Core Viewpoint - The company reported a revenue of 12.3 billion yuan for FY25/26 H1, a year-on-year decrease of 5.8%, and a net profit of 790 million yuan, down 9.7% year-on-year, while proposing an interim dividend of 0.13 yuan per share, with a payout ratio increasing by 2.8 percentage points to 102.2% [1] Revenue and Profit Analysis - The main brands (Nike + Adidas) and other brands (PUMA + Converse + VF, etc.) saw revenue declines of 4.8% and 12.2%, respectively, with total revenues of 10.81 billion yuan and 1.41 billion yuan, accounting for 87.9% and 11.5% of total revenue [1] - Retail and wholesale businesses experienced declines of 3.0% and 20.3%, with revenues of 10.60 billion yuan and 1.62 billion yuan, while online retail achieved double-digit growth [2] Operational Efficiency and Cash Flow - The company's gross margin decreased by 0.1 percentage points to 41.0%, primarily due to increased discounts from a higher proportion of online sales, although retail sales and brand support partially offset this impact [2] - The end-of-period inventory decreased by 4.7% to 5.83 billion yuan, with inventory turnover days increasing by 1.7 days to 150 days [2] - Net cash flow from operating activities fell by 48.2% to 1.36 billion yuan, influenced by changes in accounts receivable and payable [2] Strategic Initiatives - The company is enhancing its competitive edge through a comprehensive retail strategy and expanding its presence in running and outdoor segments, adding new partner brands and opening a multifunctional running community store in Shanghai [3] - The company aims to improve profitability and maintain a high dividend payout ratio, with expectations for profit stability in FY26 and improved margins in the long term [3] Earnings Forecast and Valuation - The company has adjusted its net profit forecasts for FY2026-27 down by 20% and 23% to 1.30 billion yuan and 1.49 billion yuan, respectively, while introducing a forecast of 1.70 billion yuan for FY28 [3] - The target price is set at 4.0 HKD, reflecting a PE ratio of 15.2x for FY27, maintaining a "buy" rating due to the company's leading position in comprehensive retail and attractive dividend yield [3]

Core Viewpoint - The company reported its FY26 interim results, which met expectations, and continued its high dividend policy, emphasizing shareholder returns Financial Performance - Revenue for the first half of FY26 decreased by 6% year-on-year to 12.3 billion yuan, while net profit attributable to shareholders fell by 10% to 790 million yuan, aligning with expectations [1] - The company proposed an interim dividend of 0.13 yuan per share, resulting in a high payout ratio of 102% [1] Brand Performance - Revenue from the main brand declined by 5% to 10.81 billion yuan, with the decline rate improving from 6% in FY25, accounting for 88% of total revenue [1] - Other brands saw a 12% drop in revenue to 1.41 billion yuan, representing 12% of total revenue, while joint venture revenue fell by 15% to 60 million yuan [1] Channel and Operational Efficiency - Direct sales revenue decreased by 3% to 10.6 billion yuan, making up 86% of total revenue, with a reduction of 332 stores to 4,688 [2] - The company is leveraging multi-channel strategies, including Douyin, mini-programs, and instant retail, resulting in double-digit growth in online retail [2] - Wholesale revenue dropped by 20% to 1.6 billion yuan, indicating ongoing adjustments [2] Cost Management - Gross margin remained stable, slightly decreasing by 0.1 percentage points to 41.0%, benefiting from brand partnerships and an increased share of retail business [2] - Sales and management expenses decreased by 5.5% year-on-year, with the expense ratio slightly increasing by 0.1 percentage points [3] - The net profit margin decreased by 0.3 percentage points to 6.4% [3] Inventory and Cash Flow - Inventory decreased to 5.8 billion yuan from 6 billion yuan at the beginning of the period, with inventory turnover days at 150 [4] - Operating cash flow was 1.35 billion yuan, down 48% year-on-year, primarily due to timing differences in accounts receivable related to seasonal sales [4] Strategic Focus - The company is committed to high-quality growth in the sports apparel retail sector, focusing on comprehensive retail strategies and brand expansion [4] - Collaboration with major brands like NIKE and Adidas continues to enhance retail capabilities and channel optimization [4] - Profit forecasts for FY26-28 are set at 1.29 billion, 1.42 billion, and 1.55 billion yuan, with corresponding P/E ratios of 15, 14, and 13 times, maintaining a "buy" rating [4]

