Investment Rating - The report maintains a "BUY" rating for Anta Sports with a target price of HK$128.8, indicating an upside potential of 51.3% from the current price of HK$85.15 [5][3]. Core Insights - Anta Sports reported FY23 results that exceeded expectations, with revenue of RMB62.4 billion and net profit of RMB10.236 billion, reflecting year-on-year growth of 16.2% and 34.9% respectively. This growth was attributed to improved store productivity, disciplined retail discounting, and increased interest income [1][3]. - The company has set ambitious targets for FY24, aiming for revenue growth of 10-15% for both Anta and Fila brands, and over 20% for Descente and Kolon brands. Operating profit margins are expected to be around 20% for Anta and 25% for Fila [3][5]. Financial Performance - FY23 key highlights include: - Overall online sales increased by 11% year-on-year, with FILA and Descente brands growing by over 10% and 30-40% respectively [2]. - Monthly store productivity reached RMB280-290k, up more than 10% year-on-year, with Fila and Descente nearing RMB1 million and RMB2 million respectively [2]. - Operating cash flow grew by 61% to RMB19.6 billion, driven by a reduction in inventory turnover days from 138 to 123 [2][3]. Future Outlook - The management anticipates a retail sales value (RSV) growth of 4-5% year-on-year for Q1 2024, despite facing some pressure due to a high base and unfavorable weather conditions post-Chinese New Year [2]. - The company plans to maintain inventory levels at 5 times or below for various brands and has set modest store expansion targets, prioritizing productivity [3][5]. - The payout ratio is targeted at 50% for FY24 onwards, supporting continuous expansion through a multi-branded strategy [3][5]. Market Position - Anta Sports is recognized as a leading player in the PRC sporting goods market, with a retail network comprising 9,831 ANTA brand points of sale and 1,972 FILA stores as of December 2023 [6].

Investment Rating - The report maintains a "BUY" rating for Li Ning with a target price of HK$29.40, indicating an upside potential of +38.4% from the current price of HK$21.25 [1]. Core Insights - Li Ning's FY23 results met expectations, with revenue of RMB27.6 billion, reflecting a 7% year-over-year increase, while net profit decreased by 21.6% to RMB3,187 million. The company declared a final dividend of RMB0.19, resulting in a payout ratio of 45% [1]. - Management provided conservative guidance for FY24, targeting a sales growth of approximately 5% and a net profit margin (NPM) of 12-13% [1]. - The company is focusing on operational improvements and quality enhancement, with a goal to drive NPM towards 15% in the mid-to-long term [1]. Financial Performance Summary - FY23 revenue was RMB27.6 billion, up 7% YoY, while net profit was RMB3,187 million, down 21.6% YoY. The gross profit margin (GPM) remained stable at 48.4% [2]. - The operating profit margin (OPM) contracted by 6.0 percentage points to 12.9%, primarily due to an increase in selling and distribution expenses [2]. - The cash conversion cycle extended by 5 days to 35 days, with operating cash flow reaching RMB4.7 billion, a 20% increase YoY [1][2]. Operational Highlights - Direct-to-consumer (DTC) sales mix improved to 25.0% from 20.7% in FY22, contributing positively to the GPM [1]. - The company reported a sell-through rate of 78%, significantly higher than 52% in FY22, indicating improved inventory management [1]. - Channel inventory decreased to 3.6 months, down from 4.2 months in December 2022, reflecting better inventory control [1]. Future Outlook - For FY24, Li Ning aims for a revenue target of RMB29.3 billion, with projected earnings of RMB3.52 billion [1]. - The company plans to optimize its store network, expecting to close over 20 directly operated stores while opening around 100 franchised stores [1]. - Management is implementing measures to control unauthorized sales activities, targeting a reduction of such activities by 50-60% by the end of FY24 [1].

Xtep International | 1368.HK Rating BUY Maintain Saucony stands out among the new brands Target price HK$6.6 4 C Cuu rr rr ee nn t price HK$5.04 Upside: +31.7% Curren FY23 results inline (b reakdown in Exhibit 1): Company update Xtep reported FY23 result with revenue and net profit at RMB14.3bn and RMB1,030mn. up 10.9%/11.8% YoY. While excluding inventory and receivables provisions and 21 Mar 2024 write-backs, the group’s core operating profit/earnings at RMB1,546/RMB996mn, up 4.4%/6.1% YoY. The key highlig ...