TOPSPORTS(06110) 浦银国际证券·2025-01-21 03:00Investment Rating - The report maintains a "Buy" rating for the company and upgrades it to an industry favorite, with a target price of HKD 3.34, indicating a potential upside of 18.4% from the current price of HKD 2.82 [2][5]. Core Insights - The company's revenue performance is gradually improving, with expectations that FY25 revenue will outperform the previously guided high single-digit decline. The successful promotional strategies are credited for this positive trend [2][3]. - The recovery of Nike's brand strength, particularly after signing Wang Jiaer as a global ambassador, is expected to enhance market sentiment towards the company and improve FY26 performance outlook [4][5]. - The current valuation is considered low at 10.3x FY26 P/E, coupled with a high dividend yield of around 10%, suggesting significant upside potential compared to downside risks [2][5]. Revenue Trends - For 4QFY25, the company anticipates a reduction in revenue decline to low single digits year-on-year, an improvement from the previous quarter [3]. - The retail discounting strategy has deepened in 4QFY25, aligning with the company's inventory reduction efforts and increasing online sales proportion [3]. Financial Projections - The report provides financial forecasts indicating a revenue of RMB 27,129 million for FY25, a decline of 6% year-on-year, with a projected net profit of RMB 1,382 million, reflecting a 38% decrease [5][12]. - The expected financial metrics for FY26 include a slight revenue decline to RMB 26,849 million and a net profit increase to RMB 1,595 million, indicating a recovery trend [5][12]. Market Positioning - The company is positioned as a leading player in the sports apparel retail sector, with a focus on enhancing brand image and expanding market reach, particularly in lower-tier cities [4][5]. - The overall market sentiment is expected to improve as Nike enhances its product promotion and marketing efforts in China post-inventory resolution [4].