Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 4.33 based on a valuation of 15 times FY2025 earnings [4]. Core Views - The company has established itself as the largest retail partner for Adidas globally and the second largest for Nike, benefiting from strong operational capabilities and a focus on member services [1][2]. - The recovery of Nike and Adidas is expected to positively impact the company's performance, with a significant portion of its revenue derived from these brands [2][3]. - The company has maintained a high dividend yield, averaging 104% over the past three years, making it an attractive option for dividend-seeking investors [3]. Summary by Sections Company Highlights - The company has rapidly developed since establishing partnerships with Nike and Adidas, focusing on building a robust membership system that has grown to 81 million members by FY25H1, a fourfold increase since FY2020 [1][22]. - The company has improved inventory management and store efficiency, reducing the number of stores from 8,302 at the end of FY2018 to 6,144 by the end of FY2024, while enhancing store productivity [1][28]. Investment Logic - The company's performance is closely tied to the recovery of Nike and Adidas, with Adidas showing positive growth since the appointment of a new CEO in January 2023, indicating a successful local market strategy [2][36]. - Nike's new CEO, appointed in October 2024, is expected to implement strategies similar to those of Adidas, potentially leading to a recovery in performance [3][43]. Profit Forecast, Valuation, and Rating - The company is projected to have earnings per share (EPS) of 0.22, 0.27, and 0.32 CNY for FY2025, FY2026, and FY2027, respectively, with corresponding price-to-earnings (PE) ratios of 14, 12, and 10 [4]. - The report suggests that the current operational challenges are reflected in the stock price, and the anticipated recovery of Nike and Adidas could lead to significant stock price appreciation [4].

Investment Rating - The report maintains a "Buy" rating for the company and upgrades it to an industry favorite, with a target price of HKD 3.34, indicating a potential upside of 18.4% from the current price of HKD 2.82 [2][5]. Core Insights - The company's revenue performance is gradually improving, with expectations that FY25 revenue will outperform the previously guided high single-digit decline. The successful promotional strategies are credited for this positive trend [2][3]. - The recovery of Nike's brand strength, particularly after signing Wang Jiaer as a global ambassador, is expected to enhance market sentiment towards the company and improve FY26 performance outlook [4][5]. - The current valuation is considered low at 10.3x FY26 P/E, coupled with a high dividend yield of around 10%, suggesting significant upside potential compared to downside risks [2][5]. Revenue Trends - For 4QFY25, the company anticipates a reduction in revenue decline to low single digits year-on-year, an improvement from the previous quarter [3]. - The retail discounting strategy has deepened in 4QFY25, aligning with the company's inventory reduction efforts and increasing online sales proportion [3]. Financial Projections - The report provides financial forecasts indicating a revenue of RMB 27,129 million for FY25, a decline of 6% year-on-year, with a projected net profit of RMB 1,382 million, reflecting a 38% decrease [5][12]. - The expected financial metrics for FY26 include a slight revenue decline to RMB 26,849 million and a net profit increase to RMB 1,595 million, indicating a recovery trend [5][12]. Market Positioning - The company is positioned as a leading player in the sports apparel retail sector, with a focus on enhancing brand image and expanding market reach, particularly in lower-tier cities [4][5]. - The overall market sentiment is expected to improve as Nike enhances its product promotion and marketing efforts in China post-inventory resolution [4].

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Insights - The company reported FY2025 Q3 retail data, showing a slight decline in retail sales year-on-year, which was better than expected [2][4]. - The retail trend is improving, with inventory clearance continuing. Q3 retail sales showed a low single-digit decline year-on-year, with significant improvement compared to Q2's low double-digit decline [7]. - The number of stores is at a low point, but it is expected to stabilize next year. The number of stores continued to decline at the end of Q3, with ongoing closures of inefficient stores from brands like Nike and Adidas [7]. - Nike has simplified its product line and is focusing on professional sports, which is expected to enhance its market position [7]. - The company's performance and valuation are at a low point, with a current dividend yield of approximately 8%, indicating absolute return value [7]. Summary by Sections Retail Performance - Q3 retail sales showed a low single-digit decline year-on-year, which was better than expectations [2][4]. - Inventory clearance is ongoing, with discounts deepening year-on-year, but inventory adjustments are in line with company expectations [7]. Store Count and Market Strategy - The number of stores is expected to stabilize next year after a period of decline due to store closures and restructuring [7]. - Nike's new CEO has introduced a simplified product line and is focusing on strengthening distributor relationships, particularly in the Greater China market [7]. Financial Projections - The company forecasts net profits for FY2025 to FY2027 at 1.389 billion, 1.660 billion, and 1.880 billion respectively, with corresponding valuations of 12X, 10X, and 9X [9]. - The expected dividend yields for FY2025 and FY2026 are approximately 8% and 10% respectively, highlighting the company's high dividend elasticity [7].

