TOPSPORTS(HK:06110) HTSC·2025-10-24 06:41Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 4.00 [1][10]. Core Insights - The company reported a revenue of RMB 12.3 billion for the first half of FY25/26, representing a year-on-year decrease of 5.8%, and a net profit attributable to the parent company of RMB 790 million, down 9.7% year-on-year. The interim dividend proposed is HKD 0.13 per share, with a payout ratio increasing by 2.8 percentage points to 102.2% [6][10]. - The company is accelerating its omnichannel retail strategy and optimizing operational efficiency to enhance resilience, maintaining a robust performance despite market challenges. The outlook is positive with expectations of improved retail and discount conditions as inventory levels decrease and new product sales increase [6][10]. Financial Performance Summary - Revenue and Profit Forecasts: - FY25 revenue is projected at RMB 27,013 million, a decrease of 6.64% from FY24. The net profit for FY25 is expected to be RMB 1,286 million, down 41.86% year-on-year [5][10]. - Earnings Per Share (EPS): - EPS for FY25 is projected at RMB 0.21, with a gradual increase to RMB 0.27 by FY28 [5][10]. - Return on Equity (ROE): - ROE is expected to improve from 12.97% in FY25 to 17.56% in FY28 [5][10]. - Dividend Yield: - The dividend yield is projected to be 8.81% for FY25, decreasing to 6.61% in FY26, and then increasing to 8.63% by FY28 [5][10]. Market and Operational Insights - Sales Performance: - The main brands (Nike and Adidas) saw a revenue decline of 4.8%, while other brands experienced a 12.2% drop. Online retail continues to grow, achieving double-digit growth despite a decline in offline traffic [7][10]. - Inventory Management: - The company reported a 4.7% decrease in inventory year-on-year, with inventory turnover days increasing by 1.7 days to 150 days [8][10]. - Omnichannel Strategy: - The company is enhancing its omnichannel retail capabilities, with over 800 accounts on platforms like Douyin and WeChat, and more than 3,600 mini-program stores [7][10]. Valuation and Comparison - Valuation Metrics: - The company is valued at a PE ratio of 14.89 for FY25, decreasing to 11.26 by FY28. The average PE for comparable companies is 12.0x for FY26 [5][10]. - Target Price Adjustment: - The target price has been adjusted to HKD 4.00, reflecting the company's leading position in omnichannel retail and attractive dividend yield [10].