Report Information - Report Name: Polyolefin Daily Report [1] - Date: July 17, 2025 [2] Market Quotes Futures Market | Variety | Opening | Closing | High | Low | Change | Change Rate | Open Interest | Change in Open Interest | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Plastic 2601 | 7288 | 7239 | 7301 | 7231 | -45 | -0.62% | 122440 | 5899 | | Plastic 2605 | 7258 | 7214 | 7272 | 7206 | -35 | -0.48% | 2935 | 568 | | Plastic 2509 | 7285 | 7221 | 7292 | 7208 | -63 | -0.86% | 433865 | 12529 | | PP2601 | 7072 | 7024 | 7080 | 7015 | -34 | -0.48% | 110563 | 4374 | | PP2605 | 7066 | 7018 | 7074 | 7010 | -33 | -0.47% | 5931 | 1115 | | PP2509 | 7080 | 7015 | 7080 | 7008 | -50 | -0.71% | 397459 | 5611 | [5] Spot Market - On July 16, 2025, the inventory level of major producers was 785,000 tons, a decrease of 5,000 tons (-0.63%) from the previous working day, compared with 765,000 tons in the same period last year [7] - PE market prices declined weakly. Linear PE prices were as follows: North China: 7,100 - 7,400 yuan/ton; East China: 7,200 - 7,600 yuan/ton; South China: 7,280 - 7,550 yuan/ton [7] - Shandong propylene market prices declined slightly, closing at 6,270 - 6,300 yuan/ton at 12:00, a decrease of 50 yuan/ton from the previous day [7] - PP futures fluctuated at a low level, suppressing the market trading atmosphere. The mainstream prices of North China PP drawstrings were 6,980 - 7,080 yuan/ton; East China: 6,980 - 7,130 yuan/ton; South China: 6,970 - 7,200 yuan/ton [7] Market Review and Outlook - LLDPE L2509 opened lower, fluctuated during the session, and closed down at 7,214 yuan/ton, a decrease of 29 yuan/ton (-0.40%), with a trading volume of 200,000 lots and an increase in open interest of 2,987 to 436,852 lots [6] - PP futures closed at 7,013 yuan/ton, a decrease of 23 yuan (-0.33%), with an increase in open interest of 13,700 lots to 411,200 lots [6] - Futures opened lower and fluctuated, dampening the market trading atmosphere. Some ex-factory prices were lowered, and spot prices partially declined. Downstream purchasing enthusiasm was low [6] - Entering the consumption off-season, the downstream operating rate of polyethylene was at the lowest level of the year, and there was no sign of improvement in pipe demand. The demand side was difficult to support, while the supply side pressure increased. Previously shut-down plants were planned to restart, and the loss of maintenance was expected to weaken. The supply side would still face pressure in the future. Downstream companies mostly maintained a low inventory strategy, and the supply-demand balance was expected to deteriorate, leading to a weak downward trend in the single-sided market [6] Research Team - Energy and Chemical Research Team: Peng Jinglin (Polyolefins), Li Jie (Crude Oil and Fuel Oil), Ren Junchi (PTA, MEG), Peng Haozhou (Urea, Industrial Silicon), Liu Youran (Pulp), Feng Zeren (Glass and Soda Ash) [4]

Core Viewpoint - Li Ning's Q2 2025 operational performance shows mixed results, with adult sales under pressure due to a challenging consumption environment and store closures, while e-commerce sales growth has slowed compared to Q1 [1][2][3] Group 1: Sales Performance - Adult sales in Q2 2025 experienced low single-digit year-on-year growth, with offline channel sales declining low single digits and e-commerce sales growing in the mid-single digits [1] - Direct sales channels faced pressure with a year-on-year decline in Q2 2025, attributed to a significant number of store closures in the second half of 2024, resulting in 1,278 direct stores by the end of H1 2025, a net closure of 19 stores compared to the beginning of the year [1] - Wholesale channel sales grew low single digits year-on-year, with 4,821 wholesale stores by the end of H1 2025, indicating a stable performance and potential acceleration in store openings in the second half of the year [1] Group 2: E-commerce and Children's Segment - E-commerce sales growth in Q2 2025 slowed compared to Q1, attributed to a weaker overall sales performance during the 618 shopping festival, with Q2 e-commerce sales growing in the mid-single digits compared to low double digits in Q1 [2] - Li Ning's children's clothing segment, Li Ning YOUNG, is expected to outperform adult sales with steady growth, having 1,435 stores by the end of Q2 2025, a net closure of 33 stores since the beginning of the year [2] Group 3: Financial Outlook - The company is projected to have flat revenue growth in 2025, with a 21% decline in net profit attributable to shareholders, primarily due to increased marketing expenses [3] - Li Ning is focusing on product and marketing strategy optimization, including signing with the Olympic Committee for brand marketing, which may enhance brand influence [3] - The company aims to strengthen its core categories of running and basketball while expanding into other sports categories, which is expected to support long-term growth [3]

