TOPSPORTS(06110) 国信证券·2024-12-17 10:08Investment Rating - The report maintains an "Outperform" rating for the company [1][3][27] Core Views - The company's Q3 FY2025 sales declined by mid-single digits year-over-year, but the decline narrowed compared to the previous quarter [3][5] - Online channel performance was better than offline, with online sales expected to grow by double digits in Q3, accounting for 40% of total sales [4][5] - The company aims to achieve inventory improvement by the end of the fiscal year, with deeper discounts expected in Q3 due to inventory clearance efforts [4][6] - The company's strong cash generation capability supports a high dividend payout, with a mid-term dividend payout ratio of 99% and an expected full-year payout ratio of 100% [4][26] - The company's main brand, Adidas, performed well in Greater China, with high single-digit revenue growth in the first three quarters, and the company raised its full-year revenue growth guidance to 10% [4][26] - Nike, another key brand, is in a transition phase, with potential recovery expected in FY2026 under new leadership and product innovation [4][26] - Non-core brands in the outdoor sector remain highly competitive [26] Financial Performance and Forecast - The company's Q3 FY2025 total sales declined by mid-single digits year-over-year, with a 2.1% quarter-over-quarter and 4.4% year-over-year reduction in gross sales area of directly operated stores [3][5] - The company expects to achieve inventory improvement by the end of the fiscal year, with deeper discounts in Q3 [6] - The report maintains profit forecasts, with expected net profits of 1.44 billion, 1.79 billion, and 1.92 billion yuan for FY2025, FY2026, and FY2027, respectively, representing year-over-year changes of -35.1%, +24.5%, and +7.6% [27] - The reasonable valuation range is 3.8-4.0 HKD, corresponding to a 2025 PE ratio of 15-16x [27] Brand Performance - Adidas: In Q3 FY2024, Adidas reported a 10% year-over-year revenue growth at constant exchange rates, with a 9% growth in Greater China excluding Yeezy. The company raised its full-year revenue growth guidance to 10% [16][26] - Nike: In Q1 FY2025, Nike's revenue declined by 10% year-over-year, with a 16% decline in direct sales in Greater China. The company withdrew its full-year guidance due to CEO transition but expects better performance in the second half of FY2025 [13][26] Market and Industry Outlook - The company's sales decline and store closures are primarily due to weak macroeconomic demand and reduced offline foot traffic [4][26] - The company expects channel adjustments to stabilize in the next fiscal year, with potential growth driven by inventory health and market environment improvements [4][26] - The outdoor sector remains highly competitive, with non-core brands maintaining strong performance [26]