Core Viewpoint - The company reported a mixed performance for the first half of 2025, with revenue growth in manufacturing but challenges in retail, indicating resilience in manufacturing amidst external pressures [1][2]. Group 1: Financial Performance - In H1 2025, the company achieved a revenue of $4.06 billion, a year-on-year increase of 1.1%, while net profit attributable to shareholders decreased by 7.2% to $170 million [1]. - Q2 2025 saw a revenue decline of 0.4% to $2.03 billion, but net profit attributable to shareholders increased by 13% to $100 million [1]. - Manufacturing business revenue grew by 6.2% to $2.8 billion in H1 2025, with Q2 revenue increasing by 6.5% to $1.47 billion [1][2]. Group 2: Manufacturing Business Insights - The manufacturing segment showed resilience with a 5% increase in footwear shipment volume to 13 million pairs in H1 2025, and a capacity utilization rate maintained at 93% [1]. - Average selling price per pair increased by 3.2% to $20.6 in H1 2025, driven by improved product mix [1]. - However, the gross margin for the manufacturing business decreased by 1.4 percentage points to 17.7% in H1 2025, attributed to uneven capacity loads and rising labor costs [2]. Group 3: Retail Business Challenges - The retail segment faced significant pressure, with revenue declining by 8.3% to $9.16 billion in H1 2025, and a 14% drop in physical store revenue [2]. - The number of direct-operated stores decreased by 40 to 3,408, with same-store sales declining between 10% and 20% [2]. - Gross margin for the retail business fell by 0.7 percentage points to 33.5% in H1 2025, reflecting deeper discounts due to fluctuations in the consumer environment [2]. Group 4: Future Outlook - The company is expected to maintain steady growth in its manufacturing business, with projected revenue growth of 2.5%, 6%, and 5.4% for 2025-2027, reaching $8.38 billion, $8.88 billion, and $9.36 billion respectively [3]. - Net profit is anticipated to grow by 0.8%, 10.2%, and 6.9% during the same period, reaching $400 million, $440 million, and $470 million respectively [3]. - The company maintains a "buy" rating based on its growth prospects and supply chain expansion [3].

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]