Group 1: Company Overview - Semir Fashion was established in 2002, focusing on casual and children's clothing, with major brands including Semir for adults and Balabala for children [8] - Semir brand, founded in 1996, emphasizes comfort and quality, while Balabala, established in 2002, targets children aged 0-14, positioning itself for middle-income families [8] - Semir has become a leading domestic casual wear brand, while Balabala holds a dominant market share in children's clothing [8] Group 2: Financial Performance - For Q1 2025, the company reported revenue of CNY 3.08 billion, a decrease of 1.93% from CNY 3.14 billion in the same period last year [9] - Net profit attributable to shareholders was CNY 214.37 million, down 38.12% from CNY 346.44 million year-on-year [9] - The net cash flow from operating activities fell by 81.71% to CNY 152.53 million, primarily due to increased payments for goods [10] Group 3: Inventory and Assets - As of March 31, 2025, inventory stood at CNY 3.35 billion, a decrease of CNY 134 million from the beginning of the period, but an increase of CNY 760 million compared to the same time last year [10] - The proportion of inventory items with a one-year turnover increased from 55% to 72%, indicating improved inventory health [10] - Monetary assets remained stable at CNY 8.65 billion, ensuring sufficient liquidity for ongoing operations [10] Group 4: Profitability and Expenses - The gross profit margin for the period was 47%, slightly up by 0.37 percentage points compared to the previous year [10] - Sales expenses increased by CNY 111 million, primarily due to higher advertising and service costs [11] - Management expenses rose by CNY 20 million, while financial expenses decreased by CNY 39 million [10] Group 5: Store Operations - During the reporting period, the company opened 172 stores and closed 229, resulting in a total of 8,268 stores as of March 31, 2025 [11] - The breakdown includes 2,779 adult clothing stores and 5,489 children's clothing stores, with 960 direct-operated, 74 joint-operated, and 7,234 franchised stores [11] Group 6: Retail Performance - In Q1, overall retail sales, both online and offline, showed single-digit growth year-on-year [12] - Sales continued to improve in April, maintaining a mid-to-high single-digit growth rate across the entire retail system [12]

Investment Rating - The report maintains a "Buy" rating for the company, with an expected PE of 14 times for 2025 [4][6]. Core Views - The company reported a revenue of 3.08 billion yuan and a net profit of 210 million yuan for Q1 2025, reflecting a year-on-year decline of 2% and 38% respectively [1]. - The retail channel is expected to show steady growth, with a cautious accounting approach leading to better performance in retail sales compared to revenue [2]. - The company is focusing on optimizing its store structure, with a net increase of 299 direct stores and 96 franchise stores expected in 2024 [2]. - The children's clothing segment is anticipated to grow healthily, while the adult casual wear segment is expected to decline due to industry conditions [3]. - Inventory levels increased by 29.4% year-on-year to 3.35 billion yuan, with a healthy inventory turnover structure [4]. Financial Summary - For 2025, the company is projected to achieve revenues of 15.77 billion yuan, with a year-on-year growth rate of 7.8% [5]. - The net profit for 2025 is estimated at 1.23 billion yuan, reflecting an 8.5% year-on-year increase [5]. - The latest diluted EPS is projected to be 0.46 yuan per share for 2025 [5]. - The company’s return on equity (ROE) is expected to be 10.2% in 2025, increasing to 12.2% by 2027 [5].