TOPSPORTS(06110) 交银国际证券·2024-11-06 02:01Investment Rating - The investment rating for the company is downgraded to Neutral with a target price of HKD 3.06, indicating a potential upside of 14.1% from the current closing price of HKD 2.68 [1][4][3]. Core Insights - The company experienced a decline in both revenue and net profit for the first half of the fiscal year 2025, with revenue dropping by 7.9% year-on-year to RMB 13.05 billion, slightly below market expectations. The gross margin decreased by 3.6 percentage points to 41.1%, primarily due to increased discount rates and a higher proportion of lower-margin wholesale channels [1][3]. - The company maintained a high dividend payout ratio, with an interim dividend of RMB 0.14 per share, resulting in a payout ratio of 99.4%, and an average payout ratio exceeding 100% over the past three years [1][5]. - The total number of stores decreased by 396 year-on-year to 5,813, with a 1.9% decline in total sales area compared to the previous year. However, the average sales area per store increased by 4.8% [2]. - The company has enhanced its membership quality, with a total membership count reaching 81 million, reflecting a 10.8% year-on-year growth. The contribution of repeat members to overall sales remains stable at 60-70% [2]. Financial Summary - For the fiscal years ending February 29, the projected revenues are as follows: RMB 26.58 billion for 2025E (down 8.1% year-on-year), RMB 27.57 billion for 2026E (up 3.7%), and RMB 29.11 billion for 2027E (up 5.6%) [5][9]. - The net profit is expected to be RMB 1.47 billion for 2025E (down 33.4% year-on-year), RMB 1.67 billion for 2026E (up 13.6%), and RMB 1.85 billion for 2027E (up 10.6%) [5][9]. - The earnings per share (EPS) forecast for 2025E is RMB 0.24, with a significant downward adjustment of 42.2% from previous estimates [5][9].