Core Insights - The company reported a revenue of 14.966 billion yuan for H1 2025, representing a year-on-year growth of 15.3%, while the net profit attributable to shareholders was 3.177 billion yuan, up 8.4% year-on-year [1] - The board proposed an interim dividend of 1.38 HKD per share, with a payout ratio of 60% [1] Revenue and Profit Analysis - Revenue growth was primarily driven by an increase in sales volume, although the profit growth lagged behind revenue growth due to a decline in gross margin and an increase in effective tax rate [1] - The company achieved revenue from various product segments: sportswear (10.129 billion yuan, +9.9%), casual wear (3.792 billion yuan, +37.4%), underwear (0.940 billion yuan, +4.1%), and other knitted products (0.105 billion yuan, +6.0%) [1] Market Performance - Domestic market revenue saw a slight decline, while overseas markets experienced rapid growth: mainland China (-2.1%), EU (+19.9%), USA (+35.8%), Japan (+18.1%), and other regions (+18.7%) [2] - The company increased its procurement share from four core clients, which accounted for 82.1% of total revenue, with significant contributions from Uniqlo (4.333 billion yuan, +27.4%), Nike (3.436 billion yuan, +6.0%), Adidas (2.992 billion yuan, +28.2%), and Puma (1.532 billion yuan, +14.7%) [2] Profitability and Cost Structure - The gross margin decreased by 1.9 percentage points to 27.1% due to increased employee costs, while the total expense ratio fell by 0.27 percentage points to 9.13% [3] - The company reported a net cash balance of 13.371 billion yuan as of the end of H1 2025, with inventory increasing by 4.4% to 6.990 billion yuan and inventory turnover days decreasing by 12 days to 115 days [3] Investment Outlook - The company is expected to benefit from its diversified product strategy and enhanced customer service capabilities, with projected earnings per share of 4.40, 4.92, and 5.45 yuan for 2025-2027 [4] - The current closing price corresponds to a price-to-earnings ratio of 12.3, 11.0, and 9.9 for the years 2025-2027, maintaining a "Buy-A" rating [4]

Investment Rating - The report maintains a "Buy-A" rating for the company [2][8] Core Views - In the first half of 2025, the company achieved a revenue of 14.966 billion, representing a year-on-year growth of 15.3%, while the net profit attributable to shareholders was 3.177 billion, up 8.4% year-on-year [2][3] - The company's revenue growth was primarily driven by an increase in sales volume, although the profit growth lagged behind revenue due to a decline in gross margin and an increase in effective tax rate [3][4] - The company has seen a steady growth in sportswear and a remarkable performance in casual wear, with casual wear revenue growing significantly due to demand from markets in Japan, Europe, and other regions [3][4] Revenue Breakdown - Domestic market revenue slightly declined by 2.1%, while overseas markets experienced rapid growth, with revenue from the EU, the US, Japan, and other regions growing by 19.9%, 35.8%, 18.1%, and 18.7% respectively [4] - The company's four core customers accounted for 82.1% of total revenue, with significant growth in revenue from Uniqlo, Nike, Adidas, and Puma [4] Profitability and Costs - The gross margin decreased by 1.9 percentage points to 27.1% due to increased employee costs, while the inventory turnover improved with a decrease in inventory turnover days by 12 days [5][7] - The net profit margin decreased by 1.4 percentage points to 21.2% due to various factors including increased effective tax rate and government subsidies [7] Future Outlook - The company is expected to continue benefiting from its diversified product strategy and enhanced customer service capabilities, with a projected earnings per share of 4.40, 4.92, and 5.45 for 2025, 2026, and 2027 respectively [8][10] - The report anticipates that the negative impact of employee costs on gross margin will diminish in the second half of the year, and the company's vertical integration in fabric and garment production remains a core competitive advantage [8]