Investment Rating - The report maintains a "Buy" rating for the company, with a potential dividend yield of 8.2% for FY2025, which is considered attractive [5] Core Views - The company's FY25Q3 performance showed a mid-single-digit decline in total sales for retail and wholesale businesses, with a 2.1% QoQ and 4.4% YoY reduction in direct-operated store gross sales area [3] - E-commerce promotions helped narrow the sales decline in FY25Q3 compared to FY25Q2, with online pre-tax sales estimated to grow by double digits YoY, contributing to a mid-single-digit decline in overall channel sales [3] - Retail channel performance slightly outperformed the wholesale channel, with both showing similar sales trends [3] - Inventory management remains a priority, with direct-operated discounts deepening YoY in FY25Q3, consistent with the trend in FY25H1 [4] - The company continues to optimize its store network, with a high single-digit YoY reduction in store count by the end of FY25Q3, while average store area increased [4] - New store formats, such as the FOS (Future of Style) and HALO concept stores, have been introduced to enhance the retail experience and capabilities [4] Financial Projections - FY25/26/27 net profit attributable to shareholders is projected at RMB 1.40 billion, RMB 1.53 billion, and RMB 1.67 billion, respectively, representing YoY changes of -36.7%, +9.3%, and +9.2% [5] - Revenue for FY2024 is estimated at RMB 28.93 billion, with a 6.9% YoY growth, while FY2025E revenue is projected at RMB 26.41 billion, reflecting an 8.7% YoY decline [6] - Gross margin for FY2024 is 41.8%, expected to slightly decrease to 40.0% in FY2025E, and then recover to 40.4% and 40.6% in FY2026E and FY2027E, respectively [6] - Net profit margin is projected to decline from 7.6% in FY2024 to 5.3% in FY2025E, before recovering to 5.7% and 6.0% in FY2026E and FY2027E [6] - ROE is expected to decrease from 22.5% in FY2024 to 14.2% in FY2025E, then gradually recover to 15.5% and 17.0% in FY2026E and FY2027E [6] Market Data - The company's closing price on December 17, 2024, was HKD 2.96, with a total share capital of 6,201 million shares and a net asset value of RMB 9.5 billion [2] - Total assets stood at RMB 14.9 billion, with net assets per share at RMB 1.53 [2]

Investment Rating - The report initiates coverage on Topsports International (6110) with an "Outperform" rating and a target price of HKD 3.79 per share, based on a FY2026 PE of 12x [5][23] Core Views - FY25Q3 sales showed sequential improvement, with total retail and wholesale sales declining mid-single-digit YoY, compared to a 10-20% low-end decline in FY25Q2 [2][15] - Inventory reduction is progressing smoothly, with inventory expected to return to healthy levels by FY25 end (Feb 2025) [3][22] - Nike FY25Q2 performance slightly exceeded expectations, with revenue of USD 12.35 billion, down 9% YoY (currency neutral), and net profit of USD 1.16 billion, down 26% YoY [4][16] - Nike plans to clear inventory by the first half of next year and focus on professional sports, extending partnerships with NFL, NBA, and PSG [5][17] Financial Performance and Forecast - FY2025-FY2027 net profit attributable to shareholders is forecasted at RMB 1.325/1.800/2.152 billion, with FY2026 EPS of RMB 0.29 [5][23] - FY25H1 inventory was RMB 6.12 billion, up 6.4% YoY, with inventory turnover days at 148 days, up 7 days YoY [3][22] - FY25H1 gross profit margin was 41.1%, down 3.6% YoY, due to deeper discounts to optimize inventory [3][22] Industry and Market Context - Nike's CEO emphasized strengthening ties with core partners like Topsports International and Pou Sheng International, and repositioning NIKE DIGITAL to focus on full-price models [4][16] - Nike plans to accelerate inventory clearance in H2 (Dec 2024-May 2025) and focus on professional sports, launching new products like Vomero 18 and Pegasus Premium [5][17] Valuation and Peer Comparison - The report values Topsports International at a FY2026 PE of 12x, translating to a target price of HKD 3.79 per share [5][23] - Comparable companies include JD Sports Fashion, Fraser, and Pou Sheng International, with median PE ratios of 9.1x, 10.3x, and 9.2x for 2024E, 2025E, and 2026E respectively [8]

