TOPSPORTS(HK:06110) GOLDEN SUN SECURITIES·2024-05-24 01:32Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company experienced a revenue growth of 7% year-on-year for FY2024, with a significant net profit increase of 20.5% [2] - The gross margin slightly improved to 41.8%, supported by better retail discounts and an increase in retail revenue proportion [2] - The company declared a total dividend of RMB 0.20 per share, resulting in a dividend yield of 7% based on the closing price on May 22, 2024 [2] - The company is expanding its brand partnerships, with notable growth in sales from major brands like Adidas and Nike [2] - Retail business is the main growth driver, while wholesale revenue declined by 3.3% [2] Summary by Sections Financial Performance - FY2024 revenue reached HKD 289.33 billion, a 6.9% increase year-on-year, while net profit rose to HKD 22 billion [2][7] - The company’s operating profit margin improved, with a net profit margin of 7.6% [2][10] - The company expects a revenue growth of 5% for FY2025, with profit growth anticipated to exceed revenue growth [6] Brand and Business Model - The main brand revenue grew by 6.5%, while other brands saw a 10.5% increase [2] - The company is enhancing its online presence, with direct online sales accounting for 20%-30% of total sales [3] - Membership numbers increased by 12.4% to 76.3 million, with a strong repeat purchase rate among members [3] Store Optimization and Efficiency - The company reduced its store count by 421 to 6,144, while increasing the average store size by 6% [3] - The physical stores are evolving into multi-functional retail spaces, enhancing customer engagement [3] Cash Flow and Inventory Management - Inventory levels remained stable at HKD 6.28 billion, indicating healthy inventory management [6] - Operating cash flow decreased by 28% to HKD 3.13 billion, attributed to delayed cash settlements during the Chinese New Year [6][9]