Investment Rating - The report maintains a "Buy" rating for the company with a target price of 6.6 HKD [6]. Core Insights - The company reported a revenue growth of 11% year-on-year to 5.7 billion RMB in the first half of 2025, with a net profit increase of 9% to 860 million RMB [1][2]. - The e-commerce channel showed impressive growth, increasing by 45% and accounting for 32% of total revenue, with exclusive products making up 85% of e-commerce sales [2][3]. - The gross profit margin improved to 41.5%, driven by cost control and higher product prices, with adult and children's clothing margins at 42.5% and 41.6%, respectively [2][3]. - The company has opened 49 "super product" stores and plans to reach 100 by the end of the year, focusing on enhancing store quality and efficiency [3]. Financial Summary - Revenue projections for 2025-2027 are 11.3 billion RMB, 12.5 billion RMB, and 13.8 billion RMB, respectively, with growth rates of 12.1%, 11.1%, and 10.1% [4][9]. - Net profit estimates for the same period are 1.25 billion RMB, 1.42 billion RMB, and 1.58 billion RMB, with growth rates of 8.8%, 13.6%, and 11.2% [4][9]. - The company’s earnings per share (EPS) are projected to be 0.60 RMB, 0.69 RMB, and 0.76 RMB for 2025, 2026, and 2027, respectively [4][9]. - The dividend payout ratio has increased from 40% to 45%, with a dividend of 20.4 HKD cents per share declared [1][2].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 8.00 [1][2][10] Core Views - The company reported a revenue of HKD 5.7 billion for the first half of the year, representing a year-on-year increase of 11.0%, and a net profit attributable to shareholders of HKD 860 million, up 8.6% year-on-year. The interim dividend is set at HKD 0.204 per share, maintaining a payout ratio of 45.0% [6][10] - The company is strengthening its brand value and product capabilities through upgrades in technology-driven products, optimizing channels with new store formats, and expanding into children's wear and overseas markets, which collectively enhance growth resilience [6][10] Summary by Sections Financial Performance - Revenue for the first half of 2025 was HKD 5.7 billion, with a net profit of HKD 860 million. The interim dividend is HKD 0.204 per share, with a payout ratio of 45.0% [6][10] - The company expects revenue growth to continue, with projected revenues of RMB 10,074 million, RMB 11,366 million, RMB 12,709 million, and RMB 14,019 million for the years 2024 to 2027, respectively [5][10] Market Position and Strategy - The company is focusing on product upgrades in running and basketball categories, which have driven a 12.8% increase in adult footwear revenue to HKD 2.57 billion. The children's brand has also seen an 11.4% revenue increase to HKD 1.26 billion, benefiting from increased emphasis on sports in education [7][10] - Online sales have surged by 45.0% to HKD 1.82 billion, driven by IP collaborations and promotional events [7][10] Profitability and Cash Flow - The gross margin improved by 0.2 percentage points to 41.5%, with adult footwear and apparel margins increasing to 43.3% and 41.3%, respectively [8][10] - Operating cash flow for the first half of 2025 was HKD 520 million, a significant increase of 227%, attributed to improved inventory and accounts receivable management [9][10] Valuation and Forecast - The company maintains a net profit forecast of RMB 1.31 billion, RMB 1.49 billion, and RMB 1.66 billion for 2025 to 2027, respectively. The target PE ratio for 2025 is set at 11.6x, leading to an updated target price of HKD 8.00, reflecting a 33% increase [10][10]

Core Viewpoint - The company reported strong growth in its main brand's offline, children's clothing offline, and e-commerce sales, with year-on-year increases of approximately 10%, 10%, and 20% respectively, indicating robust performance in various sales channels [1] Group 1: Operational Performance - The company achieved a discount rate of approximately 7.1, maintaining relative stability in pricing [1] - The inventory turnover ratio for Q4 2024 is projected to be between 4.5 to 5 times, reflecting stable inventory management [1] - The new "361-degree Super Store" format was successfully launched, with 49 stores opened by mid-2025 and a target of 80-100 stores for the entire year [1] Group 2: Store Format and Location Strategy - The new super stores have a larger area of 900-1000 square meters and an increased SKU count of 700-800 compared to conventional stores, enhancing product variety [1] - The distribution of the newly opened super stores is 6% in first-tier cities, 40% in second-tier cities, and 54% in third-tier and below, indicating a strategic focus on urban expansion [1] - The layout includes 55% in department stores, 25% in outlet malls, and 20% in street shops, which is an increase in presence in first and second-tier cities and non-street shop formats [1] Group 3: Product Development and Market Position - The running and basketball categories continue to grow rapidly, with new product launches such as the "Fei Biao Future 2" racing shoes and "Kuang Biao 2" basketball shoes [1] - The company is enhancing its brand image through sponsorship of events like the Qingdao Marathon and hosting its own brand IP events [1] - New high-quality and cost-effective products have been introduced in badminton shoes, sun protection clothing, and women's tennis, contributing to rapid growth in these segments [1] Group 4: Financial Forecast and Investment Rating - The company is expected to maintain industry-leading growth rates by deepening its penetration in lower-tier markets and accelerating the opening of super stores [2] - The projected net profits for 2025-2027 are 1.3 billion, 1.46 billion, and 1.62 billion respectively, with corresponding PE ratios of 7, 6, and 6 times [2] - The investment rating is maintained at "Buy" based on the company's growth strategy and market performance [2]