Core Insights - The company experienced a 5.8% year-on-year decline in revenue for the first half of fiscal year 2026, totaling 12.3 billion RMB, primarily due to fluctuations in consumer demand for sports products and offline foot traffic [1] - Despite operational pressures, the company managed to maintain a gross margin of 41.0%, only slightly down by 0.1 percentage points year-on-year, aided by increased contributions from retail business and brand support [1] - The management has maintained guidance for net profit to remain flat year-on-year, with an improvement in net profit margin, while recent sales trends are expected to mirror those of the second quarter [1] Brand Performance and Strategy - The main brand saw a year-on-year decline of 4.8%, outperforming other brands which dropped by 12.2%, indicating resilience in the core brand performance [2] - The company is actively collaborating with main brands to enhance online and offline channel management and improve overall discount levels [2] - The company plans to deepen its focus on running and outdoor segments, developing new brands such as norda, soar, Ciele, and Norrna [2] Retail Transformation - The company continues to adjust its store structure and improve quality, with a net reduction of 332 direct-operated stores to 4,688 as of August 2025, alongside a 14.1% decrease in total sales area [2] - Despite the decline in offline foot traffic, the company reported double-digit growth in online retail business, exploring a multi-scenario operational model combining offline stores and online presence [2] - The management is implementing stricter standards for new and renovated stores, focusing on larger store sizes with more restrained renovation investments [2]

Core Viewpoint - The company's 1HFY26 performance met expectations, with a revenue decline of 6% year-on-year to 12.3 billion yuan and a net profit drop of 10% to 800 million yuan, while maintaining a high dividend payout ratio of approximately 102% [1][2]. Performance Review - Revenue was impacted by fluctuations in terminal retail, leading to a focus on optimizing offline channels and expanding online retail operations [1]. - The main brands, Nike and Adidas, saw a revenue decline of 5%, accounting for 88% of total revenue, while other brands experienced a 12% decline [1]. - Direct sales and wholesale revenues fell by 3% and 20% respectively, with a total of 4,688 direct stores, a decrease of 332 stores from the beginning of the fiscal year [1]. - The company opened a new running concept store, ektos, in Shanghai, showcasing innovation in offline retail formats [1]. - Online retail sales grew by double digits, supported by a diversified operational model [1]. Profitability and Cost Control - Gross margin remained stable, with a slight decrease of 0.1 percentage points to 41%, influenced by increased promotional activities in online sales and a higher retail proportion [2]. - The overall expense ratio only increased by 0.1 percentage points to 33.2%, demonstrating effective cost management despite revenue decline [2]. - The net profit margin decreased by 0.3 percentage points to 6.4%, with a net profit decline of 9.8% [2]. - Inventory management was effective, with a 4.7% decrease in inventory by the end of August [2]. - The operating cash flow was healthy, with a net cash flow of 1.35 billion yuan, supporting a high dividend payout ratio [2]. Development Trends - Management indicated that terminal retail performance in September and October would align with 2QFY26, focusing on profit maintenance and improvement in net profit margin for FY26 [2]. Earnings Forecast and Valuation - The company maintains its EPS forecasts for FY26 and FY27 at 0.21 yuan and 0.26 yuan respectively, with current stock prices reflecting 15 and 12 times the FY26 and FY27 earnings [2]. - The target price has been raised by 23% to 4.17 HKD, corresponding to 18 and 15 times the FY26 and FY27 earnings, indicating a potential upside of 20% [2].

