CSC SECURITIES (HK) LTD·2025-07-17 02:47Investment Rating - The report assigns a "Buy" rating for the company, indicating a potential upside of 15% to less than 35% from the current price [3][9]. Core Insights - The company's Q2 retail sales showed slight pressure, with the Anta brand experiencing low single-digit positive growth year-on-year, while the FILA brand recorded mid-single-digit positive growth. Other brands saw a significant increase in retail sales, with growth rates between 50% and 55% [5][8]. - The overall outlook for the year remains unchanged, with expectations for improved sales in the second half due to store renovations and e-commerce adjustments. The acquisition of Jack Wolfskin is expected to enhance the company's long-term growth potential [8]. Summary by Sections Company Overview - The company operates in the textile and apparel industry, with a current H-share price of HKD 91.85 and a market capitalization of approximately HKD 211.95 billion [2]. Financial Performance - For the first half of 2025, the Anta brand's retail sales grew at a mid-single-digit rate year-on-year, while FILA's retail sales grew at a high single-digit rate. Other brands achieved a growth rate of 60% to 65% [5][8]. - The projected net profits for 2025 to 2027 are RMB 132.48 billion, RMB 149.62 billion, and RMB 169.18 billion, respectively, with corresponding EPS of RMB 4.72, RMB 5.33, and RMB 6.02 [7][8]. Market Position - The company's product mix includes footwear (41.2%), apparel (55.6%), and accessories (3.2%) [3]. - The stock has shown a price increase of 32.44% over the past year, indicating strong market performance [2]. Future Projections - The company anticipates a recovery in the Anta brand's sales in the latter half of the year, supported by ongoing brand strength and network expansion for other brands [8]. - The expected P/E ratios for 2025 to 2027 are 18, 16, and 14, respectively, suggesting a favorable valuation relative to earnings growth [8].