Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company experienced significant new customer growth in Q1 2025, with revenue reaching 5.35 billion yuan, a year-on-year increase of 12.3%. However, the net profit attributable to the parent company decreased by 3.2% to 760 million yuan due to the initial efficiency challenges of new factories [7][8] - The report anticipates improved gross margins in Q2 2025 as scale effects and new factory ramp-up contribute positively. Long-term prospects remain optimistic due to the expansion of new customer orders and increased market share from existing clients [7][8] Financial Summary - Q1 2025 revenue: 5.35 billion yuan (YoY +12.3%) - Q1 2025 net profit: 760 million yuan (YoY -3.2%) - Q1 2025 gross margin: 22.9% (down 5.5 percentage points) - Q1 2025 net profit margin: 14.2% (down 2.3 percentage points) [7][8] - Expected net profit for 2025-2027: 4.1 billion, 4.76 billion, and 5.51 billion yuan respectively [7] Operational Insights - Q1 2025 sales volume: 49 million pairs (YoY +8.24%), with an average price of 109 yuan per pair (YoY +3.8%) [7] - The company is accelerating the construction of new factories to meet the rising demand from new clients such as Adidas and New Balance, with plans to open two new factories in Indonesia and Sichuan in Q1 2025 [7] - As of Q1 2025, the company employed 184,000 people, a 17% increase YoY, with expectations of a slowdown in hiring in Q2 2025 [8] Financial Projections - Revenue projections for 2025-2027: 27.66 billion, 31.68 billion, and 36.18 billion yuan respectively [9] - Expected net profit margins for 2025-2027: 14.8%, 15.0%, and 15.2% respectively [9] - P/E ratios for 2025-2027: 16.1, 13.8, and 12.0 respectively [9]

Core Viewpoint - The company reported a revenue of 5.35 billion yuan and a net profit of 760 million yuan for Q1 2025, indicating a year-on-year revenue growth of 12% but a decline in net profit by 3% [1] Financial Performance - Q1 2025 revenue was 5.35 billion yuan, up 12% year-on-year; net profit was 760 million yuan, down 3% year-on-year; and non-recurring net profit was 750 million yuan, also down 3% year-on-year [1] - Q1 2025 gross margin decreased by 5.5 percentage points to 22.9% due to the ramp-up of new factories, with expectations for improvement in Q2 2025 [1][3] - The company’s net profit margin fell by 2.3 percentage points to 14.3% in Q1 2025 [1] Sales and Orders - Q1 2025 saw a significant increase in new customer orders, with stable orders from existing clients [2] - The company maintained deep cooperation with major brands like Nike and Adidas, with expectations for a 15%+ revenue growth in 2025 driven by new customer orders [2][4] Capacity Expansion - The company plans to accelerate capacity expansion, with a total capacity of 229 million pairs and a utilization rate of 97% in 2024 [2] - Four new factories were launched in 2024, with two more in Q1 2025, indicating a potential CAGR of 15% in production from 2025 to 2026 [3] Operational Efficiency - The company has maintained high production management efficiency, with a gross margin of 26.8% in 2024, although recent factory openings have temporarily affected margins [3] - Cash flow management appears stable, with inventory increasing by 12.5% year-on-year to 3.67 billion yuan and accounts receivable turnover days increasing by 2 days to 64.7 days [3] Future Outlook - Revenue is expected to continue expanding rapidly in 2025, with net profit projected to grow in the mid-single digits due to ongoing efficiency improvements in new factories [4] - The company’s net profit forecasts for 2025, 2026, and 2027 are 4.11 billion, 4.76 billion, and 5.49 billion yuan, respectively, with a PE ratio of 16 times for 2025 [4]