TOPSPORTS(HK:06110)2024-08-23 07:43Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong performance relative to the market [3][12]. Core Insights - The retail environment is under pressure, with a forecasted decline in sales for the first quarter of FY25, reflecting a similar trend to the previous quarter. The company expects continued challenges in the retail sector due to extreme weather and a lack of significant improvement in offline retail [3][4]. - Key clients show mixed performance, with Adidas recovering gradually while Nike faces increased pressure. Adidas reported sales growth in the Greater China region, while Nike's sales growth is slowing down [3][4]. - The company is actively exploring diverse retail models to mitigate the impact of reduced foot traffic, focusing on enhancing store quality and expanding online sales through various platforms [4]. - New brand collaborations and partnerships are progressing, which are expected to contribute to incremental growth. Strategic partnerships with Fanatics and Norda are highlighted as key initiatives [4]. - The company is focusing on high-quality growth through a comprehensive retail strategy, leading to a downward revision of profit forecasts for FY25-27, with projected net profits of 1.79 billion, 1.92 billion, and 2.09 billion RMB respectively [4]. Summary by Sections Market Data - As of August 22, 2024, the closing price is HKD 2.98, with a market capitalization of HKD 18.48 billion [2]. Financial Performance - For FY2024, the company expects a revenue of 28.93 billion RMB, with a net profit of 2.21 billion RMB, reflecting a 20% growth compared to the previous year [5][9]. - The gross margin is projected to be 41.8%, with a net profit margin of 7.6% for FY24 [6][9]. Sales and Store Performance - The company reported a decline in sales for the first half of FY24, with a year-on-year decrease in sales area for offline stores [8]. - The average store area has shown growth, indicating a focus on quality over quantity in store expansion [4][8].