Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 3.6 for the fiscal year ending February 2026, based on a 16x PE ratio [1][6]. Core Insights - The company reported a revenue decline of 6.6% year-on-year to RMB 27.01 billion for FY25, primarily due to weak offline consumption and reduced foot traffic. The net profit attributable to shareholders fell by 41.9% to RMB 1.286 billion, indicating that profit decline outpaced revenue decline due to high fixed costs associated with offline operations [2][3]. - Despite the challenges, the company achieved a 20% year-on-year increase in operating cash flow, reaching RMB 3.755 billion, demonstrating strong cash flow management [2][3]. - The company declared a final dividend of HKD 0.02 per share and a special dividend of HKD 0.12 per share, resulting in a total payout ratio of 135%, reflecting its commitment to shareholder returns [2][3]. Financial Summary - For FY25, the company’s revenue was RMB 27,013 million, with a projected revenue of RMB 26,438 million for FY26, indicating a further decline of 2.1% [4][11]. - The gross margin decreased by 3.4 percentage points to 38.4% due to increased discounting and inventory clearance [2][4]. - The earnings per share (EPS) for FY26 is projected to be RMB 0.21, with a slight increase to RMB 0.22 in FY27 and RMB 0.23 in FY28 [1][4]. Operational Efficiency - The company continues to optimize its store structure, reducing the number of direct-operated stores by 18.3% to 5,020, while the sales area decreased by 12.4%, indicating a focus on operational efficiency [3][4]. - The company is enhancing its single-store operational capabilities and plans to open new stores focusing on key brands and specialized categories [3][4]. Market Position - The main brands, Nike and Adidas, saw a revenue decline of 6.1% to RMB 23.31 billion, while other brands experienced a 9.9% drop to RMB 3.50 billion [2][3]. - The company is expanding its partnerships with both international and domestic sports brands, aiming to capture a larger market share as retail consumption improves [3][4].

Group 1: Company Performance - Tmall's revenue for the fiscal year ending February 2025 was 27.01 billion yuan, a year-on-year decline of 6.6%, with net profit down 41.9% to 1.29 billion yuan [1] - The main brands (Nike and Adidas) accounted for 86.3% of total revenue, with a year-on-year decline of 6.1%, while other brands saw a 9.9% decline [1] - Nike's revenue in the Greater China region fell 17% to $1.73 billion (approximately 12.446 billion yuan), primarily due to a double-digit drop in customer traffic and an aggressive promotional environment [2] Group 2: Market Dynamics - Nike's sales decline in China significantly impacted Tmall's performance, indicating a strong correlation between the two [4] - Tmall is seeking new growth opportunities by introducing high-end running brand SOAR and becoming the exclusive operator for outdoor brand Norrøna in China [5] - The high-end market is becoming increasingly competitive, as evidenced by Arc'teryx's parent company, Amer Sports, reporting a 43.1% increase in sales in the Greater China region [6][7]

Core Insights - The company reported a decline in revenue and net profit for the fiscal year 2025, with revenue at 27.01 billion RMB, down 6.6% year-on-year, and net profit at 1.29 billion RMB, down 41.9% [1][2] - The company maintained a high dividend payout ratio of 135.0%, exceeding the previous year's 100.9% [1][2] - The decline in profit was attributed to a significant drop in gross margin and a slight increase in expense ratio [1][2] Revenue Breakdown - Main brand revenue (Nike + Adidas) decreased by 6.1%, while other brand revenue fell by 9.9% [1][2] - Revenue from retail, wholesale, and esports accounted for 85.3%, 14.0%, and 0.2% of total revenue, respectively, with retail and wholesale revenues down 6.8% and 5.8% year-on-year [2][3] - The total number of stores decreased by 18.3%, with a total of 5,020 stores as of February 2025 [2][3] Financial Metrics - Gross margin decreased by 3.4 percentage points to 38.4%, primarily due to increased discounting [2][3] - The expense ratio increased by 0.4 percentage points to 33.2%, with sales, management, and financial expense ratios at 29.4%, 3.7%, and 0.1%, respectively [2][3] - Inventory decreased by 4.5% to 6 billion RMB, and accounts receivable decreased by 43.4% to 750 million RMB [3] Future Outlook - The company aims to enhance operational efficiency and reduce costs amid weak consumer demand and declining foot traffic [3][4] - The company plans to expand its brand matrix and has become the exclusive operating partner for high-end running brand SOARRunning and top outdoor brand Norrona in China [3][4] - Profit forecasts for fiscal years 2026 and 2027 have been revised down by 21% and 26%, respectively, with expected EPS of 0.21, 0.23, and 0.26 for fiscal years 2026 to 2028 [4]

Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The company experienced a revenue decline of 6.6% year-on-year to 27.01 billion RMB and a net profit decline of 41.9% to 1.29 billion RMB for the fiscal year 2025, with a high dividend payout ratio of 135% [5][10] - The company is focusing on improving operational efficiency and has accelerated the closure of underperforming stores while expanding its brand portfolio [10] Financial Performance Summary - For fiscal year 2025, the company reported a revenue of 27.01 billion RMB, down 6.6% year-on-year, and a net profit of 1.29 billion RMB, down 41.9% year-on-year [5][10] - The earnings per share (EPS) for fiscal year 2025 is 0.21 RMB, with a proposed final dividend of 0.02 RMB and a special dividend of 0.12 RMB, totaling a dividend payout ratio of 135% [5][10] - The gross margin decreased by 3.4 percentage points to 38.4%, while the operating margin fell by 3.7 percentage points to 5.9% [6][9] Revenue Breakdown - The main brand revenue (Nike + Adidas) declined by 6.1%, while other brand revenues fell by 9.9% [7] - Retail and wholesale revenues accounted for 85.3% and 14.0% of total revenue, respectively, with retail revenue down 6.8% and wholesale revenue down 5.8% [7] Store Performance - As of February 2025, the company operated 5,020 stores, a net decrease of 18.3% from the previous year, with total sales area down 12.4% but average store area up 7.2% [8] Cash Flow and Inventory Management - The company reported a 20% increase in operating cash flow to 3.76 billion RMB, with inventory decreasing by 4.5% to 6 billion RMB [9][10]

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 2.8, maintaining the "Increase" rating for the next six months [6]. Core Viewpoints - The company reported a revenue of RMB 27 billion for FY25, a year-on-year decrease of 7%, and a net profit of RMB 1.3 billion, down 42% year-on-year. The gross margin was 38%, a decline of 3.4 percentage points, and the net margin was 4.8%, down 2.8 percentage points [1]. - The decline in revenue performance was attributed to weak consumer demand and pressure on offline foot traffic, leading to increased promotional efforts and a decrease in profit margins [1]. - The company has a strong cash flow position, with cash and cash equivalents amounting to RMB 2.6 billion, a year-on-year increase of 32%. Despite a 43.5% decline in pre-tax profit, the net cash generated from operating activities grew by 20% to RMB 3.8 billion [2]. - The total number of stores operated by the company decreased by 18.3% to 5,020, with a focus on improving retail service capabilities and store efficiency [3]. - The company is expanding its brand matrix by introducing the high-end running brand SOAR Running to the Chinese market and enhancing its collaboration with the Canadian outdoor brand norda [4]. Summary by Sections Financial Performance - FY25 revenue was RMB 27 billion, down 7% year-on-year, with a net profit of RMB 1.3 billion, down 42% year-on-year. The gross margin was 38%, down 3.4 percentage points, and the net margin was 4.8%, down 2.8 percentage points [1]. Cash Flow and Dividends - Cash and cash equivalents at the fiscal year-end were RMB 2.6 billion, up 32% year-on-year. Operating cash flow increased by 20% to RMB 3.8 billion despite a 43.5% decline in pre-tax profit. The annual dividend payout ratio was 135% [2]. Store Operations - The company operated 5,020 stores at the fiscal year-end, a decrease of 18.3% year-on-year. The focus is on enhancing retail service capabilities and improving store efficiency through stricter store opening and renovation criteria [3]. Brand Strategy - The company is introducing SOAR Running to the Chinese market and deepening its partnership with norda, aiming to capture opportunities in the outdoor segment through a comprehensive brand strategy [4]. Profit Forecast - The profit forecast has been adjusted, with expected revenues for FY26-28 at RMB 26.5 billion, RMB 27.3 billion, and RMB 28.6 billion, respectively. The expected net profits are RMB 1.3 billion, RMB 1.5 billion, and RMB 1.7 billion for the same periods [5].

