Investment Rating - The investment rating for the company is "Buy" and is maintained [4] Core Views - The company plans to divest KP Global (fashion sports division) to improve profitability, with the divestiture expected to enhance earnings for the current and next year [5][6] - The divestiture is anticipated to optimize cash flow and allow the company to focus on the running market, enhancing the competitive advantage of the main brand and its collaboration with Saucony [6] Summary by Sections Event Description - The company announced the sale of KP Global for $150 million, which was initially acquired for $260 million in 2019. The divestiture is expected to alleviate the financial burden from continuous losses [5] - KP will redeem $65 million of convertible bonds issued to Hillhouse in 2021, while the company will issue a new $500 million convertible bond with a 3.5% interest rate [5] - The cumulative losses from KP since its acquisition amount to $154 million, and the company will receive a convertible bond from KP worth $154 million, allowing for a potential 30% equity stake in KP [5] Event Commentary - The divestiture is expected to improve profitability, as KP reported losses of $23 million and $31 million in 2022 and 2023, respectively. The company anticipates similar losses for 2024 [6] - The company has optimized its inventory levels and is expected to enhance gross margins and advertising expenses in 2024. The professional sports brand continues to show high growth [6] - The financial forecasts for the company are optimistic, with expected net profits of RMB 1.24 billion, RMB 1.52 billion, and RMB 1.67 billion for 2024, 2025, and 2026, respectively, corresponding to P/E ratios of 12, 9, and 9 times [6][8]
特步国际：剥离KP业绩改善，聚焦跑步市场