Report Summary 1) Report Industry Investment Rating No information provided. 2) Core Viewpoints of the Report - Natural rubber prices may fluctuate upward due to macro - prospects and supply - side reform [2]. - Synthetic rubber prices may fluctuate as domestic tire processing rates rise, providing short - term support for downstream demand, while inventory accumulates slightly [2]. - Attention should be paid to the support and pressure levels of natural rubber (13,500 - 13,700 and 14,700 - 14,900) and butadiene rubber (10,700 - 10,900 and 12,000 - 12,200) [2]. 3) Summary by Relevant Catalogs Natural Rubber Futures - On July 15, 2025, the closing price was 14,395, up 35 from the previous day; the trading volume was 369,788 lots, an increase of 79,174 lots; the open interest was 214,794 lots, up 2,879 lots; the registered warrant volume was 187,060, a decrease of 1,590 [2]. - The natural rubber basis was 30 on July 15, 2025, up 165 from the previous day [2]. - The monthly spreads of natural rubber (near - month to consecutive - one, consecutive - one to consecutive - two, consecutive - one to consecutive - three) showed different changes on July 15, 2025, with the near - month to consecutive - one down 265, consecutive - one to consecutive - two up 20, and consecutive - one to consecutive - three up 45 [2]. Synthetic Rubber Futures - On July 15, 2025, the closing price was 11,535, down 90 from the previous day; the trading volume was 101,885 lots, an increase of 26,899 lots; the open interest was 22,739 lots, a decrease of 1,690 lots; the registered warrant volume was 9,400, an increase of 200 [2]. - The synthetic rubber basis was - 101.67 on July 15, 2025, up 40 from the previous day [2]. - The monthly spreads of synthetic rubber (near - month to consecutive - one, consecutive - one to consecutive - two, consecutive - one to consecutive - three) also had different changes on July 15, 2025, with the near - month to consecutive - one down 300, consecutive - one to consecutive - two up 35, and consecutive - one to consecutive - three up 25 [2]. Supply Side - In the coming days, there will be some precipitation in major natural rubber producing areas such as Thailand and Vietnam, less in Indonesia; in domestic producing areas, there will be precipitation in Yunnan and Guangxi, less in Hainan [2]. - As of July 10, 2025, the weekly capacity utilization rate of butadiene rubber was 62.75%, down 6.21% from the previous week; that of styrene - butadiene rubber was 77.19%, down 0.1% from the previous week [2]. - As of July 15, 2025, the daily after - tax profit of Chinese butyl - styrene rubber emulsion polymerization was 234.51 yuan/ton, unchanged from the previous day; that of SBS solution polymerization was 266.64 yuan/ton, unchanged; that of butadiene rubber solution polymerization was 876.11 yuan/ton, unchanged from the previous month [2]. Inventory Side - As of July 11, 2025, the total weekly warehouse receipt inventory of natural rubber on the SHFE was 213,590 tons, an increase of 820 tons from the previous week; the weekly social inventory of natural rubber in Qingdao was 414,900 tons, an increase of 2,100 tons; the bonded area inventory was 92,600 tons, an increase of 200 tons [2]. - As of July 10, 2025, the weekly social inventory of butadiene rubber was 12,763 tons, an increase of 439 tons from the previous week [2]. Cost Side - As of July 15, 2025, the purchase price of natural rubber latex in the Songkhla market in Thailand was 3.8 baht/kg, unchanged from the previous day; the daily purchase price of natural rubber latex in the Hainan market was 1,470 yuan/ton, unchanged [2]. - The short - term contradiction of crude oil is not prominent, and the oil price volatility has returned to a shock. The price of upstream raw material butadiene has increased. As of July 15, 2025, the daily average price of Chinese butadiene (99.5%) was 9,375 yuan/ton, up 12.5 yuan/ton from the previous day; as of July 9, 2025, the weekly port inventory of Chinese butadiene was 23,600 tons, an increase of 1,270 tons from the previous week [2]. Demand Side - As of July 10, 2025, the weekly operating load rate of all - steel tires in Shandong was 64.54%, up 0.80% from the previous week; the weekly operating load rate of semi - steel tires in China was 72.55%, up 2.51% from the previous week [2]. - According to the Passenger Car Association, from June 1 - 30, the retail sales of the national automobile market were 2.904 million vehicles, an increase of 217,700 vehicles from the previous month; the sales volume of passenger cars in May was 2.536 million vehicles, an increase of 184,300 vehicles; the sales volume of trucks in June was 316,000 vehicles, an increase of 24,500 vehicles, indicating an increase in tire matching demand [2].

