Core Viewpoint - Xtep International (01368) maintains a "Buy" rating with projected revenues of 14.46 billion, 15.56 billion, and 16.78 billion CNY for 2025-2027, and net profits of 1.38 billion, 1.52 billion, and 1.66 billion CNY respectively [1] Group 1: Xtep International Performance - In Q3, Xtep's main brand saw low single-digit growth in overall channel revenue, with a steady trend in operational data [1] - Retail discount rates are between 70-75%, and inventory turnover levels are stable at 4-4.5 months compared to Q2 [1] - The main brand is increasing its outlet layout, while Saucony is expected to continue leading growth [1] Group 2: Brand Performance Breakdown - Monthly performance showed July and August better than September, with September's high temperatures affecting autumn and winter product sales [1] - Children's products outperformed adult products, and footwear outperformed apparel, with running and outdoor categories achieving double-digit growth [1] - E-commerce channels maintained double-digit growth, while offline channels saw slight increases [1] Group 3: Outlet Strategy - Xtep is launching two outlet formats: "Leading Outlet" and "Selected Outlet" [1] - The "Leading Outlet" focuses on high-end outlet shopping centers with an area of over 200 square meters, showcasing a premium running outlet image [1] - The "Selected Outlet" offers a wide range of products in larger stores (600-800 square meters), with an average store efficiency of over 1 million CNY, planning to open 30 stores in 2025 and a total of 70-100 stores from 2025 to 2026 [1] Group 4: Saucony Performance - Saucony's Q3 revenue growth was impacted by adjustments in e-commerce, with online growth lower than offline (over 30% year-on-year) due to reduced low-priced products and tighter discounting [2] - In Q3, Saucony opened 16 new stores, bringing the total to over 170, with an annual opening target of 30-50 stores, primarily in key business districts of first and second-tier cities [2] - With the upcoming promotional events like Double 11 and Double 12, Q4 is expected to see a growth acceleration compared to Q3, maintaining a full-year growth guidance of over 30% for the Saucony brand [2]

Core Viewpoint - Li Ning's Q3 2025 operational data shows a marginal decline in overall revenue, with e-commerce and children's apparel performing relatively better [1] Group 1: Financial Performance - In Q3 2025, Li Ning's total revenue (excluding Li Ning YOUNG) decreased by a mid-single-digit percentage year-on-year, with online e-commerce growing at a high single-digit percentage while offline sales declined at a high single-digit percentage [1] - The discount rate has deepened, with a slight increase in inventory turnover ratio due to early stocking, expected to return to 4-5 months by year-end [1] - As of the end of Q3, the inventory turnover ratio was 5-6 months, showing an increase both year-on-year and quarter-on-quarter, attributed to early stocking for the upcoming festivals [1] Group 2: Product Category Performance - Running and fitness categories continue to grow, achieving low single-digit growth driven by professional products, while basketball and lifestyle segments are under pressure, with basketball sales declining over 20% [2] - The outdoor category has seen good growth due to industry trends and new product launches, although its scale remains small [2] Group 3: Channel and Store Expansion - As of September 30, Li Ning had 6,132 sales points (excluding YOUNG), a net increase of 33 from the previous quarter, with a net increase of 15 sales points year-to-date [2] - The company plans to maintain its store opening strategy for the year, with a net closure of 10-20 direct sales stores and a net increase of 50 wholesale stores [2] Group 4: Future Outlook - The company maintains its 2025 performance guidance, expecting revenue to remain flat and net profit margin to be in the high single digits, despite facing some pressure [3] - Upcoming product launches, including the 2026 Winter Olympics gear and new technology platforms, are anticipated to enhance brand competitiveness and sales [3] - The company continues to focus on the sports sector, emphasizing product refinement and brand accumulation for steady growth [3]

