Haitong Securities·2024-09-06 00:11Investment Rating - The investment rating for the company is "Outperform the Market" [5][6]. Core Insights - The company has demonstrated significant growth in its core business, with a 13.8% year-on-year increase in revenue to 33.74 billion yuan in the first half of 2024, and a substantial 62.6% increase in net profit to 7.72 billion yuan [2][5]. - The growth drivers include a 25.1% increase in e-commerce revenue, enhanced product functionality, and improvements in direct-to-consumer (DTC) and retail operations [2][5]. - The company announced a share buyback plan of up to 10 billion Hong Kong dollars, representing 4.6% of its market capitalization [4][5]. Financial Performance Summary - The company's revenue for the first half of 2024 reached 33.74 billion yuan, with a gross margin of 64.1%, up 0.8 percentage points [2]. - The net profit attributable to the parent company increased by 62.6% to 7.72 billion yuan, with a net profit margin of 22.9%, an increase of 6.9 percentage points [2]. - The footwear category led the growth, with revenue increases of 18% for footwear, 10.8% for apparel, and 10.1% for accessories [2][5]. - The company expects net profits of 137.65 billion yuan and 139.93 billion yuan for 2024 and 2025, respectively, with a projected PE valuation range of 18-20X for 2024 [6][8]. Brand Performance - The company's other brands, including Descente and KOLON, saw a revenue increase of 41.8% to 4.6 billion yuan, driven by improved brand strength and store efficiency [3][5]. - The DTC and e-commerce channels for the company's main brand, ANTA, achieved double-digit growth, with revenue increasing by 13.5% to 16.08 billion yuan [5][6]. - FILA's revenue grew by 6.8% to 13.06 billion yuan, supported by e-commerce growth and an increase in functional products [5][6]. Cash Flow and Efficiency - The average inventory turnover days decreased by 10 days to 114 days, indicating improved operational efficiency [5]. - Operating cash flow for the first half of 2024 was 8.5 billion yuan, a decrease of 30% year-on-year, while free cash flow was 7.62 billion yuan, down 20% year-on-year [5][8]. Valuation and Market Comparison - The company is positioned favorably against its peers, with a market capitalization of 212.447 billion Hong Kong dollars and a competitive valuation compared to other brands in the industry [3][6]. - The average PE ratio for comparable companies indicates a strong market position, with the company expected to maintain a robust growth trajectory [6][8].