Company Performance and Strategy - The company's Q3 2024 performance met expectations, with retail sales slightly outperforming wholesale, though total sales declined by mid-single digits year-over-year [1] - The company continued to close inefficient and loss-making stores, reducing total store count by high single digits YoY and gross sales area by 4.4% YoY as of November 2024 [1] - Average store size increased YoY, aligning with the company's goal to enhance store image and efficiency [1] - The company aims to maintain stable store numbers in the next year, with net store closures in H2 2024 expected to be no less than in H1 2024 [1] Investment Ratings and Targets - The report assigns a **Neutral** rating to the company [8] - The target price is set at HKD 3.06, representing a potential upside of 4.7% from the current price of HKD 2.92 [16] - The valuation is based on 11x FY2025-26 P/E, reflecting near-term operational pressures but long-term growth potential in the sports sector [17] Financial Performance and Projections - Revenue for FY2024 is projected at RMB 28.93 billion, a 6.9% YoY increase, but FY2025 revenue is expected to decline by 8.1% to RMB 26.58 billion [19] - Net profit for FY2024 is forecasted at RMB 2.21 billion, up 20.4% YoY, but FY2025 net profit is expected to drop by 33.4% to RMB 1.47 billion [19] - Gross margin remains stable at around 41.7%-42.1% from FY2023 to FY2027, while EBIT margin is projected to decline to 7.1% in FY2025 before recovering to 8.0% in FY2027 [21] - ROE is expected to decrease from 22.5% in FY2024 to 15.7% in FY2025, reflecting operational challenges [21] Operational Highlights - Retail performance in Q3 2024 followed the trend of H1 2024, with professional sports brands showing faster growth while mass leisure brands remained weak [17] - Online channels contributed double-digit growth in Q3 2024, driven by promotional events, offsetting pressure from offline channels due to reduced foot traffic [17] - Inventory management remains a key focus, with 70-80% of inventory being new products as of November 2024, aligning with the company's de-stocking targets [17] Industry and Market Context - The sports sector is seen as having significant growth potential, despite near-term challenges in offline channels [17] - The company's partnership with Nike is highlighted as a key strength, with Nike's new CEO emphasizing efficient retail collaboration and professional sports categories like outdoor and running [17]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 3.7, based on a 15x PE multiple for FY25/02 [3][4] Core Views - The company's retail and wholesale sales for FY25Q3 (Sep-Nov) declined by mid-single digits YoY, in line with expectations, but showed sequential improvement compared to FY25Q2 [3] - Online sales outperformed offline, with double-digit growth in online GMV, driven by promotional activities during the period [4] - The company continues to optimize its store structure, with a 4.4% YoY decline in gross sales area and a high-single-digit decline in store count, indicating improved store efficiency [4] - Inventory levels remain healthy, with a stock-to-sales ratio of 4-5 months and new products accounting for 70-80% of inventory [4] - Adidas performed strongly, with high-single-digit revenue growth in Greater China, while Nike is in a transition phase but expected to improve under new leadership [4] Financial Performance - Revenue for FY25/02E is projected at RMB 26,443 million, a decline of 8.6% YoY, with a recovery expected in FY26/02E and FY27/02E [4] - Net profit for FY25/02E is forecasted at RMB 1,339 million, a decline of 39.5% YoY, with a rebound expected in subsequent years [4] - Gross margin is expected to remain stable at around 40% in the coming years, with net margin improving from 5.1% in FY25/02E to 6.9% in FY27/02E [4] - EPS is projected to grow from RMB 0.22 in FY25/02E to RMB 0.33 in FY27/02E [4] Operational Highlights - The company's online direct sales accounted for 40% of total direct sales, reflecting a shift towards digital channels [4] - Inventory turnover days improved to 130 days, indicating better inventory management [12] - The company maintains a high dividend payout ratio, with a dividend yield of 7.85% in FY25/02E, expected to rise to 12.14% in FY27/02E [4] Market Position - The company is the largest retail partner of Nike in China and has a strong partnership with Adidas, which is expected to benefit from Nike's recovery under new leadership [4] - The company is also expanding collaborations with domestic sports brands and other international brands, diversifying its brand portfolio [4]

