SINOLINK SECURITIES·2024-10-24 03:16Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [1]. Core Insights - The company reported a decline in retail sales across all platforms, with offline channels experiencing a high single-digit decline, while e-commerce sales grew in the mid-single digits, aligning with expectations [1]. - A joint venture (JV) was established with LN Co, Founder Co, and Sequoia China, with a total investment of HKD 200 million, aiming to explore international business development [1]. - The company is actively adjusting discounts and increasing the launch of high-cost performance products to alleviate inventory pressure, maintaining a healthy inventory turnover ratio [1]. - The company expects improved sales growth in Q4 due to seasonal factors and a low base effect, maintaining guidance for low single-digit revenue growth and low double-digit profit margin for the year [1]. - The establishment of the JV is seen as a strategic move to leverage international resources while focusing on domestic sports markets [1]. Financial Summary - Revenue for 2022 was CNY 25,803 million, with a growth rate of 14.31%. For 2023, revenue is projected at CNY 27,598 million, reflecting a growth rate of 6.96% [3]. - The net profit for 2022 was CNY 4,064 million, with a decline of 21.58% expected in 2023, bringing it to CNY 3,187 million [3]. - The company’s P/E ratio is projected to decrease from 15.38 in 2023 to 8.78 by 2026, indicating a potential undervaluation [3]. - The gross margin is expected to improve by approximately 1 percentage point year-on-year, despite anticipated pressure on discounts in Q4 [1][3].