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - For the steel industry, on July 15, 2025, the steel market showed a relatively strong trend. The weekly data indicated that the apparent demand was in a seasonal decline, production followed the decline in demand, and inventory remained stable. In the second half of the year, demand is likely to decline, and the supply remains abundant, lacking strong price - driving forces. Currently, the low inventory and improved market sentiment support valuation - repair trading, but the actual demand has limited upward potential. The next macro - observation window is the Politburo meeting at the end of July. For operation, observe whether the current prices of rebar at 3100 and hot - rolled coils at 3300 can be effectively broken through, and if so, focus on the next pressure levels of 3220 (rebar) and 3350 (hot - rolled coils) [1]. - For the iron ore industry, on July 14, 2025, the iron ore 09 contract showed an oscillating upward trend. Last week, the global iron ore shipment volume decreased, but the arrival volume at 45 ports increased. The demand side was affected by steel mill maintenance and Tangshan's production restrictions, with molten iron production declining from its peak. Currently, steel exports remain strong, and short - term molten iron shows resilience. In the future, molten iron production in July is expected to continue to decline, and steel mill profits will improve. Short - term iron ore is expected to oscillate strongly. It is recommended to buy on dips for the iron ore 2509 contract and conduct 9 - 1 positive arbitrage [4]. - For the coke industry, on July 14, 2025, the coke futures oscillated strongly, and the spot market was stable with a slight upward trend. After the fourth round of price cuts on June 23, a phased bottom was formed, and market expectations improved. Mainstream coking enterprises plan to initiate the first - round price increase, which is expected to be implemented later. The supply side may face difficulties in increasing production due to enterprise losses, and the demand side is affected by environmental protection restrictions in Tangshan, with molten iron production reaching a peak and starting to decline. The inventory is at a medium level, and downstream steel mills' active restocking demand is beneficial for future price increases. It is recommended to conduct hedging for the coke 2601 contract on rallies, buy on dips for the coke 2509 contract, and conduct 9 - 1 positive arbitrage [6]. - For the coking coal industry, on July 14, 2025, the coking coal futures oscillated strongly, and the spot price was stable with a slight increase. The domestic coking coal auction market recovered, and the overall coal mine production recovered slowly, remaining in short supply. Imported coal showed different trends, with Mongolian coal prices rebounding slightly and seaborne coal prices rising. The demand side saw a slight decline in coking and blast furnace operations, but the downstream restocking intensity increased. The inventory is at a medium level. It is recommended to buy on dips for the coking coal 2509 contract and conduct 9 - 1 positive arbitrage [6]. Summary by Relevant Catalogs Steel Steel Prices and Spreads - Rebar spot prices in East China, North China, and South China were 3210, 3190, and 3300 yuan/ton respectively, with changes of - 10, 0, and 10 yuan/ton compared to the previous value. The prices of rebar 05, 10, and 01 contracts were 3176, 3138, and 3170 yuan/ton respectively, with increases of 4, 5, and 9 yuan/ton [1]. - Hot - rolled coil spot prices in East China, North China, and South China were 3300, 3200, and 3300 yuan/ton respectively, with changes of 0, - 10, and 10 yuan/ton compared to the previous value. The prices of hot - rolled coil 05, 10, and 01 contracts were 3287, 3276, and 3288 yuan/ton respectively, with increases of 6, 3, and 8 yuan/ton [1]. Cost and Profit - The billet price was 2960 yuan/ton, unchanged; the slab price was 3730 yuan/ton, unchanged. The cost of Jiangsu electric - arc furnace rebar was 3333 yuan/ton, an increase of 29 yuan; the cost of Jiangsu converter rebar was 3058 yuan/ton, an increase of 9 yuan [1]. - The profits of East China, North China, and South China rebar were 160, 