TOPSPORTS(06110) 光大证券·2024-05-24 00:31Investment Rating - Maintain "Overweight" rating with a current price of HKD 5.49 [1] Core Views - The company achieved a 6.9% YoY increase in revenue and a 20.5% YoY increase in net profit attributable to shareholders in FY2024, with a dividend payout ratio of 100.9% [2] - The company's profit growth outpaced revenue growth due to a slight increase in gross margin and a decrease in expense ratio [2] - The company continues to expand its brand portfolio and enhance its omnichannel retail capabilities, with a focus on improving operational efficiency and user engagement [5] Financial Performance Revenue and Profit - FY2024 revenue reached RMB 28.933 billion, up 6.9% YoY, while net profit attributable to shareholders was RMB 2.213 billion, up 20.5% YoY [2] - EPS for FY2024 was RMB 0.36, with a final dividend of RMB 0.05 per share and a special dividend of RMB 0.15 per share, combined with an interim dividend of RMB 0.16 per share [2] - Gross margin increased by 0.1 percentage points (PCT) to 41.8%, operating margin rose by 0.6 PCT to 9.6%, and net margin attributable to shareholders increased by 0.8 PCT to 7.6% [2] Segment Performance - Revenue from core brands (Nike + Adidas) grew by 6.5% YoY, while revenue from other brands increased by 10.5% YoY [2] - Retail channel revenue grew by 8.9% YoY, while wholesale channel revenue declined by 3.3% YoY [2] - The number of directly operated stores decreased by 6.4% YoY to 6,144, but average store size increased by 6.0% [3] Operational Efficiency - Inventory turnover days decreased by 13 days to 136 days, while accounts receivable turnover days increased by 1 day to 15 days [3] - Operating cash flow decreased by 28.1% YoY to RMB 3.129 billion [3] Brand and Channel Strategy - The company has expanded its brand portfolio by partnering with HOKA, Kailas, and norda, and has initiated a collaboration with Fanatics for IP commercialization in Greater China [5] - Online sales accounted for 20-30% of total direct sales, with live-streaming sales increasing approximately 5x YoY [5] - The company has 76.3 million cumulative users as of February 2024, with a 12.4% YoY increase in user count and high single-digit growth in per-user value [5] Future Outlook - The company is expected to maintain steady growth through brand diversification and omnichannel retail capabilities, with a high dividend payout ratio averaging 7.5% over the past three fiscal years [6] - FY2025-2027 EPS forecasts are adjusted to RMB 0.39, RMB 0.43, and RMB 0.47, respectively, with PE ratios of 13x and 12x for FY2025 and FY2026 [6]