TOPSPORTS(HK:06110) Orient Securities·2024-10-30 05:43Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 3.52 HKD based on a 15x PE valuation for FY25 [2][7]. Core Views - The company reported FY25H1 revenue of 13.055 billion, a year-on-year decline of 7.9%, and a net profit attributable to shareholders of 870 million, down 34.6%, which was below market expectations [1]. - The company plans a cash dividend of 860 million, with a payout ratio of 97.85% [1]. - The main brand and other brands saw revenue declines of 8.1% and 6.5% respectively, while retail and wholesale business revenues fell by 8.9% and 2.2% year-on-year [1]. - The company has increased its store sales area and is focusing on live streaming from stores, with 5,813 stores as of FY25H1, a net decrease of 331 stores since the beginning of the fiscal year [1]. - The gross margin for FY25H1 decreased by 3.7 percentage points to 41.1%, attributed to increased inventory and promotional efforts due to weak sales [1]. - Inventory turnover days increased to 145 days, up 7 days year-on-year, while operating cash flow remained healthy at 2.61 billion [1]. Financial Summary - The company adjusted its earnings forecast for FY25-26, predicting earnings per share of 0.22, 0.26, and 0.30 for FY25-27, down from previous estimates of 0.39 and 0.42 for FY25-26 [2][7]. - The projected revenue for FY25 is 26.747 billion, with a year-on-year decline of 7.6%, and a recovery expected in FY26 with a growth of 5.9% [6][8]. - The gross margin is expected to be 38.0% in FY25, improving to 40.0% by FY27 [6][8].