Summary of Topsports Intl Holdings (6110.HK) Conference Call Company Overview - **Company**: Topsports Intl Holdings - **Ticker**: 6110.HK - **Market Cap**: HK$19.2 billion / $2.5 billion - **Industry**: Greater China Retail, specifically in sports apparel and footwear Key Points from the Conference Call Industry and Market Conditions - The company is navigating a transition year with ongoing inventory destocking and some emerging positive trends in major sports brands' product initiatives [1][2] - Sales in June were pressured due to the front-loaded 618 shopping festival, but the year-over-year decline in July and August narrowed compared to June [2][3] - The consumption environment remains choppy, leading to a Neutral rating as the company awaits clearer signs of sales recovery [1] Financial Performance - August quarter discounts were deeper year-over-year, but the sequential decline in discounts showed improvement since late July [2] - Inventory levels are manageable at 4-4.5 times, but there is room for improvement in the aging structure of inventory [2] Brand Strategy and Initiatives - The company plans to improve procurement levels for a major brand starting from CY4Q25, supported by strong product development capabilities and a low base from previous disciplined procurement [3] - Management noted a shift in consumer focus towards product quality over brand name, benefiting niche brands and prompting larger brands to invest more in category-specific R&D and marketing [8] Risks and Valuation - The company is rated Neutral with a 12-month price target of HK$2.80, reflecting a downside potential of 9.7% from the current price of HK$3.10 [9][10] - Key risks include slower industry growth leading to weaker sales, negative impacts from operating leverage, and potential upside from better-than-expected brand momentum and margin improvements [9] Future Outlook - The company acknowledges that FY26 will likely remain a transition year for both Topsports and its major brands, with expectations for clearer recovery signals needed before a more positive outlook can be established [1][2] Additional Observations - Running and outdoor categories are performing well, while skiing has cooled down and cycling presents limited commercial opportunities [8] - The company is prioritizing online channels for certain brands due to high costs associated with retail expansion [11] Conclusion - Topsports Intl Holdings is currently in a transitional phase with mixed signals in sales performance and inventory management. The focus on product quality and strategic brand initiatives may provide future growth opportunities, but the company remains cautious amid a challenging consumption environment.

Summary of Li Ning Co. (2331.HK) Corporate Day Insights Company Overview - **Company**: Li Ning Co. (2331.HK) - **Industry**: Consumer & Leisure Key Points and Arguments 1. Financial Guidance and Performance - Management reiterated FY2025 guidance with expectations of flat year-over-year sales and a net profit margin (NPM) growth at high single digits (HSD%) [2][7] - The company anticipates challenges to gross profit margin (GPM) due to ongoing discount pressures throughout the year [2][10] 2. Sales Trends - Year-to-date (YTD) trading and operational expenditure (OPEX) investments are largely on track, with inventory levels under control [2] - Positive growth in online and offline sales was recorded in April, while offline sales declined initially but turned positive during May and the Dragon Boat Festival [2][10] - Discounts have deepened, with management expecting similar trends during the 618 festival [2][10] 3. Category Performance - The adult business is expected to see small positive growth, while adjustments in the kids' wear segment and the international business transitioning to a joint venture (JV) will offset this growth [2] - The running category showed over 20% year-over-year growth in Q1 2025, driven by the popularity of core products [11] - The outdoor category is identified as a growth driver, with expectations of low to mid-single digit (LSD-MSD%) contribution for the year [11] 4. Store Network and Strategy - Plans to close 10-20 directly-operated adult stores while increasing distributor stores by 30-40 to target third-tier cities [10] - The company aims to net open 100 Li Ning Young stores in 2025, focusing on higher-tier cities through direct-to-consumer (DTC) channels [10] 5. Marketing and Sponsorship - Marketing efforts will focus on events and athlete sponsorships, particularly in relation to the Milan Winter Olympics in 2026 [10] 6. Shareholder Returns - The company has been gradually increasing shareholder returns and sees potential for further improvement, considering dividends based on free cash flow (FCF) [12] 7. Risks and Valuation - The current price target is set at HK$14.5, with a neutral rating based on a 12x 2026E price-to-earnings (P/E) ratio [13] - Key risks include slower or higher-than-expected same-store sales growth (SSSG), promotional activities, and operational expenditures on brand investments [13] 8. Additional Insights - The company is facing challenges in the basketball and lifestyle categories, with unclear demand trends among younger consumers [11] - The management expects a decrease in store-related right-of-use (ROU) asset impairments in 2025, although investment property impairments may vary based on asset revaluation [10] Conclusion Li Ning Co. is navigating a complex retail environment with a focus on maintaining sales growth amidst discount pressures. The company is strategically adjusting its store network and enhancing its marketing efforts to bolster its position in key categories while managing shareholder expectations through potential returns.