TOPSPORTS(06110) 海通国际·2024-12-24 00:39Investment Rating - The report initiates coverage on Topsports International (6110) with an "Outperform" rating and a target price of HKD 3.79 per share, based on a FY2026 PE of 12x [5][23] Core Views - FY25Q3 sales showed sequential improvement, with total retail and wholesale sales declining mid-single-digit YoY, compared to a 10-20% low-end decline in FY25Q2 [2][15] - Inventory reduction is progressing smoothly, with inventory expected to return to healthy levels by FY25 end (Feb 2025) [3][22] - Nike FY25Q2 performance slightly exceeded expectations, with revenue of USD 12.35 billion, down 9% YoY (currency neutral), and net profit of USD 1.16 billion, down 26% YoY [4][16] - Nike plans to clear inventory by the first half of next year and focus on professional sports, extending partnerships with NFL, NBA, and PSG [5][17] Financial Performance and Forecast - FY2025-FY2027 net profit attributable to shareholders is forecasted at RMB 1.325/1.800/2.152 billion, with FY2026 EPS of RMB 0.29 [5][23] - FY25H1 inventory was RMB 6.12 billion, up 6.4% YoY, with inventory turnover days at 148 days, up 7 days YoY [3][22] - FY25H1 gross profit margin was 41.1%, down 3.6% YoY, due to deeper discounts to optimize inventory [3][22] Industry and Market Context - Nike's CEO emphasized strengthening ties with core partners like Topsports International and Pou Sheng International, and repositioning NIKE DIGITAL to focus on full-price models [4][16] - Nike plans to accelerate inventory clearance in H2 (Dec 2024-May 2025) and focus on professional sports, launching new products like Vomero 18 and Pegasus Premium [5][17] Valuation and Peer Comparison - The report values Topsports International at a FY2026 PE of 12x, translating to a target price of HKD 3.79 per share [5][23] - Comparable companies include JD Sports Fashion, Fraser, and Pou Sheng International, with median PE ratios of 9.1x, 10.3x, and 9.2x for 2024E, 2025E, and 2026E respectively [8]