Core Insights - The collaboration between Meituan Flash and Tmall has significantly boosted the sales of sports products, with instant retail sales doubling and running shoe sales increasing by over 200% compared to the previous year [2] Group 1: Partnership and Sales Growth - Meituan Flash has partnered with Tmall, integrating nearly 2000 stores into its platform, enhancing the availability of sports products for consumers [1] - Tmall has experienced substantial sales growth on Meituan Flash, with winter clothing sales increasing by 110% month-on-month in December 2024 and a 120% increase in sales during the Spring Festival in January 2025 [2] - On May 20, 2025, certain brands operated by Tmall on Meituan Flash saw sales growth exceeding 400% compared to previous periods [2] Group 2: Consumer Demand and Experience Enhancement - There is a strong consumer demand for sports products in scenarios such as business trips, travel, and gifting, which has driven the growth of instant retail [3] - Meituan Flash has developed a comprehensive support mechanism for apparel merchants, enhancing the shopping experience by ensuring inventory data integration and reducing stockout situations [3][4] - The introduction of pre-order functionality has allowed Tmall to meet consumer needs outside of business hours, with pre-orders accounting for over 15% of total orders on Meituan Flash [4]

Core Insights - Adidas and Nike are losing market share in China, with Nike's market share declining by over 3 percentage points in the past five years and Adidas experiencing five consecutive quarters of revenue decline in the Greater China region [1] - The largest sports goods distributor in China, Tmall, reported a revenue drop of 6.69% to 27.013 billion RMB and a net profit decline of 41.89% for the fiscal year ending February 28, 2024 [2][3] - Tmall's revenue from Adidas and Nike still accounted for 86.3% of total revenue, despite a 6.1% decline in revenue from these brands [4] Company Performance - Tmall's revenue for the fiscal year ending February 28, 2025, was 27.013 billion RMB, with a gross profit of 10.383 billion RMB and an operating profit of 1.593 billion RMB [3] - The main brands (Adidas and Nike) generated 23.311 billion RMB in revenue, down from 24.834 billion RMB the previous year [5] Market Trends - The sports retail industry is undergoing a transformation, with local brands like Anta rapidly gaining market share through national trend marketing [1] - Tmall is shifting its focus towards niche international outdoor brands, signing partnerships with brands like Norrøna and SOAR to diversify its offerings [6][10] - The rise of niche sports brands is seen as an opportunity for Tmall, as traditional sports markets show limited growth [19] Strategic Shifts - Tmall is adopting a multi-brand and multi-channel operational model, transitioning from a traditional distributor to a comprehensive sports retail operator [14] - The company aims to provide full-chain support for new brands, focusing on understanding and positioning them in the Chinese market [16][17] - Tmall's strategy includes targeting high-end outdoor brands, which aligns with the growing interest in outdoor activities among young consumers [21][23] Competitive Landscape - The outdoor sports market in China is becoming increasingly competitive, with numerous new brands entering the market [24] - Tmall faces challenges in educating consumers about high-end outdoor brands in a market with a weak outdoor culture [24]

Investment Rating - The investment rating for the company is upgraded to "Buy" [5] Core Views - The company is leveraging a comprehensive retail strategy to address operational challenges and diversify its customer base [5] - The company has faced short-term profit impacts due to increased discounts but maintains a leading dividend payout ratio in the industry [7] - The core international brand partnerships are gradually recovering, and new brand acquisitions are expected to enhance the company's diversified layout [7] - The company is projected to achieve a net profit of RMB 1.416 billion in FY2026, with a growth rate of 10.14% [7] Financial Performance Summary - For FY2024, the company is expected to generate revenue of RMB 27,012.90 million, reflecting a year-on-year decline of 6.64% [6] - The net profit for FY2024 is projected at RMB 1,286 million, down 41.89% year-on-year [6] - The company’s gross margin for FY2024 is estimated at 38.4%, a decrease of 3.4 percentage points compared to the previous fiscal year [7] - The company plans to maintain a total dividend payout ratio of 135% for FY2024/25, continuing to provide high dividend returns to shareholders [7] Revenue and Profit Forecast - Revenue forecasts for the company are as follows: RMB 28,933.20 million in 2024, RMB 27,012.90 million in 2025, and RMB 26,445.63 million in 2026, with respective growth rates of 6.87%, -6.64%, and -2.10% [6] - The projected net profit for the years 2026 to 2028 is RMB 1,416.34 million, RMB 1,670.93 million, and RMB 1,980.06 million, with growth rates of 10.14%, 17.98%, and 18.50% respectively [6][7]

