Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 10.15 [7][8] Core Views - The company achieved a revenue of RMB 20.96 billion in 2024, a year-on-year decrease of 2.7%, and a net profit of RMB 2.16 billion, down 26.9% year-on-year, which is in line with previous expectations [1] - In Q1 2025, the company reported a revenue of RMB 6.19 billion, a slight increase of 0.2% year-on-year, and a net profit of RMB 0.94 billion, up 5.5% year-on-year, indicating a recovery in growth [1] - The company is focusing on solidifying its core apparel business while expanding into the sports sector and accelerating globalization, particularly through the new JD Outlet business model [1][2] Revenue and Growth - The main brand, group buying, and other brands (including FCC and JD Outlet) generated revenues of RMB 15.27 billion, RMB 2.22 billion, and RMB 2.67 billion respectively, with growth rates of -7.2%, -2.5%, and +32.4% [2] - Offline revenue for 2024 was RMB 15.74 billion with a total of 7,178 stores, while online revenue increased by 35.6% to RMB 4.42 billion, reflecting a robust multi-channel marketing strategy [2] Profitability and Costs - The gross profit margin remained stable at 44.5% in 2024, while the net profit margin decreased by 3.2 percentage points to 10.4% due to increased selling and management expenses [3] - Selling expense ratio increased by 2.9 percentage points to 23.1%, primarily due to the rise in direct store numbers and advertising costs [3] Inventory and Cash Flow - Inventory turnover days increased by 47 days to 330 days, mainly due to the consolidation of the FCC business and increased winter apparel inventory [4] - Cash and cash equivalents decreased by 42.9% year-on-year to RMB 6.79 billion, potentially due to increased dividend payouts and the impact of the FCC business [4] Profit Forecast and Valuation - The net profit forecast for 2025 and 2026 is RMB 2.78 billion and RMB 3.11 billion respectively, with an introduction of a 2027 forecast of RMB 3.39 billion [5] - The target price is based on a 2025E PE of 17.5x, with a comparison to the industry average PE of 17.0x [5]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 10.15 [7][8]. Core Insights - The company achieved a revenue of RMB 20.96 billion in 2024, a year-on-year decrease of 2.7%, and a net profit of RMB 2.16 billion, down 26.9% year-on-year, which aligns with previous expectations [1]. - In Q1 2025, the company reported a revenue of RMB 6.19 billion, a slight increase of 0.2% year-on-year, and a net profit of RMB 0.94 billion, reflecting a year-on-year growth of 5.5% [1]. - The company is focusing on solidifying its core apparel business while expanding into the sports sector and accelerating globalization efforts, particularly through the JD Outlet new business model [1][2]. Revenue Breakdown - For 2024, the main brand, group purchases, and other brands (including FCC and JD Outlet) generated revenues of RMB 15.27 billion, RMB 2.22 billion, and RMB 2.67 billion respectively, with growth rates of -7.2%, -2.5%, and +32.4% [2]. - Offline revenue for 2024 reached RMB 15.74 billion, with a total of 7,178 stores, while online revenue increased by 35.6% to RMB 4.42 billion [2]. Profitability and Costs - The company's gross margin remained stable at 44.5% in 2024, while the net profit margin decreased by 3.2 percentage points to 10.4% [3]. - Selling expenses increased by 2.9 percentage points to 23.1%, primarily due to the rise in direct store numbers and advertising costs [3]. - The company’s inventory turnover days increased by 47 days to 330 days, influenced by the consolidation of the FCC business and increased winter apparel inventory due to a warm winter [4]. Financial Forecasts - The report maintains net profit forecasts of RMB 2.78 billion for 2025 and RMB 3.11 billion for 2026, with an introduction of a 2027 forecast of RMB 3.39 billion [5]. - The estimated PE ratio for 2025 is set at 17.5x, with a target price of RMB 10.15 based on the company's steady development and new growth avenues [5].

Core Insights - The opening of the South Pole brand pop-up store in Shanghai's Zhongsheng Plaza focuses on high-quality leisurewear, attracting significant consumer interest and becoming a highlight of the shopping district [1][3]. Product Highlights - The pop-up store features a youthful product matrix emphasizing "family scenes" and "young fashion," with items like UPF50+ sun-protective clothing and lightweight breathable leisure pants designed for both urban commuting and outdoor activities [3][6]. - The homewear category stands out with parent-child matching sets made from Xinjiang long-staple cotton, appealing to young parents [6]. Consumer Engagement - The store experienced high foot traffic on opening day, with families shopping together, indicating a successful alignment with family-oriented marketing strategies [6][8]. - Certain styles sold out within two hours, and the quick replenishment of the quick-dry T-shirts highlights strong consumer demand [6][8]. Brand Strategy - The brand's upgrade strategy focuses on family consumption, aiming to strengthen emotional connections with consumers through interactive experiences and scene-based displays [8][11]. - South Pole continues to collaborate with global suppliers to maintain high-quality standards for its products, such as using YKK zippers and Australian wool [8][13]. Marketing Approach - A comprehensive marketing strategy was implemented, combining online and offline efforts, including social media campaigns and targeted advertising in key commercial areas [10][11]. - The launch of the pop-up store marks a significant step in the brand's transition from online to offline channels, reflecting a deeper strategic focus on multi-channel expansion [13].