On AG(US:ONON) Haitong Securities International·2026-03-04 10:20Investment Rating - The report assigns a rating of "Outperform" for On Holdings AG, indicating an expected total return over the next 12-18 months that exceeds the return of its relevant broad market benchmark [19]. Core Insights - For FY2025, On Holdings AG achieved record high net sales exceeding CHF 3 billion, with a reported currency increase of 30% year-on-year and a fixed currency increase of 35.6%. The gross margin reached 62.8%, and adjusted EBITDA margin hit a historical high of 18.8%. However, net profit declined by 15.9% year-on-year to CHF 203 million [2][8]. - The company raised its full-year guidance for 2026, expecting net sales to increase by at least 23% at fixed currency, with a compound annual growth rate of at least 30.5% from 2023 to 2026. The gross margin is projected to rise to at least 63% compared to 2025, driven by brand appeal and operational efficiency [5][11]. Summary by Sections Financial Performance - In FY2025, net sales reached CHF 3.0 billion, with a gross margin of 62.8% and adjusted EBITDA margin of 18.8%. Net profit was CHF 203 million, down 15.9% year-on-year. Cash reserves exceeded CHF 1 billion, and inventory stood at CHF 419.8 million [2][8]. - For Q4 FY2025, net sales were CHF 743.8 million, a 22.6% increase year-on-year, with a gross margin of 63.9%, up 180 basis points from the previous year [3][9]. Regional Performance - The Americas, EMEA, and APAC regions all showed robust expansion. DTC channel sales grew approximately 20%, with APAC being the core growth engine, achieving a 70.8% increase in net sales [4][10]. - By region, net sales in the Americas totaled CHF 434.3 million, up 12.8% at reported currency. EMEA net sales reached CHF 183 million, up 24.2%, while APAC net sales hit CHF 126.5 million, up 70.8% [10]. Future Outlook - The company anticipates that DTC business will outpace wholesale business, with apparel sales expected to grow significantly faster than the overall level. The reported net sales target for 2026 is at least CHF 3.44 billion [5][11]. - The company expects a gross margin for FY2026 to hit a new record high, with an adjusted EBITDA margin forecasted between 18.5% to 19% [11].