Core Viewpoint - 361 Degrees reported a revenue of 5.7 billion yuan for the first half of the year, representing a year-on-year increase of 11.0%, and a net profit attributable to shareholders of 860 million yuan, up 8.6% year-on-year. The company maintains a stable dividend payout ratio of 45.0% and proposes an interim dividend of 20.4 Hong Kong cents per share, indicating a solid business performance and growth potential [1]. Group 1: Financial Performance - Revenue for the adult footwear segment increased by 12.8% year-on-year to 2.57 billion yuan, driven by product upgrades and event marketing [2]. - The children's brand revenue grew by 11.4% year-on-year to 1.26 billion yuan, benefiting from increased emphasis on sports in education and the expansion of product lines [2]. - Online sales surged by 45.0% year-on-year to 1.82 billion yuan, accounting for 31.8% of total revenue, primarily due to successful promotional campaigns [2]. Group 2: Profitability and Margins - Gross margin improved by 0.2 percentage points to 41.5%, with adult footwear and apparel margins increasing by 0.5 percentage points and 1.1 percentage points, respectively [2]. - The net profit margin slightly decreased by 0.4 percentage points to 15.0%, indicating stable profitability despite slight margin compression [2]. Group 3: Operational Efficiency - Operating cash flow significantly improved, with a net cash flow of 520 million yuan, up 227% year-on-year, attributed to better inventory and accounts receivable management [3]. - Inventory levels decreased by 220 million yuan to 1.89 billion yuan, with inventory turnover days at 109 days, reflecting effective inventory control [3]. - The company has a net cash reserve of 4.3 billion yuan, providing a solid foundation for future growth [3]. Group 4: Future Outlook and Valuation - The company maintains profit forecasts of 1.31 billion yuan, 1.49 billion yuan, and 1.66 billion yuan for 2025-2027 [3]. - A target price of 8.0 Hong Kong dollars has been set, reflecting a 33% increase from previous estimates, with a price-to-earnings ratio of 11.6x for 2025 [3].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 8.00 [1][2][10] Core Views - The company reported a revenue of HKD 5.7 billion for the first half of the year, representing a year-on-year increase of 11.0%, and a net profit attributable to shareholders of HKD 860 million, up 8.6% year-on-year. The interim dividend is set at HKD 0.204 per share, maintaining a payout ratio of 45.0% [6][10] - The company is strengthening its brand value and product capabilities through upgrades in technology-driven products, optimizing channels with new store formats, and expanding into children's wear and overseas markets, which collectively enhance growth resilience [6][10] Summary by Sections Financial Performance - Revenue for the first half of 2025 was HKD 5.7 billion, with a net profit of HKD 860 million. The interim dividend is HKD 0.204 per share, with a payout ratio of 45.0% [6][10] - The company expects revenue growth to continue, with projected revenues of RMB 10,074 million, RMB 11,366 million, RMB 12,709 million, and RMB 14,019 million for the years 2024 to 2027, respectively [5][10] Market Position and Strategy - The company is focusing on product upgrades in running and basketball categories, which have driven a 12.8% increase in adult footwear revenue to HKD 2.57 billion. The children's brand has also seen an 11.4% revenue increase to HKD 1.26 billion, benefiting from increased emphasis on sports in education [7][10] - Online sales have surged by 45.0% to HKD 1.82 billion, driven by IP collaborations and promotional events [7][10] Profitability and Cash Flow - The gross margin improved by 0.2 percentage points to 41.5%, with adult footwear and apparel margins increasing to 43.3% and 41.3%, respectively [8][10] - Operating cash flow for the first half of 2025 was HKD 520 million, a significant increase of 227%, attributed to improved inventory and accounts receivable management [9][10] Valuation and Forecast - The company maintains a net profit forecast of RMB 1.31 billion, RMB 1.49 billion, and RMB 1.66 billion for 2025 to 2027, respectively. The target PE ratio for 2025 is set at 11.6x, leading to an updated target price of HKD 8.00, reflecting a 33% increase [10][10]