TOPSPORTS(HK:06110) Guoxin Securities·2025-06-26 05:13Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [1][5][17] Core Views - The company reported a mid-single-digit year-on-year decline in total sales for the first quarter of the 2026 fiscal year, with retail performing better than wholesale, and direct online sales showing positive growth compared to offline channels [2][3][4] - Inventory management is on track, with total inventory decreasing year-on-year, and the inventory-to-sales ratio remaining stable [3][4] - The company is expected to gradually improve profitability due to its operational capabilities, with a focus on long-term cash returns and high dividend levels [3][8] Summary by Sections Sales Performance - For the first quarter of the 2026 fiscal year, total sales decreased by a mid-single-digit percentage year-on-year, continuing the trend from the previous fiscal year [2][4] - Direct online sales accounted for 40% of total direct sales, showing positive growth, while offline channels are still affected by weak foot traffic [4] Inventory and Discounts - As of the end of May, total inventory decreased year-on-year, and the inventory-to-sales ratio remained stable [3][4] - The increase in direct online sales has led to a deeper discount in the first quarter, although the extent of the discount has moderated compared to the previous quarter [3][4] Financial Forecasts - The company maintains its profit forecasts, expecting net profits of 1.3 billion, 1.46 billion, and 1.63 billion yuan for the fiscal years 2026, 2027, and 2028, respectively, representing year-on-year growth of 0.7%, 12.6%, and 11.5% [3][8][9] - The reasonable valuation range is maintained at 3.8 to 4.0 HKD, corresponding to a price-to-earnings ratio of 17 to 18 times for the fiscal year 2026 [3][8]