Investment Rating - The report maintains an "Outperform" rating for the company [1]. Core Insights - The company reported better-than-expected performance for 2025, with revenue growth of 3% to 296 billion RMB and a net profit decline of 3% to 29.4 billion RMB, primarily driven by professional sports categories and effective cost control [4]. - The company expects high single-digit revenue growth for 2026, with improvements in gross margin due to enhanced brand and product strength, although expenses are anticipated to rise due to Olympic sponsorship and new channel development [4]. Financial Data and Profit Forecast - Revenue projections (in billion RMB): - 2024: 287 - 2025: 296 - 2026E: 317 - 2027E: 337 - 2028E: 353 [2] - Net profit projections (in billion RMB): - 2024: 30.1 - 2025: 29.4 - 2026E: 28.5 - 2027E: 31.6 - 2028E: 34.0 [2] - Gross margin is expected to be around 49% for 2026, with a slight improvement anticipated in subsequent years [4]. - The company’s PE ratios are projected to be 17 for 2026, 15 for 2027, and 14 for 2028 [4]. Operational Performance - The company maintained a healthy inventory turnover ratio and product age structure, with a sell-through rate for new products between 70% and 80% [4]. - Professional categories such as running, cross-training, and badminton led growth, while basketball and lifestyle segments saw declines [4]. - E-commerce performance outpaced offline sales, with a total of 6,091 stores by the end of 2025, reflecting a strategic focus on channel innovation [4].

Core Viewpoint - The company, HLA, is initiating a plan for a Hong Kong listing to enhance its global strategy and accelerate overseas business development, with a focus on diversifying its capital operation platform [1] Group 1: Overseas Expansion - HLA's overseas revenue has significantly increased from 6.1684 million in 2017 to 355 million in 2024, with a 27.42% year-on-year growth in the first half of 2025 [1] - The company has expanded its presence in Southeast Asia, including Malaysia, Thailand, Vietnam, and Singapore, while also exploring new markets in Central Asia and the Middle East [1][8] - As of the first half of 2025, HLA has opened 111 overseas stores, with overseas revenue accounting for only 1.83% of total revenue [8][6] Group 2: Business Transformation - HLA is transitioning from being a "men's wardrobe" to a "family wardrobe" by implementing a multi-brand and multi-category strategy, which includes women's wear, children's wear, and sportswear [2] - Despite a 1.73% year-on-year revenue growth to 11.566 billion in the first half of 2025, the company's net profit attributable to shareholders decreased by 3.42% to 1.580 billion, indicating challenges in performance [2][3] - The main brand, HLA, contributed approximately 75% of the company's main business revenue in the first half of 2025, highlighting its significance in the overall revenue structure [4] Group 3: Financial Performance - HLA's revenue from the main brand has consistently accounted for over 70% of total revenue from 2020 to 2024, with figures of 137.68 billion, 151.33 billion, 137.53 billion, 164.58 billion, and 152.70 billion respectively [4] - The company's financial performance has shown volatility, with significant fluctuations in both revenue and net profit from 2020 to 2024, compared to its peak in 2019 [3][4] - The company has invested 248 million in acquiring a 51% stake in a sports brand management company to enhance its sports segment and has established 529 Adidas stores in China as of the first half of 2025 [4][5]