator for the high-end outdoor brand Norda in China [1][2] Revenue and Profitability - For FY2025H1, the company's revenue was 13.055 billion RMB, with a gross margin of 41.1%, down 3.6 percentage points year-on-year [1] - The company's retail and wholesale businesses both saw declines, with wholesale revenue down 2.2% to 2.04 billion RMB and retail revenue down 8.9% to 10.92 billion RMB [2] - The company anticipates a further revenue decline in FY2025, projecting a nearly 40% drop in net profit due to ongoing market uncertainties [6] Business Model and Strategy - The company is focusing on enhancing its online presence, with over 2,500 stores opening mini-programs and a 200% increase in sales through Douyin live streaming, making it the top player in the outdoor sports category on the platform [2] - The company has increased its membership base to 81 million, with member sales accounting for 93.7% of total sales, indicating strong consumer loyalty [2] Financial Forecast - The company’s revenue is projected to decline to 26.523 billion RMB in FY2025, with net profit expected to drop to 1.337 billion RMB [10][14] - The report adjusts the net profit forecasts for FY2025 to FY2027 to 1.337 billion RMB, 1.476 billion RMB, and 1.639 billion RMB respectively, with a corresponding P/E ratio of 12 times for FY2025 [6][10]

Investment Rating - Maintain "Overweight" rating with a target price of HKD 2.84 [1] Core Views - The company's H1 FY2024/25 revenue and net profit attributable to shareholders decreased by 7.9% and 34.7% YoY respectively, with a dividend payout ratio of 99.4% [1] - The company's performance is under pressure due to weak retail demand, but it maintains a high dividend policy and expects retail recovery driven by policy stimulus [2] - The company is adjusting its offline store structure, focusing on store efficiency, and expanding its online presence through live streaming [2] Financial Performance - H1 FY2024/25 revenue was RMB 13.05 billion, down 7.9% YoY, while net profit attributable to shareholders was RMB 870 million, down 34.7% YoY [1] - Gross margin decreased by 3.6 percentage points to 41.1%, mainly due to increased promotional efforts and higher online sales proportion [1] - Operating cash flow increased by 2.5% YoY to RMB 2.61 billion in H1 FY2024/25 [1] Business Segments - Revenue from the main brands (Nike + Adidas) decreased by 8.1% YoY, accounting for 87.0% of total revenue [1] - Retail and wholesale revenue decreased by 8.9% and 2.2% YoY respectively, with retail accounting for 83.7% of total revenue [1] - The number of directly operated stores decreased by 5.4% QoQ to 5,813 as of August 2024, with average store size increasing by 4.8% YoY [1] Future Outlook - The company expects retail improvement driven by recent consumption stimulus policies, particularly in the sports sector [2] - The company has revised its profit forecasts for FY2025-2027, with net profit attributable to shareholders expected to decrease by 11%, 4%, and 3% respectively compared to previous forecasts [2] - The company's EPS for FY2025/26/27 is forecasted to be RMB 0.21/0.26/0.31, with corresponding P/E ratios of 12/10/8 [2] Operational Adjustments - The company is focusing on optimizing store efficiency, opening new stores for main brands and professional vertical brands, and closing low-performing stores [2] - The company has significantly expanded its online presence, with over 2,500 mini-program stores and over 300 live streaming accounts as of August 2024 [2]

Financial Data and Key Metrics Changes - The overall revenue fell by 7.9% to RMB 13.05 billion, primarily due to subdued macroeconomic demand and diminished foot traffic from offline customers [12][7] - Retail business revenue decreased by 8.9% to RMB 10.92 billion, while wholesale business revenue fell by 2.2% to RMB 2.04 billion [12] - The company registered a 35% decline in pretax profit, but operating cash flow rose by 2.5% [10][11] - The dividend payout ratio was 99.9%, maintaining a leading position in the industry [5][11] Business Line Data and Key Metrics Changes - The main brand sales revenue fell by 8.1% to RMB 11.35 billion, contributing 87.6% to total sales revenue, while other brands accounted for 12.4% of revenue, marking a slight rise of 0.2% [12] - The gross profit margin experienced a year-on-year decline of 3.6%, attributed to increased discount rates and a shift in sales distribution towards lower-margin wholesale channels [12][15] Market Data and Key Metrics Changes - The overall consumer market remains unclear, but supportive macroeconomic policies are anticipated to stimulate consumption [5][36] - The company noted a shift in consumer behavior from in-person to online shopping, which has increased the pressure on physical retail [36][37] Company Strategy and Development Direction - The company is committed to a flexible omni-channel strategy, enhancing integrated retail frameworks that merge online and offline channels [4][36] - There is a focus on broadening category layouts and solidifying market advantages across various sports sub-sectors [4][36] - The company aims to adapt to changing consumer preferences and enhance user experience through targeted optimizations [4][38] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a sluggish macroeconomic environment but expressed confidence in the long-term strategy and cash flow management [5][36] - The company anticipates beneficial shifts in the consumer market as macroeconomic policies take effect, despite the current unclear market conditions [5][36] - Management remains cautious about the second half of the year, projecting a potential decline in profits [86][87] Other Important Information - The company has maintained a strong cash generation capability, with net cash flow from operating activities reaching a billion, marking a 2.5% rise from the same period last year [28][29] - The number of directly operated stores decreased by 396, with a focus on optimizing store layouts and improving efficiency [41][40] Q&A Session Summary Question: Inventory management and new CEO impact - The company plans to work with brands facing inventory issues and is optimistic about the new CEO's potential to improve product innovation and market share in China [61][66][70] Question: Strategies for the November 11 shopping event - The company is mobilizing online and offline resources for the shopping event, acknowledging high industry inventory levels and the importance of this sales opportunity [73][74] Question: Market sentiment and consumer behavior changes - Management noted that government initiatives, such as consumption coupons, are positively impacting consumer sentiment, although quantifiable effects remain uncertain [75][90]