Core Viewpoint - The operational data released by Xtep indicates stable performance for its main brand and strong growth for Saucony, meeting previous guidance expectations [1][2]. Group 1: Main Brand Performance - Xtep's main brand achieved steady all-channel revenue, with a low single-digit growth for the year, despite a slight slowdown in December due to warm winter and delayed Spring Festival [1]. - The children's segment and online sales showed remarkable performance, with online channels experiencing double-digit growth and live streaming platforms like Douyin and Kuaishou leading in sales [1]. Group 2: Saucony's Growth - Saucony's revenue for Q4 and the entire year grew over 30% year-on-year, indicating a strong development momentum [1]. - The brand has successfully adjusted its online strategy by reducing low-priced products and enhancing discount rates, leading to improved brand image [2]. Group 3: Inventory and Discount Management - The retail discount rate remained stable at 70-75%, with flexible adjustments during promotional periods to enhance terminal sales [2]. - The inventory turnover ratio for the main brand was approximately 4.5 months at the end of Q4, maintaining a reasonable level [2]. Group 4: Channel Optimization and DTC Transformation - The main brand's channel upgrade is ongoing, with over 70% of new stores being of the ninth generation or higher, and plans to open 20-30 new flagship stores by 2026 [3]. - The DTC transformation is progressing steadily, with plans to recover 300-400 stores in 2026, which will enhance responsiveness to market changes [3]. Group 5: Product Innovation and Market Position - The main brand continues to excel in functional products, with double-digit growth in the running category and significant sales increases for the Champion running shoe family [3]. - The company is focusing on optimizing its multi-brand matrix by divesting from fashion sports brands and concentrating on core running business, which is expected to strengthen its market position [4].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its stock performance in the near term [6][19]. Core Insights - The main brand shows steady performance, while the subsidiary brand, Saucony, continues its strong growth trajectory. The overall revenue for the main brand remained stable, with a low single-digit growth achieved for the year. Saucony's revenue growth exceeded 30% year-on-year, reflecting robust market demand [6][10]. - The company has successfully optimized its product offerings and channels, focusing on direct-to-consumer (DTC) strategies and enhancing customer experience through new store formats. The DTC transformation is progressing steadily, with plans to recover a significant number of stores to better respond to market changes [6][10]. - The financial forecasts indicate a projected increase in net profit from 1.37 billion RMB in FY2025 to 1.6 billion RMB in FY2027, with corresponding price-to-earnings ratios decreasing from 9 to 8 over the same period [6][15]. Financial Data and Profit Forecast - Revenue projections for FY2023 to FY2027 are as follows: 143 billion RMB, 136 billion RMB, 142.8 billion RMB, 151 billion RMB, and 161 billion RMB, respectively. The year-on-year growth rates are expected to fluctuate, with a notable decline in FY2024 [6][15]. - The net profit attributable to shareholders is forecasted to grow from 1.03 billion RMB in FY2023 to 1.6 billion RMB in FY2027, with a consistent increase in earnings per share from 0.41 RMB to 0.57 RMB over the same period [6][15]. - The gross margin is expected to stabilize around 45% from FY2025 onwards, indicating effective cost management and pricing strategies [6][15].