Summary of Xtep International Holdings Conference Call Company Overview - **Company**: Xtep International Holdings (1368.HK) - **Industry**: Consumer & Leisure Key Points Financial Performance and Guidance - The company is on track to meet its full-year guidance for FY25, with positive growth expected for the Xtep brand and over 30% growth for Saucony, alongside more than 10% year-over-year net profit growth [1][2] - Saucony has experienced easing impacts from product adjustments in the e-commerce channel and solid growth in offline sales [2] Brand Strategy and Outlook - Management anticipates relatively stable operations for the Xtep brand in 2026, considering the current macroeconomic and competitive environment [2] - Continuous investments in R&D and product innovation are planned, while maintaining stable pricing [2] - The company aims to double Saucony's revenue size by 2027, implying a compound annual growth rate (CAGR) of over 20% from 2024 to 2027 [2] Margin and Inventory Management - A slight year-over-year operating profit margin (OPM) expansion is expected in 2025, reflecting brand investments weighted towards the second half of the year [2] - Healthy inventory levels at both brands suggest less discounting pressure compared to the industry [2] Industry Trends and Competitive Landscape - The company has observed intensifying discounting within the industry in Q4, but both Xtep and Saucony are in a healthier position due to clean inventory levels [2] - Competition in the running segment is acknowledged, but Xtep maintains good brand recognition and competitive pricing [2] - Management believes that significant technological breakthroughs are necessary to meaningfully boost demand in the running segment [2] Risks and Valuation - The price target for Xtep is set at HK$6.80, representing a 27.1% upside from the current price of HK$5.35 [7] - Key downside risks include slower industry growth due to weakening consumption and potential execution challenges in discount control and inventory management [7] Financial Projections - Market capitalization is reported at HK$14.8 billion (approximately $1.9 billion) [7] - Revenue projections for the upcoming years are as follows: - 2024: Rmb 13,577.2 million - 2025: Rmb 14,396.1 million - 2026: Rmb 15,728.0 million - 2027: Rmb 16,690.1 million [7] Conclusion - The overall tone from management is constructive regarding future growth, particularly for the Saucony brand, while maintaining a cautious outlook for the Xtep brand in the near term [1][2]