Investment Rating - The report maintains a "Buy" rating for the company [10][4] Core Views - The manufacturing business shows resilience with a 6.2% year-on-year revenue growth in H1 2025, reaching $2.8 billion. The outdoor sports shoes and casual shoes segments grew by 4.9% and 29.2% respectively, while the overall footwear shipment volume increased by 5% to 130 million pairs [1][2] - The retail business faces pressure, with a revenue decline of 8.3% in H1 2025, totaling 9.16 billion yuan. Physical store sales dropped by 14%, and same-store sales fell by 10% to 20% [2][3] - The company expects revenue growth of 2.5%, 6%, and 5.4% for 2025, 2026, and 2027, respectively, with net profit growth of 0.8%, 10.2%, and 6.9% during the same period [3][9] Financial Summary - H1 2025 revenue reached $4.06 billion, a 1.1% increase year-on-year, while net profit decreased by 7.2% to $170 million. Q2 revenue slightly declined by 0.4% to $2.03 billion, but net profit increased by 13% to $100 million [1][2] - The manufacturing business's gross margin decreased by 1.4 percentage points to 17.7% in H1 2025, primarily due to uneven capacity utilization and rising labor costs [2][3] - The retail business's gross margin fell by 0.7 percentage points to 33.5% in H1 2025, attributed to increased discounts amid fluctuating consumer demand [3][9]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company has shown a slight increase in revenue for the first half of 2025, with a year-on-year growth of 1.1%, while net profit attributable to the parent company decreased by 7.2% [2] - The company plans to invest approximately 23 billion Indian Rupees (around 27.6 million USD) to establish a production base in an economic zone in India, with preliminary construction already underway [2][3] - The company has a strong market position as a leading global sports shoe manufacturer, benefiting from vertical integration and a significant share of the global sports brand market [5] Summary by Sections Financial Performance - For the first half of 2025, the company's revenue and net profit attributable to the parent company were 406 million USD and 171 million USD, respectively, with a year-on-year growth of 1.1% and a decline of 7.2% [2] - The second quarter of 2025 saw revenue and net profit of 203.1 million USD and 95 million USD, with a year-on-year decline of 0.35% in revenue but a 13.02% increase in net profit [2] - The company plans to distribute a dividend of 0.4 HKD per share, resulting in a payout ratio of 47.77% and an annualized dividend yield of 6.4% [2] Manufacturing Insights - The manufacturing segment's revenue and net profit for the first half of 2025 were 279.8 million USD and 155 million USD, reflecting a year-on-year growth of 6.2% and a slight decline of 0.3% in net profit [3] - The manufacturing gross margin and net margin were 17.7% and 5.5%, respectively, with a year-on-year decrease of 1.4 and 0.4 percentage points [3] - The company has increased its workforce to 292,300 employees, a 5.5% year-on-year increase, with manufacturing staff growing by 6.6% [3] Retail Business Performance - The retail segment experienced a decline in revenue and net profit for the first half of 2025, with figures of 915.9 million CNY and 188 million CNY, representing a year-on-year decrease of 8.26% and 44% [4] - The number of direct-operated stores decreased by 1.16% year-on-year to 3,408, with a closure of 40 stores since the end of 2024 [4] - Despite challenges, the company reported a robust growth of 16% in omni-channel revenue, with live streaming sales increasing by over 100% [4] Investment Recommendations - The company is expected to face short-term order pressures due to tariffs and inflation, but medium-term growth is anticipated as production capacity is expanded and orders recover [5] - Revenue forecasts for 2025-2027 have been adjusted downwards to 8.218 billion USD, 8.546 billion USD, and 8.822 billion USD, respectively, with net profit forecasts revised to 373.67 million USD, 414.02 million USD, and 450.05 million USD [5][7] - The company maintains a favorable valuation with a projected PE ratio of 7, 6, and 6 for 2025-2027, supporting the "Buy" rating [5][7]