Financial Data and Key Metrics Changes - The company achieved record highs in revenue, operating profit, and operating profit margin for Q2 2025, with operating profit growing 14% to $304 million [5][29] - Same store sales growth turned positive at 1%, marking the tenth consecutive quarter of same store transaction growth [6][36] - System sales growth reached 4%, showing a sequential improvement of two percentage points [6][26] - Restaurant margin improved by 60 basis points, and operating profit margin increased by 100 basis points year over year [7][29] Business Line Data and Key Metrics Changes - KFC achieved 5% system sales growth and a healthy restaurant margin in Q2, operating over 12,000 stores in more than 2,400 cities [8][9] - Pizza Hut sustained a 2% same store sales growth, with a 17% increase in same store transactions, operating over 3,800 stores [9][22] - K Coffee Cafe contributed to incremental sales, with average cups sold increasing and a total of 1,300 locations nationwide [20][21] Market Data and Key Metrics Changes - Delivery sales accounted for around 45% of total sales mix, up from 38% in the same quarter last year [14][16] - The company opened 336 net new stores in Q2, with a total of 12,238 stores for KFC and 3,864 stores for Pizza Hut [19][24] Company Strategy and Development Direction - The company is focused on operational efficiency and innovation, with a dual strategy targeting both same store sales and system sales growth [5][10] - The introduction of new store formats, such as Pizza Hut Wow! stores, aims to penetrate lower-tier cities and improve profitability [25][66] - The company plans to maintain a balanced approach to delivery, leveraging both third-party platforms and its own channels to enhance visibility and traffic [16][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year targets for 2025, including new store openings and system sales growth [34][44] - The competitive landscape remains challenging, but the company aims to protect margins while driving sales through core competencies [51][112] - The company anticipates a steady same store sales level year over year in the second half, despite macroeconomic uncertainties [36][54] Other Important Information - The company returned a total of $536 million to shareholders in the first half of the year, with plans to return at least $1.2 billion in 2025 [32][33] - Capital expenditure guidance was revised down from $700-800 million to $600-700 million due to lower CapEx per store [39][95] Q&A Session Summary Question: Delivery business growth and margin impact - Management acknowledged intense competition in the delivery space but emphasized a focus on core competencies and maintaining price integrity [50][52] Question: New store format performance and targets - Management confirmed that the Pizza Hut Wow! model is showing promising results, with no specific guidance on store openings yet [61][66] Question: Potential for Pizza Hut's restaurant and operating margins - Management indicated that there is room for improvement in Pizza Hut's margins, with a focus on operational efficiency and cost management [70][76] Question: Impact of delivery platform subsidies on margins - Management stated that larger brands like Yum China enjoy favorable subsidy arrangements, which helps mitigate margin impacts [82][83] Question: Average check trends at KFC - Management noted that while average check may decline due to smaller orders, the focus remains on driving same store transaction growth [88][91] Question: CapEx guidance and future trends - Management explained that the CapEx reduction is primarily due to lower CapEx per store, with expectations for similar trends in the future [94][96] Question: Franchise mix strategy - Management clarified that the decision to open franchise stores is based on strategic alignment and market conditions, particularly in lower-tier cities [102][105] Question: Competitive environment and margin preservation - Management reiterated the importance of maintaining a balance between sales growth and margin protection amidst competitive pressures [110][112]

Core Insights - The company reported a revenue of 25.902 billion yuan for FY2025, representing a year-on-year growth of 11.6% [1] - The operating profit for FY2025 was 4.967 billion yuan, up 12.9% year-on-year, while the net profit attributable to shareholders was 3.514 billion yuan, reflecting a 14.3% increase [1] - The company has shown a consistent revenue CAGR of 17.7% from FY2021 to FY2025, with a net profit CAGR of 19.7% during the same period [1] Business Segments - The brand down jacket and OEM processing businesses were the main drivers of revenue growth, with the brand down jacket segment achieving a revenue of 21.668 billion yuan in FY2025, up 11.0% year-on-year [2] - The OEM processing business recorded a revenue of 3.373 billion yuan, marking a significant year-on-year increase of 