Core Viewpoint - Xtep International (01368) is optimizing its multi-brand matrix by divesting its fashion sports brand in 2024 to focus on its core running business, which will enhance resource allocation and strengthen its professional sports position. The company is expected to begin its DTC transformation in 2025, exploring more efficient and high-quality channel layouts, maintaining a "Buy" rating and profit forecasts for 2025-2027 [1] Group 1 - In Q3 2025, Xtep's main brand achieved a low single-digit year-on-year growth in total channel revenue, continuing the stable trend from Q2, with online sales outperforming offline sales and children's products outperforming adult products [2] - The running and outdoor product categories saw double-digit growth, while lifestyle products experienced slight fluctuations due to macroeconomic conditions. Over 60% of Xtep's brand products are functional, stabilizing the core business [2] Group 2 - Saucony brand experienced over 20% year-on-year growth in total channel revenue in Q3, with offline revenue increasing by over 30%. The brand opened 16 new stores, primarily in key business districts of first and second-tier cities, maintaining an annual store opening target of 30-50 [3] - Saucony's online business has been actively adjusted since Q2 to reduce low-priced products and tighten discounts, aiming to strengthen its high-end brand positioning for the Q4 sales season [3] Group 3 - Xtep's main brand maintained a healthy inventory level with a stock-to-sales ratio of 4-4.5 months and discount levels between 70-75%, reflecting good supply chain management and terminal sales efficiency [4] - Saucony's inventory and discount levels are also under control, allowing flexibility for Q4 promotional activities [4] Group 4 - Xtep is continuously optimizing its channel structure and upgrading store images, with over 70% of its new store formats being the 9th generation and leading stores. The company is accelerating its layout in shopping centers and outlet stores [5] - The outlet channel, represented by leading and selected outlets, has a significant area and is expected to contribute to offline sales growth, with plans to expand the number of stores to 70-100 by 2026 [5] Group 5 - The DTC transformation is progressing steadily, with plans to reclaim approximately 100 stores in Q4 and a total of 400 stores by the end of 2025, with related capital expenditures of about 400 million yuan, which will enhance long-term channel competitiveness [6]

Core Viewpoint - Li Ning's performance in H1 2025 exceeded market expectations, with revenue growth driven by wholesale channels and professional products, despite challenges in certain categories [1][2] Financial Performance - In H1 2025, Li Ning achieved revenue of 14.82 billion yuan, a year-on-year increase of 3.3%, and a net profit attributable to shareholders of 1.74 billion yuan, a decrease of 11.0% [1] - The company plans to distribute an interim dividend of 870 million yuan, with a payout ratio of 50% [1] Channel Performance - Revenue from direct sales, wholesale, and e-commerce channels in H1 2025 was 3.38 billion yuan (-3%), 6.88 billion yuan (+4%), and 4.30 billion yuan (+7%) respectively, aligning with overall sales growth [1] - The running and training categories saw significant growth, each increasing by 15% year-on-year, while basketball and lifestyle categories continued to decline, with decreases of 20% and 7% respectively [1] Operational Metrics - Gross margin in H1 2025 was 50.0%, a slight decrease of 0.4 percentage points year-on-year, attributed to deeper discounts and a slight increase in e-commerce sales proportion [1] - Operating profit margin (OPM) was 16.5%, a decrease of 0.2 percentage points year-on-year, but still above market expectations [1] - Advertising and marketing expenses increased by 0.3 percentage points to 9.0% of revenue, with higher spending anticipated in H2 2025 [1] Product and Inventory Management - The inventory turnover ratio remained stable at approximately 4 months, with new products accounting for 82% of sales, a slight decrease of 1 percentage point year-on-year [2] - Professional products contributed over 60% to revenue, with improved discount rates and a sell-through rate maintained between 70%-80% [2] Future Outlook - The company is expected to achieve net profits of 2.59 billion yuan, 2.77 billion yuan, and 2.99 billion yuan for the years 2025-2027, with corresponding price-to-earnings ratios of 17, 16, and 15 times [2] - Increased brand promotion efforts are anticipated to seek growth amidst intensifying competition, with potential recovery in the basketball category due to new product launches [2]

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported a revenue of 14.82 billion yuan for H1 2025, representing a year-on-year increase of 3.3%, while the net profit attributable to shareholders was 1.74 billion yuan, down 11.0% year-on-year, slightly exceeding expectations. The company plans to distribute an interim dividend of 870 million yuan, with a payout ratio of 50% [2][4]. Summary by Sections Performance Overview - In H1 2025, the company's revenue reached 14.82 billion yuan, with a year-on-year growth of 3.3%. The net profit attributable to shareholders was 1.74 billion yuan, reflecting a year-on-year decline of 11.0%. The performance was slightly better than expected, and the company intends to distribute an interim dividend of 870 million yuan, maintaining a dividend payout ratio of 50% [2][4]. Channel Performance - Revenue from direct sales, wholesale, and e-commerce channels in H1 2025 was 3.38 billion yuan, 6.88 billion yuan, and 4.30 billion yuan, respectively, with year-on-year changes of -3%, +4%, and +7%. The running and training categories were the main drivers of revenue growth, while basketball and lifestyle categories continued to decline [6]. Operational Metrics - The overall operating profit margin (OPM) was 16.5%, slightly down by 0.2 percentage points year-on-year, but better than market expectations. The gross margin decreased by 0.4 percentage points to 50.0%. The company increased its advertising and marketing expenses, which accounted for 9.0% of revenue, up 0.3 percentage points year-on-year [6]. Future Outlook - The company is expected to achieve net profits of 2.59 billion yuan, 2.77 billion yuan, and 2.99 billion yuan for the years 2025, 2026, and 2027, respectively. The current price corresponds to price-to-earnings (P/E) ratios of 17, 16, and 15 times for the respective years [8].