Investment Rating - The investment rating for the company is "Buy" (maintained) [4] Core Views - The company is initiating a comprehensive retail strategy with new brand expansions across various categories, enhancing its brand matrix [4] - Despite challenges in the retail environment, the company's strategy is expected to sustain traffic and sales through diversified channels [6] - Collaborations with leading international brands like Nike and Adidas are anticipated to drive future growth [6] Financial Performance Summary - For FY25/26, the company reported a revenue of 12.299 billion RMB, a year-on-year decrease of 5.79%, with a gross profit of 5.037 billion RMB, down 6.06% [6] - The net profit attributable to shareholders for FY25/26 was 789 million RMB, reflecting a decline of 9.69% [6] - The company maintains a high dividend payout ratio, achieving 102.2% in FY25/26, and a cumulative payout ratio of 107.3% since FY2019/20 [6] Earnings Forecast and Valuation - Revenue projections for the company are as follows: 28,933.20 million RMB in 2024, 27,012.90 million RMB in 2025, and 26,443.89 million RMB in 2026, with a forecasted growth rate of -6.64% for 2025 [5] - Net profit forecasts are 2,213 million RMB for 2024, 1,286 million RMB for 2025, and 1,417.56 million RMB for 2026, with a significant decline of 41.89% expected in 2025 [5] - The company is projected to achieve earnings per share of 0.36 RMB in 2024, decreasing to 0.21 RMB in 2025, and recovering to 0.23 RMB in 2026 [5]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong performance relative to the market [7][6][17] Core Insights - The company reported a 6% year-on-year decline in revenue to 12.3 billion RMB for the first half of FY26, with a net profit decrease of 10% to 0.79 billion RMB, aligning with expectations [7][9] - The company proposed a mid-term dividend of 0.13 RMB per share, achieving a high payout ratio of 102%, emphasizing shareholder returns [7] - The main brand's revenue decline narrowed to 5%, while other brands faced a 12% drop, attributed to fluctuations in consumer environment and reduced foot traffic [7] - The company is enhancing operational efficiency through channel optimization and a multi-channel approach, resulting in double-digit growth in online retail [7][6] Financial Data and Earnings Forecast - Revenue projections for FY2024 to FY2028 are as follows: 28.93 billion RMB (FY2024), 27.01 billion RMB (FY2025), 25.94 billion RMB (FY2026E), 27.34 billion RMB (FY2027E), and 29.04 billion RMB (FY2028E) [6][17] - Net profit forecasts are 2.21 billion RMB (FY2024), 1.29 billion RMB (FY2025), 1.29 billion RMB (FY2026E), 1.42 billion RMB (FY2027E), and 1.55 billion RMB (FY2028E) [6][17] - The gross margin is projected to be 41.8% (FY2024), declining to 38.4% (FY2025) and stabilizing around 39.3% to 40% in subsequent years [6][17] Operational Performance - The company has reduced its direct store count by 332 to 4,688 stores, with a 3% decline in direct sales to 10.6 billion RMB, indicating a strategic focus on operational efficiency [7] - Inventory levels decreased to 5.8 billion RMB, with inventory turnover days at 150 days, reflecting improved inventory management [7] - The company maintains a strong online presence with over 800 Douyin and WeChat video accounts, and more than 3,600 mini-program stores, establishing a comprehensive online-offline operational network [7]

Core Viewpoint - The latest interim results of the domestic sports retail operator, Tmall (滔搏), show a decline in key performance indicators, indicating challenges in the retail environment and a need for strategic transformation [1][2][3]. Financial Performance - For the first half of the fiscal year ending August 31, 2025, Tmall reported revenue of 12.299 billion yuan, a year-on-year decrease of 5.79% - The net profit attributable to shareholders was 789 million yuan, down 9.69% - Operating profit fell to 994 million yuan, a decline of 11.3% [3][4]. Brand Performance - Revenue from core brands Nike and Adidas decreased by 4.8% to 10.811 billion yuan, accounting for 87.9% of total revenue - Other brands, including PUMA and Asics, saw a revenue decline of 12.2%, representing 11.5% of total revenue - Non-brand retail income, including joint venture fees, dropped by 15.2%, while e-sports revenue fell by 39.7% [3][4]. Profitability Metrics - Overall gross margin slightly decreased by 0.1 percentage points to 41% - Operating profit margin declined by 0.5 percentage points to 8.1% - Net profit margin fell by 0.3 percentage points to 6.4% [4]. Store Network and Strategy - As of August 31, 2025, the number of direct-operated stores decreased to 4,688, nearly a 40% reduction from the historical peak of 8,395 in 2021 - Store closures primarily affected street shops and inefficient shopping centers, while online business growth partially offset offline revenue decline [5][6]. Strategic Transformation - Tmall is shifting focus towards niche markets such as outdoor and running segments, introducing brands like norda™, Norrøna, and Soar as exclusive partners in China - The company aims to create a differentiated operational strategy for these high-end brands, emphasizing community integration and user engagement [6][8]. - Tmall's management envisions a transition from being a mere distributor to a comprehensive sports retail operator, providing full-chain solutions in brand operation and consumer service [8][9].

