Investment Rating - The report maintains a "Buy" rating for the company 361 Degrees [1] Core Views - The company has shown steady growth in performance, with a 11% year-on-year increase in revenue to 5.7 billion RMB and a 9% increase in net profit to 860 million RMB for the first half of 2025, which is in line with expectations [6] - The company plans to distribute an interim dividend of 0.204 HKD per share, with a payout ratio of 45%, up from 40.3% in the first half of 2024, enhancing shareholder returns [6] - The children's clothing segment continues to grow at double-digit rates, while the gross margin for adult apparel has steadily improved [6] - E-commerce channels have shown strong growth, increasing by 45% to 1.82 billion RMB, accounting for 31.8% of total revenue [6] - The company has significantly improved its inventory and operating cash flow, with cash on hand of approximately 4.3 billion RMB and a low debt ratio of 2.2% [6] Financial Data and Profit Forecast - Revenue projections for FY2023 to FY2027 are as follows: 84.23 billion RMB (2023), 100.7 billion RMB (2024), 111.8 billion RMB (2025E), 121.4 billion RMB (2026E), and 130.8 billion RMB (2027E) [5][15] - Net profit forecasts are: 9.6 billion RMB (2023), 11.5 billion RMB (2024), 12.6 billion RMB (2025E), 13.9 billion RMB (2026E), and 15.1 billion RMB (2027E) [5][15] - The gross margin is expected to slightly increase from 41.1% in FY2023 to 41.9% in FY2027 [5][15] - The price-to-earnings ratio is projected to decrease from 11 in FY2023 to 7 in FY2027 [5][15]

Investment Rating - The report maintains a "Positive" investment rating for the industry [11]. Core Insights - The report analyzes the running industry and the development of running shoes, highlighting three main drivers: product technology advancements, breakthroughs in the supply chain, and future prospects for domestic brands to lead a new cycle of product innovation [4][10]. Summary by Sections Global Running Boom - The running craze has swept globally, with China experiencing rapid penetration. The running participation rate and road running events in China still have significant room for growth compared to overseas markets [7][21][31]. Competition in Midsole Technology - Midsole technology is crucial for the comfort of running shoes, with material and foaming processes determining performance. Different consumer groups have varying needs for shoe performance, with midsole technology being the core factor affecting comfort [8][39]. Evolution of Midsole Technology - The report emphasizes that product quality is fundamental, while marketing plays a supportive role. Major brands like Nike and Adidas have led the market through midsole technology upgrades, with Li Ning's "䨻" technology marking a significant advancement in the domestic market [9][10]. Future Industry Dynamics - Domestic brands are catching up with international competitors in terms of core midsole technology, although there are still gaps in design and product calibration. Continuous investment in these areas is expected to enhance market share and lead to new product cycles [10][11].