130, and 270 yuan/ton respectively, with increases of 27, 1, and 47 yuan. The profits of East China, North China, and South China hot - rolled coils were 240, 150, and 230 yuan/ton respectively, with increases of 17, 17, and 7 yuan [1]. Production and Inventory - The daily average molten iron production was 239.8 tons, a decrease of 1.2 tons (- 0.5%) compared to the previous value. The production of five major steel products was 872.7 tons, a decrease of 12.4 tons (- 1.4%) [1]. - The inventory of five major steel products was 1339.6 tons, a decrease of 0.4 tons (0.0%); the rebar inventory was 540.4 tons, a decrease of 4.8 tons (- 0.9%); the hot - rolled coil inventory was 345.6 tons, an increase of 0.6 tons (0.2%) [1]. Transaction and Demand - The daily average building material trading volume was 10.6 tons, an increase of 0.5 tons (5.0%). The apparent demand for five major steel products was 873.1 tons, a decrease of 12.2 tons (- 1.4%); the apparent demand for rebar was 221.5 tons, a decrease of 3.4 tons (- 1.5%); the apparent demand for hot - rolled coils was 322.5 tons, a decrease of 1.9 tons (- 0.6%) [1]. Iron Ore Price and Spread - The warehouse - receipt costs of Karara fines, PB fines, Brazilian mixed fines, and Jinbuba fines were 768.2, 794.2, 804.0, and 801.5 yuan/ton respectively, with increases of 2.2 yuan/ton. The 09 - contract basis of these four types of iron ore decreased significantly, with decreases of - 47.3 yuan/ton [4]. - The 5 - 9 spread was - 49.0 yuan/ton, a decrease of 2.0 yuan/ton (- 4.3%); the 9 - 1 spread was 30.0 yuan/ton, an increase of 2.5 yuan/ton (9.1%); the 1 - 5 spread was 19.0 yuan/ton, a decrease of 0.5 yuan/ton (- 2.6%) [4]. Supply and Demand - The weekly arrival volume at 45 ports was 2662.1 tons, an increase of 178.2 tons (7.2%); the global weekly shipment volume was 2987.1 tons, a decrease of 7.8 tons (- 0.3%); the national monthly import volume was 9813 tons, a decrease of 500.3 tons (- 4.9%) [4]. - The weekly average daily molten iron production of 247 steel mills was 239.8 tons, a decrease of 1.0 tons (- 0.4%); the weekly average daily port clearance volume at 45 ports was 319.5 tons, an increase of 0.2 tons (0.1%) [4]. Inventory - The 45 - port inventory decreased by 56.8 tons (- 0.4%) compared to Monday of the previous week; the imported iron ore inventory of 247 steel mills was 8979.6 tons, an increase of 61.1 tons (0.7%); the inventory - available days of 64 steel mills was 20.0 days, an increase of 1.0 days (5.3%) [4]. Coke Price and Spread - The prices of Shanxi first - grade wet - quenched coke and Rizhao Port quasi - first - grade wet - quenched coke remained unchanged at 1094 and 1270 yuan/ton respectively. The prices of coke 09 and 01 contracts were 1526 and 1569 yuan/ton respectively, with increases of 6 and 21 yuan/ton [6]. - The 09 and 01 bases were - 119 and - 163 yuan/ton respectively, with decreases of 6 and 21 yuan/ton. The J09 - J01 spread was - 44 yuan/ton, a decrease of 16 yuan/ton [6]. Production and Inventory - The daily average production of all - sample coking plants was 64.1 tons, a decrease of 0.3 tons (- 0.4%); the daily average production of 247 steel mills was 47.2 tons, a decrease of 0.3 tons (- 0.6%) [6]. - The total coke inventory was 931.0 tons, an increase of 0.3 tons (0.0%); the coke inventory of all - sample coking plants was 93.1 tons, a decrease of 9.0 tons (- 8.84%); the coke inventory of 247 steel mills was 637.8 tons, an increase of 0.3 tons (0.0%); the port inventory was 200.1 tons, an increase of 9.0 tons (4.7%) [6]. Coking Coal Price and Spread - The prices of coking coal (Shanxi warehouse - receipt) and coking coal (Mongolian coal warehouse - receipt) were 1020 and 894 yuan/ton respectively, with changes of 0 and 5 yuan/ton. The prices of coking coal 09 and 01 contracts were 920 and 938 yuan/ton respectively, with increases of 7 and 18 yuan/ton [6]. - The 09 and 01 bases were - 26 and - 70 yuan/ton respectively, with decreases of 2 and 13 yuan/ton. The JM09 - JM01 spread was - 44 yuan/ton, a decrease of 11 yuan/ton [6]. Production and Inventory - The weekly raw coal production of Fenwei sample coal mines was 868.1 tons, an increase of 2.9 tons (0.34%); the weekly clean coal production was 443.5 tons, an increase of 1.2 tons (0.34%) [6]. - The Fenwei coal mine clean coal inventory was 176.4 tons, a decrease of 14.3 tons (- 7.5%); the coking coal inventory of all - sample coking plants was 892.4 tons, an increase of 44.2 tons (5.24%); the coking coal inventory of 247 steel mills was 782.9 tons, a decrease of 6.7 tons (- 0.8%); the port inventory was 304.3 tons, an increase of 17.4 tons [6].