26.4%, with the top five clients accounting for 90.4% of the revenue [2] Channel Development - The Top Store model and online-offline collaboration have significantly contributed to the company's high-quality development, with direct sales and wholesale channels for brand down jackets growing by 5.2% and 24.3% respectively in FY2025 [3] - The number of offline stores increased by 253 to 3,470, while online revenue for brand down jackets rose by 9.4% to 7.478 billion yuan in FY2025 [3] Profit Forecast - The company is expected to achieve net profits of 3.928 billion yuan, 4.388 billion yuan, and 4.879 billion yuan for FY2026 to FY2028, with year-on-year growth rates of 11.78%, 11.71%, and 11.20% respectively [4] - The company's strong brand presence, product development capabilities, and efficient supply chain management are anticipated to drive growth in the down jacket segment [4]

Core Viewpoint - The company reported a revenue of 25.9 billion RMB and a net profit of 3.51 billion RMB for the fiscal year 2024/25, reflecting a year-on-year growth of 11.6% and 14.3% respectively, indicating strong performance despite external challenges [3][4]. Group 1: Financial Performance - For the fiscal year 2024/25, the company achieved a gross margin of 57.3%, a decrease of 2.3 percentage points year-on-year, while the operating margin increased by 0.2 percentage points to 19.2% [3][6]. - The company proposed a final dividend of 0.22 HKD per share, resulting in a total payout ratio of 84.1% for the year [3]. - The company's inventory increased to 3.95 billion RMB, up 23.6% from the beginning of the year, with inventory turnover days slightly increasing to 118 days [7]. Group 2: Business Segmentation - Revenue from the main business segments showed varied performance: brand down jackets grew by 11%, OEM processing by 26.4%, women's wear declined by 20.6%, and diversified clothing increased by 2.9% [4]. - The brand down jacket segment accounted for 83.7% of total revenue, with the main brand Bosideng contributing 85.3% of this segment's revenue [4][5]. - Online sales for the entire brand reached 7.58 billion RMB, a year-on-year increase of 9.3%, with online sales of brand down jackets accounting for 34.5% of the segment's revenue [4]. Group 3: Strategic Focus - The company is implementing a dual-focus strategy on down jackets and fashionable functional apparel, aiming for steady growth despite challenges such as warm winters and changing consumer environments [8]. - The company has strengthened its brand building, market promotion, product quality, and supply chain management, which contributed to its resilient performance [8].

Core Insights - The company reported a revenue of 25.9 billion RMB for the fiscal year 2024/25, representing a year-on-year growth of 11.6%, and a net profit attributable to shareholders of 3.51 billion RMB, up 14.3% year-on-year [1] - The company plans to distribute a final dividend of 0.22 HKD per share, resulting in a total payout ratio of 84.1% for the year [1] - The gross profit margin decreased by 2.3 percentage points to 57.3%, while the operating profit margin and net profit margin increased by 0.2 and 0.3 percentage points to 19.2% and 13.6%, respectively [1] Revenue Breakdown - The main business segments include brand down jackets, OEM processing, women's wear, and diversified clothing, with respective revenue contributions of 83.7%, 13%, 2.5%, and 0.8% [1] - Revenue growth rates for these segments were +11%, +26.4%, -20.6%, and +2.9% respectively [1] Brand and Channel Performance - Within the brand down jacket segment, the main brands (Bosideng, Xuezhongfei, Bingjie, and others) contributed 85.3%, 10.2%, 0.6%, and 3.9% to revenue, with year-on-year growth rates of 10.1%, 9.2%, -12.9%, and 49.4% respectively [2] - Revenue from self-operated, wholesale, and other channels accounted for 69.6%, 26.4%, and 4% of the brand down jacket business, with growth rates of 5.2%, 24.3%, and 49.4% respectively [2] - Online sales for all brands reached 7.58 billion RMB, a 9.3% increase, with brand down jackets contributing 7.48 billion RMB, up 9.4% [2] Store Expansion and Inventory Management - As of March 2025, the company operated 3,470 stores for its down jacket business, a net increase of 253 stores (+7.9%) [2] - The inventory increased to 3.95 billion RMB, a 23.6% rise, with inventory turnover days slightly increasing to 118 days [3] Cost Management and Financial Metrics - The company reduced its expense ratio by 2.0 percentage points to 38.5%, with sales, management, and financial expense ratios at 32.9%, 6.4%, and -0.8% respectively [3] - Operating net cash flow for the fiscal year was 3.98 billion RMB, down 45.7% year-on-year [3] Strategic Focus - The company is focusing on its dual strategy of concentrating on the down jacket main channel and fashionable functional apparel, aiming for steady growth despite external challenges [3] - The main