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].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The main brand of the company shows stable performance, while the subsidiary brand, Saucony, continues its strong growth trend. The overall performance aligns with expectations, with the main brand achieving low single-digit growth for the year [6] - The company has successfully optimized its multi-brand matrix by divesting from fashion sports brands and focusing on core running business, which is expected to strengthen its competitive advantage in the running segment [6] Financial Data and Profit Forecast - Revenue projections for FY2023 to FY2027 are as follows: - FY2023: 143 billion RMB - FY2024: 136 billion RMB (down 5%) - FY2025E: 142.8 billion RMB (up 5%) - FY2026E: 151 billion RMB (up 6%) - FY2027E: 161 billion RMB (up 6%) [5] - Net profit forecasts for the same period are: - FY2023: 10.3 billion RMB - FY2024: 12.4 billion RMB (up 20%) - FY2025E: 13.7 billion RMB (up 11%) - FY2026E: 14.9 billion RMB (up 8%) - FY2027E: 16.0 billion RMB (up 8%) [5] - The earnings per share (EPS) is projected to increase from 0.41 RMB in FY2023 to 0.57 RMB in FY2027 [5] Sales Performance - The main brand's retail sales performance for Q4 2023 showed over 30% year-on-year growth, with a stable discount rate of 7-7.5 [10] - The company plans to open 20-30 new flagship stores in 2026 and has already opened around 30 outlet stores, with an average monthly sales performance exceeding 1 million RMB [6]