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].

Core Viewpoint - The company achieved a revenue of 27.01 billion for FY25, a year-on-year decline of 6.6%, and a net profit attributable to shareholders of 1.29 billion, down 41.9% year-on-year, with FY25H2 showing a revenue and net profit decline of 5.4% and 53% respectively [1] - The expected dividend payout ratio for FY25 is 134%, exceeding market expectations [1] Revenue Breakdown - Revenue from retail and wholesale channels for FY25 decreased by 6.8% and 5.8% year-on-year respectively [1] - Revenue from the main brand and other brands declined by 6.1% and 9.9% year-on-year respectively [1] Store Operations - As of the end of FY25, the company had 5,020 directly operated stores, with a net closure of 1,124 stores, including 258 new openings and 1,382 closures [1] - Total sales area decreased by 12.4% year-on-year, while sales area per store increased by 7.2%, reflecting the company's "one product one strategy" approach to store adjustments [1] Profitability Metrics - The gross margin for FY25 decreased by 3.4 percentage points to 38.4%, primarily due to increased retail discounts, with FY25H2 showing greater discounting than FY25H1 [1] - The net profit margin attributable to shareholders decreased by 2.9 percentage points to 4.8% [1] Inventory and Cash Flow - The company's inventory turnover days were 133 days, a decrease of 1 day year-on-year, with net cash flow from operating activities reaching 3.76 billion, a year-on-year increase of 20% [2] - Cash at the end of the period was 2.59 billion, up from 1.96 billion in the same period last year [2] Brand Collaborations - The company is steadily advancing new brand collaborations, including the introduction of the high-end SOAR running brand to the Chinese market [2] - Collaborations with top outdoor brands for comprehensive operations in China are underway, alongside deepened partnerships with the Canadian high-end trail running brand nordaTM [2] Earnings Forecast - The earnings forecast for FY26-28 has been adjusted, with expected earnings per share of 0.21, 0.25, and 0.30 respectively [2] - A target price of 3.45 HKD is set for FY26, based on a 15 times PE valuation [2]

Core Viewpoint - The company is maintaining a "buy" rating while focusing on high dividends and expanding in the running and outdoor sectors, despite a decline in revenue and net profit for FY2025 [1] Group 1: Financial Performance - FY2025 revenue is projected at 27.01 billion yuan, a decrease of 6.6% year-on-year, with a net profit of 1.286 billion yuan, down 41.9% [1] - The company has a high dividend payout ratio of 135% for the full year, with a cumulative payout ratio of 104.2% over the past six years [1] - Revised net profit forecasts for FY2026-2028 are 1.32 billion, 1.59 billion, and 1.85 billion yuan, respectively, down from previous estimates [1] Group 2: Sales and Revenue Breakdown - Main brand revenue for FY2025 is 23.31 billion yuan, a decline of 6.1%, accounting for 86.3% of total revenue, while other brand revenue is 3.5 billion yuan, down 9.9% [1] - Direct online sales have seen double-digit growth, increasing their share to 30-40% from 20-30% in FY2024 [1] - Retail and wholesale revenues decreased by 6.8% and 5.8%, respectively, indicating a challenging sales environment [1] Group 3: Store Management and Operations - As of FY2025, the number of stores is 5,020, a decrease of 18.3% year-on-year, with a focus on optimizing low-efficiency stores [2] - The average sales area per store has increased by 7.2%, reflecting a strategy of tailored store adjustments [2] - Inventory management has improved, with inventory down 4.5% to 6 billion yuan and inventory turnover days at 134.9 days, a slight improvement [2] Group 4: Profitability and Cost Management - FY2025 gross margin is 38.4%, down 3.4 percentage points, with a slight increase in expense ratio to 33.1% [2] - Operating profit margin (OPM) is 5.9%, and net profit margin is 4.8%, both showing declines [2] - The company has managed to maintain cash flow, with net cash increasing by 20% to 3.76 billion yuan, which is 2.6 times the net profit [2]

Core Viewpoint - The company reported FY25 results that were in line with expectations, showing a revenue decline of 6.6% year-on-year and a significant drop in net profit attributable to shareholders by 42% to 1.29 billion RMB [1][2]. Financial Performance - The company plans to distribute a final and special dividend of 0.14 RMB per share, resulting in an annual payout ratio of 135%, maintaining a high dividend distribution [1]. - Revenue decline was attributed to weak demand and pressure on offline foot traffic, with a 5.4% year-on-year decrease in revenue for the second half of FY25, which was an improvement compared to the first half [1]. - Retail business revenue for the first and second halves of FY25 decreased by 8.9% and 4.8% year-on-year, respectively, due to increased inventory clearance in online channels [1]. - The main brand's revenue fell by 6.1% year-on-year, while other brands saw a 9.9% decline, primarily due to weakness in the leisure sports segment [1]. - The company closed 1,382 stores, reducing the total to 5,020, with total sales area decreasing by 12% year-on-year [1]. Operational Efficiency - The company maintained a cautious approach to store openings and accelerated the elimination of inefficient stores [1]. - Despite revenue pressures, the company achieved a 20% year-on-year increase in operating cash flow, reaching 3.77 billion RMB, supported by effective working capital management [2]. - Inventory decreased by 4.5% year-on-year, and accounts receivable dropped by 43%, reducing cash consumption [2]. Future Outlook - The company holds a cautiously optimistic view for the new fiscal year, focusing on efficiency and profit improvement, with plans to continue cost reduction and efficiency enhancement [2]. - For FY26, the company expects net profit to remain flat year-on-year, with an improvement in net profit margin [3]. - The EPS forecast for FY26 has been revised down by 24% to 0.21 RMB, with an introduction of FY27 EPS forecast at 0.26 RMB [3]. - The current stock price corresponds to 13/11 times the FY26/27 earnings, with a target price of 3.10 HKD, reflecting a stable valuation [3].

Core Viewpoint - The company experienced a decline in revenue and net profit in FY2025, attributed to weak consumer demand and reduced foot traffic, but maintained strong cash flow supporting high dividend payouts [1][2][3] Group 1: Financial Performance - FY2025 revenue decreased by 6.6% year-on-year to 27.01 billion yuan, with retail channel revenue down 6.8% to 23.03 billion yuan and wholesale channel revenue down 5.8% to 3.79 billion yuan [1] - Net profit fell by 41.9% year-on-year to 1.29 billion yuan, with a gross margin decline of 3.4 percentage points to 38.4% due to increased promotional discounts and a higher proportion of low-margin online sales [1] - Operating cash flow increased by 20% year-on-year to 3.76 billion yuan, with a free cash flow to net profit ratio of 2.6 times, indicating efficient cash generation [1] Group 2: Operational Strategy - The company reduced its direct store count by 1,124 to 5,020, a decrease of 18.3% year-on-year, while total sales area declined by 12.4%, but single-store sales area increased by 7.2% [2] - Membership sales accounted for 93.2% of total sales, with high-value members contributing nearly 40% of sales, reflecting strong customer loyalty [2] - The company strategically entered the outdoor and professional sports market, becoming the exclusive operator for high-end brands like norda and Norrona in China [2] Group 3: Future Outlook - In Q4 FY2024, total sales for retail and wholesale businesses saw a mid-single-digit decline, with a more significant reduction in direct store area [3] - Management expressed cautious optimism for the new fiscal year, aiming for net profit to remain flat year-on-year while improving net profit margin through cost reduction and increased online channel sales [3] - The company adjusted its profit forecasts for FY2026-2028, expecting net profits of 1.30 billion, 1.46 billion, and 1.63 billion yuan respectively, reflecting a modest growth trajectory [3]