Core Viewpoint - The company's 1H25 performance met expectations, with a revenue increase of 3% to 14.8 billion RMB and a net profit decrease of 11% to 1.74 billion RMB, alongside a mid-term dividend declaration of 0.3359 RMB per share, reflecting a payout ratio of approximately 50% [1][2]. Revenue and Product Performance - Revenue from running and training products continued to grow healthily, with running and training categories maintaining a 15% year-on-year growth, accounting for 34% and 16% of total sales respectively [1]. - Revenue from wholesale (excluding Li Ning YOUNG and international business) increased by 5% to 6.5 billion RMB, while direct sales revenue (excluding Li Ning YOUNG) decreased by 4% to 3.2 billion RMB, with a net closure of 19 stores [1][2]. - Online revenue grew by 7% to 4.3 billion RMB [1]. Profitability and Financial Metrics - The gross profit margin decreased by 0.4 percentage points to 50.0%, primarily due to changes in channel structure and increased promotions in direct sales [2]. - The operating profit margin fell by 0.3 percentage points to 16.5%, influenced by a decline in financial income and an increase in impairment losses [2]. - The net profit margin decreased by 1.9 percentage points to 11.7% [2]. Inventory and Receivables Management - Inventory remained at a relatively healthy state, with a low single-digit year-on-year growth and a healthy inventory turnover ratio maintained for four months [2]. - The proportion of new products within six months in the channel inventory was 82%, and accounts receivable turnover days remained at a favorable level of 14 days [2]. Future Outlook - The company expects revenue fluctuations in July and August but remains committed to long-term investments in marketing resources for the Olympics and enhancing multi-category product R&D [2]. - The company aims to improve multi-channel operational efficiency and maintains a positive long-term development outlook [2]. Earnings Forecast and Valuation - The earnings per share (EPS) forecast for 2025/26 remains unchanged at 0.92/1.07 RMB, with the current stock price corresponding to 18/15 times the 2025/26 price-to-earnings ratio [3]. - The target price has been raised by 9% to 22.68 HKD, reflecting a 25% upside potential from the current stock price [3].

Core Viewpoint - The company shows steady growth in its main brand and significant growth in the Saucony brand, with a positive long-term outlook driven by strategic initiatives and product expansion [1][2] Group 1: Main Brand Performance - In Q2 2025, the main brand's total revenue showed low single-digit year-on-year growth, maintaining a stable performance overall [1] - The e-commerce segment is expected to lead in growth, while the children's segment is anticipated to outperform the adult segment [1] - The running category continues to be a strong growth driver, with expectations of double-digit year-on-year growth in the first half of the year [1] Group 2: Saucony Brand Performance - Saucony's revenue grew over 20% year-on-year in Q2 2025, although the growth rate slowed compared to Q1 2025 [2] - The company is optimizing its channels and upgrading products, focusing on elite runners and professional product areas, which is expected to drive 30%-40% revenue growth for the year [2] - The expansion of new stores in lower-tier cities is expected to enhance store efficiency and contribute to revenue growth [2] Group 3: Financial Forecast and Valuation - The company maintains its net profit forecasts for 2025-2027 at 1.37 billion, 1.53 billion, and 1.71 billion yuan respectively [2] - The target price is set at 6.58 HKD, with a revised PE ratio of 12.2x for 2025, reflecting ongoing uncertainties in consumer recovery [2]

