Core Viewpoint - The company reported a solid performance in H1 2025, with revenue growth of 11% and a net profit increase of 8.6%, while also raising its dividend payout ratio to enhance shareholder returns [1][4]. Group 1: Financial Performance - In H1 2025, the company's revenue reached 57 billion, with a gross margin of 41.5%, and a net profit of 8.6 billion, resulting in a net profit margin of 15% [1]. - The company declared a dividend of 20.4 Hong Kong cents per share, increasing the payout ratio from 40.3% in H1 2024 to 45% [1]. - The company expects revenue growth of 11.4% and net profit growth of 9.8% for the full year 2025 [4]. Group 2: Adult Business Segment - The adult footwear and apparel segment saw revenue growth of 8.2% to 41.8 billion, with footwear sales increasing by 12.8% to 25.7 billion and apparel sales growing by 1.6% to 16 billion [1][2]. - The company has enhanced its product offerings in the running and basketball categories, with a focus on brand strength through sponsorships and product innovation [2]. - The number of adult stores decreased by 71 to 5,669, while the average store size increased by 7 square meters to 156 square meters [2]. Group 3: Children's Business Segment - The children's business segment achieved revenue of 12.6 billion, reflecting a year-on-year growth of 11.4%, accounting for 22.1% of total revenue [3]. - The number of children's stores decreased by 56 to 2,494, but the average store size increased by 5 square meters to 117 square meters [3]. Group 4: E-commerce Business Segment - E-commerce revenue surged by 45% to 18.2 billion, representing 31.8% of total revenue, with 85% of e-commerce sales coming from exclusive products [4]. - The company improved its cash flow, with net cash from operating activities increasing by 227% to 5.24 billion [4]. - Inventory levels rose by 29% to 18.9 billion, with inventory turnover days extending by 24 days to 109 days, indicating support for e-commerce growth and replenishment needs [4].

Investment Rating - The investment rating for the company is "Buy" [5] Core Views - The company achieved a steady revenue and profit growth in H1 2025, with revenue increasing by 11% year-on-year to 5.7 billion yuan and net profit rising by 8.6% to 860 million yuan [1][9] - The company is focusing on enhancing shareholder returns, as evidenced by an increase in the dividend payout ratio to 45% from 40.3% in H1 2024 [1] - The company is expected to maintain a revenue growth of 11.4% and a net profit growth of 9.8% for the full year 2025 [4][9] Summary by Sections Adult Business - The adult segment's revenue grew by 8.2% year-on-year to 4.18 billion yuan, with footwear and apparel revenues increasing by 12.8% and 1.6% respectively [1][2] - The company has optimized its store structure, reducing the number of adult stores by 71 to 5,669 while increasing the average store size by 7 square meters to 156 square meters [2] Children's Business - The children's segment reported a revenue of 1.26 billion yuan, reflecting a year-on-year growth of 11.4%, accounting for 22.1% of total revenue [3] - The number of children's stores decreased by 56 to 2,494, but the average store size increased by 5 square meters to 117 square meters [3] E-commerce Business - E-commerce revenue surged by 45% year-on-year to 1.82 billion yuan, representing 31.8% of total revenue, with 85% of sales coming from e-commerce exclusive products [3] Financial Performance - As of the end of H1 2025, accounts receivable increased by 4% to 4.66 billion yuan, while inventory rose by 29% to 1.89 billion yuan, indicating a focus on supporting e-commerce and replenishing offline stock [4] - The net cash flow from operating activities saw a significant increase of 227% year-on-year to 524 million yuan, reflecting improved operational quality [4]

Group 1: Market Overview - The Hong Kong stock market has seen a continuous rise, with the Hang Seng Index closing at 24,590 points, up 386 points or 1.60% [2] - The trading volume in the main board increased significantly to HKD 288.4 billion, a rise of 37.1% compared to the previous day [2] - Northbound trading maintained a net inflow status, with a net inflow of HKD 3.824 billion, although this was a decrease of 53.6% from the previous day [2] Group 2: Sector Performance - Among the 12 Hang Seng Composite Industry Indices, 8 sectors rose while 4 fell, with consumer discretionary, healthcare, and information technology leading the gains, rising between 2.48% and 3.72% [3] - The sectors that experienced declines included energy, consumer staples, real estate, and industrials, with decreases ranging from 0.09% to 0.47% [3] Group 3: Company Analysis - 361 Degrees (1361.HK) - The company reported a robust performance in Q2 2025, with its main brand and children's clothing lines both achieving approximately 10% growth in offline sales, while e-commerce sales surged by about 20% [6] - The company continues to innovate with new product launches across various categories, including running shoes and basketball shoes, enhancing consumer choice [6] - 361 Degrees is actively expanding its superstore concept, with plans to increase the number of superstores from 49 to an estimated 80-100 by the end of the year, aiming for an annual store efficiency of nearly HKD 10 million [7] Group 4: Investment Recommendations - The company has a strong focus on high cost-performance and functional product development, with a positive outlook on new store formats contributing to revenue growth [7] - Earnings per share (EPS) forecasts for 2025-2027 are projected at HKD 0.60, HKD 0.69, and HKD 0.76, with a target price of HKD 6.6 based on a 10x PE ratio for 2025, maintaining a "Buy" rating [7]