Core Viewpoint - UBS reports that Tmall (06110) experienced a year-on-year decline in revenue and net profit of 6% and 10% respectively for the first half of the 2026 fiscal year, amounting to 12.299 billion yuan and 789 million yuan. The net profit aligns with UBS's expectations but is better than the market's anticipated 16% decline due to a slight revenue drop being offset by higher gross margins and reduced financial expenses [1] Group 1 - Tmall's management maintains guidance for flat net profit and improved net profit margin for the entire 2026 fiscal year, focusing on enhancing operational efficiency [1] - UBS raises the target price from 3.55 HKD to 4.06 HKD and adjusts net profit forecasts for 2026 to 2028 upwards by 0% to 5% to reflect the long-term recovery prospects of American brand partners, maintaining a "Buy" rating [1]

Investment Rating - The report maintains a "Buy" rating for the company [2] Core Insights - The company reported a 6% year-on-year decline in revenue to 12.3 billion RMB for the first half of FY26, with a net profit decrease of 10% to 0.79 billion RMB, aligning with expectations. A high dividend payout ratio of 102% was proposed, emphasizing shareholder returns [7] - The main brand's revenue decline has narrowed to 5%, while other brands faced a 12% drop, attributed to fluctuations in consumer environment and reduced foot traffic [7] - The company is enhancing operational efficiency through channel optimization and multi-channel integration, with a notable increase in online retail sales [7] - Gross margin remained stable with a slight decrease of 0.1 percentage points to 41.0%, supported by brand partnerships and improved retail business proportions [7] - The company is focused on high-quality growth in the sports apparel retail sector, maintaining strong partnerships with Nike and Adidas, and expanding its brand portfolio [7] Financial Data and Profit Forecast - Revenue projections for FY2024 to FY2028 are as follows: 28.93 billion RMB, 27.01 billion RMB, 25.94 billion RMB, 27.33 billion RMB, and 29.04 billion RMB respectively, with a forecasted net profit of 2.21 billion RMB for FY2024 [6][17] - The company expects net profits for FY26 to be 1.29 billion RMB, with corresponding PE ratios of 15, 14, and 13 for FY26, FY27, and FY28 respectively [7]

Core Viewpoint - The management of the company maintains guidance for full-year net profit to be flat year-on-year, with an improvement in net profit margin, while recent sales trends are similar to those in the second quarter, with discounts deepening year-on-year [1] Group 1: Financial Performance - For the first half of the fiscal year 2026, the company's revenue was 12.3 billion RMB, a year-on-year decrease of 5.8%, primarily due to fluctuations in consumer demand for sports products and offline foot traffic [1] - The company's gross margin slightly decreased by 0.1 percentage points to 41.0%, impacted by discount changes and an increase in online revenue share, although the contribution from retail business and support from brand partners partially offset negative effects [1] - The net profit for the first half of the year was 790 million RMB, a year-on-year decline of 9.8%, which was broadly in line with expectations [1] Group 2: Brand and Store Management - By brand, the main brand and other brands saw year-on-year declines of 4.8% and 12.2% respectively, with the main brand performing better than others and the overall performance [2] - The company is actively collaborating with main brands to improve online and offline channel management and overall discount levels [2] - The company plans to deepen its focus on running and outdoor segments, developing new brands such as norda, soar, Ciele, and Norr?na [2] Group 3: Store Structure and Online Business - As of August 2025, the number of direct-operated stores decreased by 332 to 4,688, continuing a downward trend, while total sales area decreased by 14.1%, but the average store area increased by 6.5% year-on-year [2] - The company is implementing a "selection + optimization" principle, applying stricter standards for new and renovated stores, resulting in larger store areas with more restrained renovation investments [2] - Online retail business experienced double-digit growth year-on-year, with the company exploring a multi-dimensional operational model of "1 (offline store) + N (online multi-scenario layout)" [2]