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 6.58 [1][2][9] Core Views - The company's main brand experienced low single-digit growth in Q2 2025, while the Saucony brand showed strong growth potential [6][8] - The company is focusing on accelerating its direct-to-consumer (DTC) strategy for its main brand and expanding the Saucony product matrix, which is expected to create a second growth curve [6][9] Financial Performance Summary - Revenue projections for the company are as follows: - 2024: RMB 13,577 million - 2025E: RMB 14,486 million (growth of 6.69%) - 2026E: RMB 15,789 million (growth of 9.00%) - 2027E: RMB 17,385 million (growth of 10.10%) [5] - Net profit attributable to the parent company is projected to be: - 2024: RMB 1,238 million - 2025E: RMB 1,372 million (growth of 10.82%) - 2026E: RMB 1,530 million (growth of 11.52%) - 2027E: RMB 1,711 million (growth of 11.81%) [5] - The company’s EPS is expected to increase from RMB 0.45 in 2025 to RMB 0.61 in 2027 [5] Operational Insights - In Q2 2025, the main brand's overall channel revenue showed low single-digit year-on-year growth, while the Saucony brand's revenue grew over 20% year-on-year [6][8] - The main brand's running category continues to be a significant growth driver, with expectations of double-digit growth in the first half of the year [7] - The company anticipates a healthy inventory turnover ratio of 4-4.5 months, maintaining a stable operational rhythm [7] Market Positioning - The Saucony brand is expected to achieve 30%-40% revenue growth for the year, driven by channel optimization and product upgrades [8] - The company is focusing on high-end brand positioning and expanding its product offerings to include lifestyle and leisure products [8]

Core Viewpoint - Company reported low single-digit growth in retail sales for the second quarter ending June 30, 2025, with a decline in offline channels and a significant increase in e-commerce sales [1][2][3] Retail Performance - As of June 30, 2025, retail sales points (excluding Li Ning YOUNG) totaled 6,099, a net increase of 11 from the previous quarter but a net decrease of 18 year-to-date, with retail business down by 19 and wholesale business up by 1 [1] - E-commerce virtual store business recorded a mid-single-digit growth, while offline channels saw a low single-digit decline [1][2] Sales and Discounts - The overall sales revenue for Li Ning in the second quarter showed low single-digit growth, with e-commerce performing better than offline sales [3] - Retail discounts increased, leading to pressure on margins, but the inventory-to-sales ratio improved to a four-month high [3][4] Marketing Strategy - Marketing efforts are focused on two main themes: NBA (with player Yang Hansheng) and the Olympics, with a significant increase in marketing expenses expected in the second half of the year [2][3] - The company aims to leverage the NBA and Olympic themes to enhance brand visibility and drive sales growth [3][4] Financial Outlook - The company maintains its profit forecast, expecting net profits of 2.51 billion, 2.83 billion, and 3.04 billion yuan for 2025-2027, reflecting year-on-year changes of -16.8%, +12.8%, and +7.6% respectively [2][4] - Target price is set between 17.9 and 19.2 HKD, corresponding to a 2025 PE ratio of 17.2-18.5x, with a rating of "outperform" [2][4]

Company Overview - The major shareholder, Everbright, announced an increase in its stake in Li Ning Company by acquiring 18.09 million shares for a total of HKD 275 million at an average price of HKD 15.20 per share [1] Business Performance - Li Ning's basketball business is under pressure, with retail sales expected to decline by 21% in 2024, accounting for 21% of the company's overall sales [1] - Despite the challenges, Li Ning continues to sponsor various basketball leagues and is focused on launching new products and technologies to maintain brand positioning [1] - The company signed a player who was selected 16th in the 2025 NBA Draft, marking the third Chinese player to be a first-round pick, which is expected to enhance brand visibility in the basketball sector [1] Strategic Initiatives - In the second quarter of 2025, Li Ning's brand is still facing pressure from a volatile market environment and intense competition, particularly in retail and discounting [2] - The company aims to innovate in core categories like running and basketball while increasing exposure and investment in sports like badminton and table tennis [2] - A contract with the Chinese Olympic Committee was completed at the end of April, which is anticipated to lead to more marketing events in the second half of 2025 [2] Shareholder Confidence - The major shareholder's increase in stake from January to June 2025 reflects confidence in Li Ning's "single brand, multiple categories, and multi-channel" core strategy [2] Financial Forecast - The earnings per share (EPS) forecast for 2025 and 2026 remains unchanged at CNY 0.92 and CNY 1.07, respectively, with the current stock price corresponding to 16 and 14 times the projected earnings for those years [2] - The target price is maintained at HKD 20.82, indicating a potential upside of 28% from the current stock price [2]