Core Insights - The global smartphone market experienced its first decline in nearly six quarters, with a year-on-year drop of 1% in Q2 2025, according to Canalys [1] - Despite the slight decrease in shipments, major manufacturers showed stability amid cautious consumer sentiment and macroeconomic uncertainties [1] - Samsung maintained its market leadership with a 19% share, followed by Apple at 16%, Xiaomi at 15%, and Transsion Holdings and OPPO each at 9% [1] Group 1 - The decline in Q2 2025 reflects a slowdown in consumer demand and the end of a replacement cycle that was boosted during the pandemic [1] - Manufacturers are focusing on optimizing operational efficiency and achieving tactical synergies to maintain stability [1] - In the U.S. market, manufacturers like Apple and Samsung have kept higher inventory levels due to uncertainties related to tariffs and geopolitical factors [1] Group 2 - Canalys anticipates that many consumers who delayed upgrades in early 2025 will make purchases during year-end shopping festivals and promotional events [2] - Effective pricing strategies and clever promotional tactics are crucial for manufacturers' success, as demonstrated by positive responses during the '618' shopping festival [2] - The smartphone market showed signs of growth fatigue in Q1 2025, with only a 0.2% increase in shipments, totaling 296.9 million units [2] Group 3 - The year 2024 was a strong year for the smartphone market, with a 7% growth reaching 1.22 billion units after two consecutive years of decline [3]

Investment Rating - The report maintains a "Buy" rating for Li Ning [6] Core Views - Li Ning's adult revenue showed low single-digit year-on-year growth in Q2 2025, with offline channel revenue declining and e-commerce revenue growing in mid-single digits [1][2] - The company is focusing on optimizing its product and marketing strategies to establish a foundation for long-term growth, particularly through its partnership with the Olympic Committee [3] - Revenue for 2025 is expected to remain flat year-on-year, while net profit attributable to shareholders is projected to decline by 21% [3] Summary by Sections Revenue and Sales Performance - In Q2 2025, Li Ning's direct sales revenue decreased in mid-single digits, attributed to a significant number of store closures in the second half of 2024 [1] - The wholesale channel revenue grew in low single digits, with the number of wholesale stores increasing to 4,821 by the end of H1 2025 [1] - E-commerce sales growth slowed compared to Q1 2025, with Q2 growth in mid-single digits, influenced by a weaker overall sales environment during the 618 shopping festival [2] Product Segments - Li Ning's children's clothing segment, Li Ning YOUNG, is expected to outperform adult sales, with a steady growth rate and an increase in store count to 1,435 by the end of Q2 2025 [2] - The company is enhancing its product structure and brand promotion for children's clothing to drive long-term growth [2] Inventory Management - Li Ning emphasizes inventory management, with an estimated inventory turnover ratio of around 4 by the end of Q2 2025, indicating a healthy inventory level [2] Financial Projections - The company forecasts revenues of 28.92 billion in 2025, with a net profit of 2.39 billion, reflecting a 21% decline [3] - The projected earnings per share (EPS) for 2025 is 0.92, with a price-to-earnings (P/E) ratio of 16 times [3][5] Market Position and Strategy - Li Ning is focusing on enhancing its brand influence through Olympic-related marketing activities and expanding its product matrix in various sports categories, including running, basketball, badminton, and outdoor sports [3]