Investment Rating - The industry rating is "Recommended" [4] Core Insights - The report highlights that Tmall and Taobao platforms experienced negative growth in various categories in April 2025, with the highest growth seen in Jin Hong Group [7] - Deckers reported a 16.3% revenue increase to $4.986 billion for FY2025, with operating profit rising by 27.1% to $1.179 billion, and a gross margin increase of 2.3 percentage points to 57.9% [15] - VF Corporation's revenue decreased by 4% to $9.504 billion for FY2025, with a net loss of $190 million, although the loss narrowed compared to the previous year [16] Summary by Sections Company Performance - Tmall and Taobao platforms saw negative growth across categories in April 2025, with Jin Hong Group showing the highest growth [7] - Deckers' FY2025 revenue grew by 16.3% to $4.986 billion, with operating profit increasing by 27.1% to $1.179 billion, and a gross margin of 57.9% [15] - VF Corporation's revenue fell by 4% to $9.504 billion, with a net loss of $190 million, but the loss was less than the previous year [16] - Amphenol's Q1 2025 revenue was $1.473 billion, with a net profit increase of 2539.22% [17] Market Trends - The textile and apparel industry saw a decline in stock performance, with the SW textile and apparel sector down 1.31% [20] - The cotton price index in China increased by 0.29% as of May 23, 2025, while the medium import cotton price index rose by 1.06% [30] - The USDA forecasts a 2.7% decrease in global cotton production for the 2025/2026 season [40] Investment Recommendations - The report suggests short-term recommendations for companies with high U.S. revenue exposure and significant prior declines, while mid-term recommendations focus on companies with high overseas exposure [18][19] - Long-term recommendations include companies with growth potential, such as Zhejiang Natural and Kai Run Co., which have favorable market positions [19]

Core Viewpoint - The company is experiencing a decline in revenue and net profit for FY2025, primarily due to sales drop and inventory pressure, leading to increased promotional efforts and a decrease in gross margin [1][3]. Financial Performance - FY2025 revenue, net profit, and operating cash flow are projected at 27.013 billion, 1.286 billion, and 3.755 billion yuan, respectively, with year-on-year changes of -6.6%, -41.9%, and +20.0% [1]. - The gross margin for FY2025 decreased by 3.4 percentage points to 38.4%, while the net profit margin fell by 2.9 percentage points to 4.8% [3]. - The company plans to distribute a cash dividend of 0.02 yuan per share and a special dividend of 0.12 yuan, resulting in a total dividend payout ratio of 135% and a dividend yield of 8.75% [1]. Store and Sales Performance - The number of stores decreased by 18.3%, while the sales area per store increased by 7.2% [1]. - Revenue from the main brand, other brands, joint venture fees, and esports revenue for FY2025 are projected at 23.311 billion, 3.505 billion, 146 million, and 52 million yuan, respectively, with declines of 6.1%, 9.9%, 14.1%, and 32.4% [1]. - Retail and wholesale business revenues are expected to be 23.027 billion and 3.788 billion yuan, reflecting year-on-year declines of 6.8% and 5.8% [1]. Online and Digital Strategy - The company has over 500 accounts on Douyin and WeChat video accounts, with more than 2,300 mini-program stores, indicating a strong online presence [1]. - Direct online sales, including public and private domains, have shown double-digit growth year-on-year, with online sales accounting for 30%-40% of total direct sales [1]. - The company has developed an AI tool, "Dolphin AI," which has contributed nearly 100 million yuan in sales and improved content generation efficiency [2][3]. Customer Engagement and Membership - The total number of users reached 86 million, a year-on-year increase of 12.7%, with high-value members contributing 93.2% of in-store retail sales [2]. - High-value members, although representing a low single-digit percentage of total members, account for approximately 40% of total sales, indicating strong customer loyalty [2]. Future Outlook - Short-term improvements in inventory and online sales strategies are expected to mitigate the impact of declining foot traffic [3]. - The company is optimistic about future collaborations with high-end brands and the potential for recovery in the market following leadership changes at Nike [3]. - Long-term prospects remain positive due to strong channel partnerships, ongoing digital transformation, and high dividend attributes [3].