business segments, particularly brand down jackets, achieved over 10% revenue growth, indicating resilience in brand and operations [3] Future Outlook - The company is expected to maintain long-term stable growth as a leading down jacket brand, leveraging brand influence and product innovation [4] - Profit forecasts for fiscal years 2026-2028 have been slightly adjusted downwards, with projected net profits of 3.92 billion, 4.37 billion, and 4.83 billion RMB respectively [4]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company achieved a robust and high-quality growth in a weak demand environment, continuing to advance its dual-focus strategy [10] - For the fiscal year 2024/25, the company reported a revenue of 25.9 billion RMB, a year-on-year increase of 11.6%, and a net profit attributable to shareholders of 3.51 billion RMB, up 14.3% year-on-year [5] - The company’s gross margin decreased by 2.3 percentage points to 57.3%, while the operating margin increased by 0.2 percentage points to 19.2% [5][8] Financial Performance - The company’s main business segments showed varied performance: brand down jackets increased by 11%, OEM processing by 26%, women's wear decreased by 21%, and diversified clothing increased by 3% [6] - Online sales for the entire brand reached 7.58 billion RMB, a year-on-year growth of 9.3%, with the brand down jackets accounting for 34.5% of the revenue [6] - As of March 2025, the company had 3,470 down jacket stores, a net increase of 253 stores, reflecting a 7.9% growth [7] Profitability and Cost Management - The company’s operating expenses ratio decreased by 2.0 percentage points to 38.5%, indicating effective cost control [8] - The inventory increased by 23.6% to 3.95 billion RMB, with inventory turnover days slightly increasing to 118 days [9] Strategic Focus - The company is committed to a dual-focus strategy centered on down jackets and fashionable functional apparel, aiming for steady growth despite external challenges [10] - The report anticipates continued revenue growth exceeding 10% for the main business segments, showcasing the resilience of the brand and operations [10] Earnings Forecast - The report projects revenue growth rates of 10.1% for FY2026 and 10.0% for FY2027, with net profit growth rates of 11.5% and 11.4% respectively [11] - The estimated earnings per share (EPS) for FY2026 is projected at 0.34 RMB, with a price-to-earnings (P/E) ratio of 12 [11]

Core Viewpoint - Bosideng has successfully implemented a "dual focus" strategy on down jackets and fashionable functional apparel, achieving high-quality financial results for the fiscal year 2024/25 despite a complex market environment [1] Financial Performance - The company reported a revenue of 25.902 billion RMB, an increase of 11.6% year-on-year - Operating profit reached 4.967 billion RMB, up 12.9% year-on-year - Shareholder profit amounted to 3.514 billion RMB, reflecting a 14.3% increase year-on-year - Operating profit margin improved to 19.2%, marking eight consecutive years of record revenue and net profit [1] - Cash flow from operating activities was 3.982 billion RMB, with cash and cash equivalents totaling 4.185 billion RMB, supporting ongoing development and strategic initiatives [1] Dividend and Stock Performance - Based on strong operational performance, Bosideng declared a final dividend of 0.22 HKD per share - The stock price reached a year-high of 4.79 HKD, with a maximum increase of 23.5% within the year - The company saw a net inflow of 615 million HKD over nearly 60 trading days [4] Strategic Focus and Brand Development - Bosideng's long-term value-driven approach and strategic consistency have garnered investor trust - The company has positioned itself as a "global leader in down jackets," focusing on brand activation and consumer recognition [7] - The strategic focus includes enhancing brand leadership, category management, channel operations, and customer experience [7] Brand Value and Innovation - Bosideng ranked 46th in the Brand Finance "Global Most Valuable Apparel Brands" list for 2024 and 268th in the "Asia Brand 500" ranking - The company filed 466 patent applications and received 527 patent grants in the fiscal year, totaling 1,498 patents as of March 31, 2025, supporting its innovation in down jacket technology [8] - New product lines, including a polar extreme series and sun protection clothing, were launched to meet evolving consumer demands [9][10] Sales Performance - The down jacket segment generated revenue of 21.668 billion RMB, a year-on-year increase of 11% - The main brand, Bosideng, contributed 18.481 billion RMB, up 10.1%, while the Snow Flying brand achieved 2.206 billion RMB, a 9.2% increase [10][12] Operational Efficiency - Bosideng's retail network expanded to 3,470 stores, with a net increase of 253 stores, ensuring coverage across various city tiers - Online sales reached 7.575 billion RMB, growing 9.3%, with significant contributions from live-streaming sales on platforms like Douyin [13] - The company has implemented an intelligent supply chain management system, optimizing inventory turnover to 118 days and achieving a 99% replenishment rate for top-selling items [14] Future Outlook - Bosideng plans to continue its "dual focus" strategy, enhancing brand leadership and operational efficiency to maintain its leading position in the global down jacket market [14]