Core Viewpoint - Broadcom's second-quarter earnings forecast exceeded market expectations, driven by AI capabilities and low inventory levels [1][2][4] Group 1: Earnings Performance - In Q2 2025, Broadcom reported normalized EPS of $1.58, beating estimates by $0.01, and GAAP EPS of $1.03, exceeding estimates by $0.07 [2] - Revenue for Q2 2025 was $15.00 billion, surpassing estimates by $29.22 million, with a year-over-year revenue growth of 20% from $12.49 billion in Q2 2024 [2][3] - AI-related products contributed significantly to revenue, with AI income growing 46% year-over-year to $4.4 billion, while infrastructure software revenue increased 25% to $6.6 billion [2][3] Group 2: Inventory Levels - Broadcom's inventory levels reached a record low in Q2 2025, with inventory increasing from $600 million in 2015 to $2.017 billion, but sales growth outpaced inventory growth [4] - Days Inventory Outstanding (DIO) decreased from approximately 51.71 days in 2015 to 37.25 days in Q2 2025, indicating strong product demand [4] Group 3: Market Position and Valuation - Broadcom maintains strong relationships with major clients and is well-positioned in the AI market, with expectations for continued demand growth [2][6] - The company's forward PEG ratio is 1.82, indicating a relatively favorable growth-adjusted valuation compared to peers like Tesla and Apple [6][7] - Recent developments in U.S. export regulations are expected to further strengthen demand for Broadcom's products [6]

Automotive Dealer Strategy - SKU Streamlining: The number of configurations for single models has been reduced from 4-5 to 2-3 (e.g., Qin Lev/Seagull 06EV has only 3 versions) to optimize the supply chain, reduce inventory complexity, and enhance product competitiveness [4] - Inventory Break Mechanism: Immediate cessation of shipments when inventory exceeds warning levels to alleviate financial pressure on dealers and enhance operational flexibility [4] - Accelerated Rebate Payments: Shortening the rebate cycle and expediting fund allocation (personally supervised by Wang Chuanfu) to stabilize the pricing system and ensure dealer profitability [4] - Terminal Price Control: Managing discount levels and optimizing promotional policies to prevent vicious competition and ensure sustainable profits [4] International Market Dynamics - Indonesia Market: The first dealer conference was held, signing long-term service commitments, and traditional dance performances were used to strengthen brand cohesion [4] - Americas Market: 170 dealers experienced the Tengshi Z9GT/Yangwang U8, with a focus on expanding into European, North American, and South American markets, alongside tea ceremony activities to promote Chinese culture [4] Other Business Lines - Forklift Business: Targeting an annual sales revenue of 5 billion yuan, with strategies focused on electric forklift technology upgrades and intelligent logistics solutions, aiming to expand into high-end markets in Europe, the United States, and Japan [4]

Group 1 - The core viewpoint is that Nike's management expects a narrowing of revenue decline to a mid-single-digit percentage in Q1 of FY2026, following an 11% year-over-year decline in Q4 of FY2025 [1] - Nike's revenue for Q4 FY2025 decreased by 11% year-over-year, exceeding FactSet's expectation by 3.4%, with regional revenue declines in North America, EMEA, Greater China, and Asia-Pacific-Latin America [1][2] - Inventory levels remained high, with a year-over-year change of 0% in Q4 FY2025, and Nike plans to continue reducing inventory over the next two quarters [1] Group 2 - Management anticipates a year-over-year revenue decline of mid-single digits for Q1 FY2026, with gross margin expected to decrease by 350-425 basis points, including a 100 basis point negative impact from tariffs [2] - The increase in wholesale holiday orders is offset by declines in the Greater China region, with apparel and footwear categories showing year-over-year declines of 9% and 12%, respectively [2] - Macquarie believes that approximately $1 billion in incremental tariff costs will be alleviated through optimizing sourcing and production distribution, reducing the import share from China, and phased price increases starting in Fall 2025 [2] Group 3 - In the Greater China region, Nike's direct business revenue declined by 15% year-over-year, with digital and store sales down 31% and 6%, respectively [3] - The decline in wholesale revenue by 24% year-over-year is expected to relieve pressure on