Core Viewpoint - Xtep International reported a 7.1% year-on-year revenue growth and a 21.5% increase in net profit attributable to shareholders for H1 2025, slightly exceeding expectations [1][2] Financial Performance - The company achieved a revenue of 6.838 billion RMB in H1 2025, with the main brand (Xtep) contributing 6.053 billion RMB, a 4.5% increase year-on-year, accounting for 88.5% of total revenue [1] - The professional sports segment (including Saucony and Merrell) saw a significant revenue increase of 32.5% to 785 million RMB, representing 11.5% of total revenue, driven by strong offline retail performance [1] - Gross margin decreased by 0.3 percentage points to 43.6%, with the main brand's gross margin also down by 0.3 percentage points [1] - Net profit attributable to shareholders rose to 914 million RMB, with a net profit margin increase of 1.6 percentage points to 13.4% [1] Dividend and Earnings Forecast - The company declared a dividend of 0.18 HKD per share, with a payout ratio of 50% [1] - Earnings per share (EPS) estimates for 2025-2027 have been revised to 0.55, 0.62, and 0.68 RMB, respectively, with a target price adjustment to 7.16 HKD [1][2] Operational Efficiency - As of H1 2025, the main brand had 7,924 stores, a net decrease of 42 stores since the beginning of the year, while Saucony increased its store count by 10 to 155 [2] - The company is focusing on enhancing its high-end brand image and expanding its product matrix with new series [2] Strategic Focus Post-Divestiture - Following the divestiture of KSWISS and Palladium, the company aims to concentrate resources on the main brand and Saucony, which is expected to lead to faster growth [2]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 7.16 [1][7]. Core Insights - The company reported a revenue of RMB 6.838 billion for the first half of 2025, representing a year-on-year growth of 7.1%, and a net profit attributable to shareholders of RMB 914 million, which is a 21.5% increase compared to the previous year [2][3]. - The professional sports segment, including brands like Saucony, showed significant growth with a 32.5% increase in revenue to RMB 785 million, driven by strong offline retail performance [2][3]. - The company has adjusted its earnings per share (EPS) estimates for 2025-2027 to RMB 0.55, 0.62, and 0.68 respectively, reflecting a positive outlook based on the recent performance [3]. Financial Performance Summary - Revenue for 2025 is projected to be RMB 14.52 billion, with a growth rate of 6.9% [5]. - The net profit for 2025 is estimated at RMB 1.402 billion, indicating a growth rate of 13.2% [5]. - The gross margin is expected to stabilize at 43.2% for 2025, while the net profit margin is projected to be 9.7% [5][11]. - The company plans to maintain a dividend payout ratio of 50% in the coming years, with a projected dividend yield of 4.48% for 2025 [5][11]. Operational Efficiency - The company has optimized its channels, with a total of 7,924 stores for the main brand as of the first half of 2025, reflecting a net decrease of 42 stores since the beginning of the year [3]. - The company is focusing on enhancing its brand image and expanding its product matrix, particularly in the elite sports lifestyle segment [3]. - Following the divestiture of KSWISS and Palladium, the company aims to concentrate resources on its main brand and Saucony, which is expected to lead to faster growth in the future [3].

Transaction Overview - The company plans to publicly transfer 51% equity of its subsidiary, Tibet Kangyu Pharmaceutical Co., Ltd., to focus resources on core business and enhance profitability [1][2] - The initial transfer price is set at RMB 63.78 million based on an asset appraisal [1][6] Financial Performance of the Target Company - The target company's total assets increased from RMB 12,287.27 million to RMB 15,871.39 million over the last year [5] - Total liabilities rose from RMB 7,519.00 million to RMB 11,392.73 million [5] - Net profit for the last audited year was RMB 1,678.43 million, up from RMB 289.61 million [5] Asset Valuation - The valuation of the 51% equity stake is based on an appraisal conducted by Walker (Beijing) International Asset Appraisal Co., Ltd., using both asset-based and income approaches [6] - The assessed value of the target company's total equity is RMB 125.06 million, with an increase of RMB 77.38 million, representing a growth rate of approximately 164.5% [6] Approval Process - The proposal for the equity transfer requires approval from the company's shareholders' meeting before execution [2][8] - The independent directors and supervisory board have expressed support for the transaction, confirming that it aligns with the company's strategic goals and does not harm shareholder interests [7][8] Future Implications - If the transaction is completed, the target company will no longer be included in the company's consolidated financial statements [6] - The transaction is seen as a necessary step for optimizing the company's investment structure and enhancing its operational capabilities [8]

Core Viewpoint - Kory Technology plans to sell its subsidiary Zhongshan Kory Automation Technology Co., Ltd. to Beiding Co., Ltd. and transfer some specialized machinery to its subsidiaries, aiming to focus on core business and improve asset efficiency [1][4]. Group 1: Transaction Details - The transaction will occur in two parts: the transfer of 100% equity of Zhongshan Kory to Beiding and the sale of specialized machinery to subsidiaries Suzhou Kory and Kory Technology [2]. - Beiding Co., Ltd. recently reported significant year-on-year growth in revenue and net profit for the first half of 2025, while Kory Technology's revenue for the previous year was 2.448 billion yuan, with a net profit of 139 million yuan, both showing a decline [2]. Group 2: Financial Performance of Zhongshan Kory - Zhongshan Kory reported revenue of 258 million yuan last year, with a loss of approximately 2.05 million yuan. As of June 30 this year, its total assets were 86.618 million yuan, and net assets were 65.2144 million yuan [3]. - The equity value assessed using the asset-based method was 156 million yuan, with an appraisal increment of 91.2419 million yuan, resulting in a 139.91% increase, primarily due to the appreciation of buildings [3]. Group 3: Strategic Rationale - Kory Technology previously positioned Zhongshan Kory as a single production base, but with the headquarters' production capacity increasing, the company aims to divest non-core production functions to focus resources on core business and enhance profitability [4]. - The proceeds from the sale will be flexibly used for main business investments, and the sale of equipment will improve utilization rates and avoid redundant purchases [4]. Group 4: Expected Financial Impact - The transaction is expected to generate approximately 82 million yuan in profit, significantly exceeding Kory Technology's net profit of 44.254 million yuan for the first quarter of this year [5].