Investment Rating - Buy (Maintained) [8] Core Views - The company's Q3 sales decline narrowed slightly compared to the first half of the fiscal year, with a mid-single-digit drop in total retail and wholesale sales for FY2025Q3 (9/1/2024-11/30/2024) [3] - E-commerce performance is expected to be better than offline, and direct sales are expected to outperform franchised sales [3] - The company continues to prioritize inventory health, aiming for optimization by year-end [3] - Direct sales channels are undergoing optimization, with a 4.4% YoY and 2.1% QoQ decrease in gross sales area for direct stores in Q3 2024 [4] - The company's brand partnership matrix remains strong, with Nike and Adidas being key partners, and new collaborations in outdoor, trail running, and IP culture sectors [5] - FY25/26/27 revenue is forecasted at -7%/+5%/+5% to 26.8/28.2/29.7 billion yuan, with net profit attributable to the parent company at -39%/+21%/+13% to 1.36/1.64/1.85 billion yuan [6] Financial Forecasts - FY2025E revenue: 26.8 billion yuan (-7.34% YoY), FY2026E: 28.2 billion yuan (+5.36% YoY), FY2027E: 29.7 billion yuan (+5.04% YoY) [6] - FY2025E net profit attributable to the parent company: 1.36 billion yuan (-38.61% YoY), FY2026E: 1.64 billion yuan (+21.05% YoY), FY2027E: 1.85 billion yuan (+12.62% YoY) [6] - FY2025E EPS: 0.22 yuan, FY2026E: 0.27 yuan, FY2027E: 0.30 yuan [6] - FY2025E P/E: 12.33X, FY2026E: 10.19X, FY2027E: 9.05X [6] Operational Highlights - Direct sales channels reduced by 331 stores in the first half of the fiscal year, with total sales area down 1.9% YoY but single-store sales area up 4.8% [4] - The company is focusing on opening larger stores and closing smaller ones to enhance the offline shopping experience [4] - Nike's new management team is expected to bring positive changes, reflecting the brand's emphasis on the Chinese and outdoor markets [5] - The company has expanded its brand portfolio with new partnerships in outdoor, trail running, and IP culture sectors, including HOKA ONE ONE, Kailas, Fanatics, and Norda [5] Valuation and Dividends - The company has maintained a cash dividend payout ratio of around 100% over the past three years [6] - The strong brand partnership matrix, healthy cash flow, and high dividend yield support the "Buy" rating [6]

Investment Rating - The report maintains an "Accumulate" rating for the company, with a target price of 2.83 HKD [1]. Core Viewpoints - The company is expected to benefit from consumer stimulus policies, focusing on non-essential consumption [1]. - The company has faced challenges with offline traffic decline but is expanding its online platforms and utilizing new customer acquisition methods [1]. - The report highlights the importance of deepening user engagement through personalized marketing strategies, which have resulted in a stable contribution of 60-70% from repeat members [1]. - The company is diversifying its product offerings and expanding brand partnerships to capture growth in emerging sports segments [1]. - The earnings forecast for FY25-27 is maintained, with projected revenues of 26.5 billion RMB, 28.5 billion RMB, and 29.9 billion RMB, and net profits of 1.39 billion RMB, 1.67 billion RMB, and 1.92 billion RMB respectively [1]. Summary by Relevant Sections Investment Rating - The company is rated "Accumulate" with a current price of 2.83 HKD and a target price set [1]. Business Performance - The company reported a decline in retail and wholesale sales, with a 2.1% decrease in gross sales area and a 4.4% year-on-year decline [1]. - New customer acquisition strategies include the use of mini-programs and partnerships with platforms like Douyin and Meituan [1]. User Engagement - The company is enhancing user experience through tailored product recommendations and marketing strategies, leading to increased user loyalty [1]. - High-value members contribute nearly 40% of total sales despite being a small percentage of total members [1]. Product Diversification - The company is expanding its brand collaboration matrix and entering new sports categories, including partnerships with HOKA ONE ONE and KAILAS [1]. - The company is also collaborating with Fanatics to expand the commercialization of sports IP in Greater China [1]. Financial Forecast - The report maintains the earnings forecast with projected revenues and net profits for FY25-27, along with EPS estimates of 0.22 RMB, 0.26 RMB, and 0.30 RMB respectively [1].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its performance relative to the market [5][9]. Core Insights - The company reported its FY25 Q3 operational data, which met expectations, showing a slight year-on-year decline in sales but a significant improvement compared to the previous quarter [5][6]. - Online sales outperformed offline sales during the quarter, with a notable double-digit growth during the Double Eleven shopping festival, leading to an increase in the proportion of online direct sales to 40% [6][9]. - The inventory level remains stable, with a healthy structure, although discount rates have deepened temporarily due to ongoing inventory clearance [7][9]. - The new CEO of NIKE is expected to drive a new product innovation cycle, which could positively impact the company's retail business [8][9]. - The company focuses on high-quality growth in the sports apparel retail sector, leveraging strong partnerships with major brands like NIKE and Adidas [9]. Summary by Sections Market Data - Closing price (HKD): 2.83 - Market capitalization (billion HKD): 175.49 - 52-week high/low (HKD): 6.28/2.11 [3] Financial Performance - FY25 Q3 sales showed a year-on-year decline in the single digits, but improved from a 10-20% decline in the previous quarter [5][6]. - The company expects net profits for FY25-FY27 to be 13.2 billion, 16.7 billion, and 19.3 billion RMB, respectively, with corresponding P/E ratios of 12, 10, and 8 [9][11]. Sales and Inventory - The company’s direct sales area decreased by 4.4% year-on-year, with a high single-digit decline in the number of stores, reflecting an optimization of store structure [6][9]. - The inventory turnover ratio is maintained between 4-5 months, with 70-80% of inventory being new products [7][9]. Future Outlook - The company is expected to benefit from improvements in the retail environment and brand recovery, maintaining a positive long-term growth trend [9].