retailers like Tmall [3] - Efforts to revitalize the Chinese market will take time, with deeper resets leading to increased discounts and reduced supply, as evidenced by an 11% year-over-year decline in inventory [3] Group 4 - The report maintains an underperform rating for Yue Yuen Industrial Holdings and Kwan Hung Holdings, despite ongoing revenue challenges for Nike in China [4] - Tmall is rated outperform with a target price of HKD 3.70, as competition from domestic and emerging international brands may lead to more discounts [4] - Yue Yuen is rated underperform with a target price of HKD 9.60, facing slow recovery in brand client orders and adverse impacts from raw material costs and foreign exchange [4]

Financial Data and Key Metrics Changes - Net revenues for the first quarter were $7.1 million, down from $10 million in the prior year [6] - Average active brand partners decreased to 7,700 from 13,400 year-over-year [6] - Loss before income taxes improved to a negative $1.4 million from a negative $1.7 million [6] - Net loss decreased to $1.1 million compared to a loss of $1.3 million last year [6] - Loss per share improved to $0.13 from $0.15 on a fully diluted basis [6] - Net inventories decreased by $2.7 million from $44.7 million to $42 million [7] Business Line Data and Key Metrics Changes - The decline in sales was primarily driven by reduced brand partner levels in the paper pie division [4] - Customer sales events were implemented to promote paper pie sales and generate cash [4] Market Data and Key Metrics Changes - The company faced a challenging sales environment due to high inflation and reduced disposable income among families with small children [4] - The direct sales industry, particularly in the product sector, has experienced difficulties in recruiting new consultants [4] Company Strategy and Development Direction - The company is focusing on strategic changes to support brand partners and has launched new incentive programs [7] - A successful partnership with Ticket to Dream has allowed the company to distribute thousands of books to foster children [9] - The company is planning a phased approach to purchasing new titles and replenishing best sellers to energize the sales force [10][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the current downturn in the industry but expressed confidence in emerging stronger and more resilient [13] - The company is working on a sale leaseback of its headquarters, with expectations to complete the sale before September [12] - Management is optimistic about the ongoing sale process and has developed a contingency plan (Plan B) in case the primary sale does not go through [22][23] Other Important Information - The company has executed an agreement to sell the Hilti Complex, with a 90-day due diligence period [12] - Proceeds from the sale are expected to fully pay back the bank, leaving the company with no debt [13] Q&A Session Summary Question: What is the contingency plan if the sale of the Hilti Complex falls through? - Management has a viable Plan B that includes other offers with quick close contingencies, which would also help eliminate bank debt [22][23] Question: Can you provide more details about the buyer group for the Hilti Complex? - The buyer group is a real estate company, and management is optimistic about the ongoing due diligence process [26][27] Question: What is the strategy behind buying new titles given the current inventory levels? - The strategy involves a conservative approach to introduce new titles to energize the sales force without significantly increasing inventory levels [40][41] Question: What is the target net revenue run rate and average from partners during normalization? - Management indicated that rebuilding will take time, and they are implementing various strategies to improve sales and recruitment [44][45] Question: Has there been any serious interest in acquiring the company? - Management has not received any serious unsolicited offers for acquisition, but they would entertain such discussions in the future [47][50] Question: What is the current relationship with the bank? - The relationship has been good, with the bank supporting the company through the process, although amendments have become more restrictive [51][53]