Core Viewpoint - The company's 1H25 performance fell short of expectations, with revenue declining by 3.58% year-on-year and net profit down by 42.66% due to weak retail demand and increased fixed costs leading to negative operating leverage [1][2]. Financial Performance - 1H25 revenue was 2.391 billion yuan, with a net profit of 197 million yuan. In 2Q25, revenue was 1.087 billion yuan, and net profit was 27 million yuan, reflecting a year-on-year decline of 3.47% and 71.37%, respectively [1]. - By brand, revenue for 1H25 showed a mixed performance: Baoshiniao down 9.60%, Haggis up 8.37%, Baoniao down 22.53%, Lefeiye up 20.48%, and other brands down 9.42% [1]. - The company’s overall gross margin remained stable year-on-year, but online and group purchase models faced pressure [2]. Expense and Profitability Analysis - In 2Q25, the sales expense ratio increased by 3.8 percentage points to 49.5% due to rising rental and promotional costs associated with store expansion [2]. - The net profit margin for 2Q25 decreased by 5.9 percentage points to 2.5% [2]. Inventory and Cash Flow - As of 1H25, inventory increased by 5.9% year-on-year to 1.138 billion yuan, with inventory turnover days rising by 23 days to 268 days [2]. - The net cash flow from operating activities decreased by 32% year-on-year to 95 million yuan, while cash reserves stood at approximately 1.43 billion yuan [2]. Development Trends - The company plans to open 10% to 20% new stores while optimizing underperforming locations, with expectations for brand influence to improve through increased investment [3]. - The outdoor brands Lefeiye and Woolrich are anticipated to have good growth potential [3]. Profit Forecast and Valuation - Due to uncertainties in the retail environment, the company has lowered its profit forecasts for 2025 and 2026 by 31% and 27%, respectively, to 368 million yuan and 438 million yuan [4]. - The current stock price corresponds to a P/E ratio of 15x for 2025 and 13x for 2026, with a target price reduction of 17% to 4.44 yuan, indicating a potential upside of 15.3% from the current price [4].

Core Viewpoint - The company's mid-year earnings fell short of market expectations due to declining revenue, rigid expenses, and increased asset impairment, with a significant year-on-year profit drop of 71% in the second quarter [1] Revenue Performance - The revenue decline in the second quarter was similar to the first quarter, but the profit drop was more pronounced, indicating increasing short-term performance pressure from weak retail demand and rising costs [1] - The Haggis brand showed resilient growth with an 8.37% increase despite only two new store openings, largely driven by online sales [1] - The Baoniao brand faced significant pressure, with a 9.6% year-on-year revenue decline and four store closures in the first half of the year [1] - The Baoniao group buying business experienced a 22.53% revenue decline, exceeding previous market estimates [1] - The smaller outdoor brand Lefeiye performed well, maintaining around 20% revenue growth, indicating that outdoor apparel remains a strong segment [1] Expense Trends - Despite a challenging retail environment, the company continued to increase its expenditure for long-term development, leading to expected short-term performance challenges [2] - The acquisition of the American outdoor brand Woolrich resulted in increased expenses and intangible asset amortization, contributing to a rise in sales and management expense ratios by 3.66 and 2.27 percentage points, respectively [2] - While expenses may be slightly controlled in the second half of the year, they are still expected to pose challenges to short-term performance [2] Future Outlook - The company is one of the more mature multi-brand apparel firms in China and is expected to recover growth as consumer demand gradually improves [2] - There is optimism regarding the sustainable growth of the Haggis and Lefeiye brands, as well as positive expectations for the mid-term development of the newly acquired Woolrich brand [2] - The Baoniao brand is undergoing a transformation towards a younger and more fashionable image, which may benefit from a potential consumer recovery [2] Earnings Forecast and Investment Recommendation - Based on the mid-year report, the company's earnings forecast has been revised downwards, with expected earnings per share of 0.28, 0.34, and 0.41 yuan for 2025-2027 [3] - A target price of 4.20 yuan has been set, based on a 15 times PE valuation for 2025, while maintaining a "buy" rating for the company [3]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company experienced a decline in performance due to increased expenses, with a focus on high-quality development across multiple brands [12] - In 2024, the company reported a revenue of 5.15 billion yuan, a year-on-year decrease of 1.9%, and a net profit attributable to shareholders of 495 million yuan, down 29.1% year-on-year [5][12] - The company is expanding its brand portfolio, including the acquisition of the global intellectual property rights for the high-end outdoor brand Woolrich for approximately 384 million yuan [12] Financial Performance - The company's gross profit margin increased by 0.3 percentage points to 65.0% in 2024, while the net profit margin decreased to 9.6%, down 3.7 percentage points year-on-year [6][9] - The company’s operating income for 2025 Q1 was 1.3 billion yuan, a year-on-year decline of 3.7%, with a net profit of 170 million yuan, down 31.9% year-on-year [6][12] - The total number of stores for the main brands as of the end of 2024 was 821 for Baoxini, 478 for Haggis, and 95 for Le Fei Ye, with Le Fei Ye showing a significant growth rate of 26.7% [8] Expense and Profitability Analysis - The company's expense ratio increased by 3.0 percentage points to 49.9% in 2024, primarily due to higher sales and marketing costs [9][10] - The sales expense ratio rose to 41.3%, reflecting increased investment in market expansion and brand promotion [9][18] - The company’s net cash flow from operating activities decreased by 39.1% in 2024, primarily due to reduced sales collections [11] Future Outlook - The company has adjusted its profit forecasts for 2025 and 2026, with net profits projected at 517 million yuan and 570 million yuan, respectively [12] - The report anticipates continued growth in the outdoor segment, particularly for the Le Fei Ye brand, benefiting from trends in outdoor activities [12]

Core Viewpoint - The company is experiencing a decline in both revenue and net profit for 2024, prompting a shift towards the outdoor market as a strategic response to ongoing performance pressures [1][3][4]. Financial Performance - In 2024, the company reported revenue of 5.153 billion yuan, a year-on-year decrease of 1.91%, and a net profit of 495 million yuan, down 29.07% [3][4]. - Marketing expenses increased to 2.13 billion yuan in 2024, up 4.88% from the previous year, contributing to the decline in profitability [3][4]. - The company had previously seen revenue and net profit growth of 21.82% and 52.11% respectively in 2023, indicating a significant reversal in performance [4]. Marketing Strategy - The rise in marketing expenses is attributed to increased efforts in market expansion and brand promotion, which have not yielded the expected results [3][5]. - The company has engaged various celebrities for marketing campaigns, but the effectiveness of these strategies has diminished over time [3][4]. Outdoor Market Expansion - The company is intensifying its focus on the outdoor market, highlighted by the acquisition of the American high-end outdoor brand Woolrich for 384 million yuan [7][9]. - The outdoor brand Lefeiye, which the company has been representing since 2016, saw revenue growth of 27.95% in 2024, indicating a positive trend in this segment [6][8]. - The overall outdoor equipment market in China is projected to grow from 87.2 billion yuan in 2023 to over 100 billion yuan by 2028, suggesting a lucrative opportunity for the company [8][10]. Competitive Landscape - The outdoor market is becoming increasingly competitive, with established players like Anta and Nike already present, making it challenging for the company to gain market share [9][10]. - Analysts suggest that the company's lack of expertise in the outdoor sector may hinder its ability to compete effectively against more specialized brands [10].