Core Viewpoint - The company reported a 12% year-on-year revenue growth to 25.9 billion yuan and a 14% increase in net profit to 3.5 billion yuan for FY25, meeting expectations [1] Revenue and Profit Performance - The company declared a final dividend of 0.22 HKD per share, resulting in an annual payout ratio of approximately 84% [1] - The main down jacket business maintained a steady growth rate of 7% in revenue during the second half of FY25 despite adverse factors such as high base, warm winter, and fluctuating consumer environment [1] - The core brand Bosideng generated a revenue increase of 7% to 13.2 billion yuan, accounting for 85% of the down jacket revenue [1] Business Segments and Growth - The OEM business saw a significant revenue increase of 26.4% to 3.37 billion yuan, reflecting the company's efforts to expand high-quality new clients and enhance overseas production capacity [1] - The company opened 253 new stores throughout the fiscal year, with approximately 31% of stores located in first- and second-tier cities, an increase of 2.8 percentage points year-on-year [1] Margin and Cost Management - The overall gross margin decreased by 3.0 percentage points to 61% in the second half of FY25, with the brand down jacket business gross margin declining by 1.9 percentage points to 64.3% due to a higher proportion of lower-margin wholesale channels and rising raw material costs [2] - The main brand Bosideng's gross margin only decreased by 1.0 percentage point to 70%, indicating strong discount control capabilities [2] - Selling and administrative expense ratio decreased by 2.4 percentage points to 42% due to operational efficiency improvements [2] Inventory Management - The company maintained healthy inventory turnover, with inventory turnover days increasing by 3 days to 118 days by the end of FY25 [2] Strategic Direction - The company plans to focus on its core down jacket business and fashionable functional apparel, emphasizing brand leadership and innovative multi-category product development [2] Earnings Forecast and Valuation - The company maintains its FY26 EPS forecast at 0.34 yuan and introduces an FY27 EPS forecast of 0.38 yuan, with the current stock price corresponding to 12/11 times FY26/27 earnings [3] - The target price remains unchanged at 5.63 HKD, implying a 22% upside potential from the current stock price [3]

Core Insights - Bosideng achieved continuous growth in revenue and net profit for eight consecutive years, with revenue reaching approximately 25.902 billion yuan, an increase of 11.6% year-on-year, and net profit around 3.514 billion yuan, up 14.3% year-on-year, driven by its "dual focus" strategy [1] Group 1: Business Performance - The "dual focus" strategy has led to significant business development, with revenue from down jackets increasing by 11.0% to approximately 21.668 billion yuan, marking a record high [1] - The OEM management business also performed well, generating revenue of 3.373 billion yuan, a year-on-year increase of 26.4% [1] - The subsidiary brand Xuezhongfei capitalized on the "ice and snow" theme, boosting online sales to approximately 2.206 billion yuan, a 9.2% increase year-on-year [1] Group 2: Channel Development - Bosideng actively optimized its operations and expanded its channels, focusing on TOP stores and tiered store management to enhance channel quality and operational efficiency [2] - The brand significantly promoted its lightweight down jackets on emerging platforms like Douyin, gaining over 1 million new followers by September 2024, totaling around 10 million followers by March 31, 2025 [2] - On Tmall and JD platforms, the brand added approximately 7 million new followers and 3 million new members, reaching a total of about 21 million members across these platforms [2] Group 3: Product Innovation - In response to changing market demands, Bosideng has innovated its product categories, launching functional outerwear such as sun-protective clothing and shell jackets, which contribute to sales during off-peak seasons [2] - The company has positioned sun-protective clothing as "more fashionable professional sun protection" and focused on practical solutions for temperature variations with its shell jackets [3] - Bosideng has introduced advanced features in its products, such as UV resistance and high elasticity in sun-protective clothing, and developed eco-friendly materials for shell jackets, enhancing their fashion appeal [3]