Core Viewpoint - First Shanghai maintains a "Buy" rating for Shenzhou International (02313) with a target price of HKD 79.80, highlighting the company's strong performance despite fluctuations in the sports brand and macroeconomic environment [1] Group 1: Financial Performance - For the first half of 2025, the company's revenue increased by 15.3% to RMB 14.97 billion, driven primarily by volume growth, while prices in USD decreased by 0.8% [1] - Gross margin declined by 1.9 percentage points to 27.1%, mainly due to increased employee compensation in the second half of the previous year [1] - The company recorded a net profit attributable to shareholders growth of 8.4% to RMB 3.18 billion, with overall revenue growth exceeding expectations [1] Group 2: Product and Market Performance - The sports category grew by 9.9%, while the leisure category saw a significant increase of 37.4%, driven by demand in the US, Europe, and Japan [2] - Regional performance showed Europe, the US, Japan, and other regions growing by 19.9%, 35.8%, 18.1%, and 18.7% respectively, while the domestic market declined by 2.1% [2] - The growth of major clients like Nike, Adidas, Uniqlo, and Puma was 6.0%, 28.2%, 27.4%, and 14.7% respectively, with their combined market share increasing by 2.7 percentage points to 82.1% [2] Group 3: Future Outlook and Capacity - The company expects high single-digit growth in volume for the second half of the year, with an improvement in gross margin due to faster growth in sports products [3] - In terms of capacity, the company has recruited 4,000 employees in Cambodia in the first half and plans to hire a total of 6,000 by year-end, while the acquisition of a factory in Vietnam will increase daily capacity by 200-300 tons [3] - Capital expenditure for the first half was RMB 1.5 billion, with an estimated total of around RMB 2.3 billion for the year [3]