Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The company's revenue, net profit, and operating cash flow for 2025 were CNY 11.146 billion, CNY 1.309 billion, and CNY 0.815 billion respectively, showing year-on-year growth of 10.6%, 14.0%, and 1067.1%, which met market expectations. After excluding donation impacts, the net profit reached CNY 1.412 billion, a 22% year-on-year increase, exceeding market expectations [2] - The company plans to distribute a final dividend of HKD 0.113 per share, maintaining an annual payout ratio of 45%, consistent with the previous year, resulting in a dividend yield of 5.6% when combined with an interim dividend of HKD 0.204 per share [2] Revenue and Profit Analysis - In 2025, the offline retail business generated revenue of CNY 7.858 billion, a 5.3% year-on-year increase, despite a 6.5% decrease in the number of stores. The average store efficiency improved by 13% to CNY 1.01 million [3] - E-commerce revenue for 2025 was CNY 3.287 billion, reflecting a 26% year-on-year growth [3] - The main brand, excluding international operations, achieved revenue of CNY 8.572 billion, a 14% year-on-year increase, despite a 6.5% decrease in store count [3] - The children's brand revenue grew by 10.4% to CNY 2.583 billion, with a 5.3% increase in store count [3] - The outdoor brand ONE WAY opened 7 new stores [3] Profitability Metrics - The company's net profit margin for 2025 was 11.7%, an increase of 0.3 percentage points year-on-year, while the gross profit margin remained stable at 41.5% [4] - The sales expense ratio decreased by 1.7 percentage points to 20.2%, contributing to the improved net profit margin [4] Cash Flow and Working Capital - Inventory decreased by 2.03% to CNY 2.066 billion, attributed to a systematic ordering management model [5] - The average inventory turnover days increased by 10 days to 117 days, while accounts receivable increased by 7.9% to CNY 4.74 billion [5] Investment Recommendations - In the short term, the company is expected to benefit from the trend of consumer downgrade, with the main brand's running shoes accounting for over half of sales, likely maintaining rapid growth [7] - In the medium term, the company identifies three growth points: super stores, the outdoor ONE WAY brand, and overseas and cross-border e-commerce [7] - Revenue forecasts for 2026 and 2027 have been adjusted down to CNY 12.372 billion and CNY 13.641 billion, respectively, with net profit estimates adjusted to CNY 1.609 billion and CNY 1.836 billion [7] - The projected earnings per share for 2026, 2027, and 2028 are CNY 0.78, CNY 0.89, and CNY 1.03, respectively [9]

Core Viewpoint - CICC maintains a "outperform" rating for 361 Degrees (01361) with a 2025 EPS forecast of 0.61 CNY and introduces a 2027 EPS forecast of 0.74 CNY, reflecting a stable retail environment despite fluctuations [1] Group 1: Financial Performance - In Q4 2025, both the main brand and children's clothing lines achieved approximately 10% year-on-year growth in offline revenue, continuing the strong performance seen earlier in the year [2] - Online revenue in Q4 2025 experienced high double-digit year-on-year growth, with online discounts and new product ratios remaining stable [2] Group 2: Store Expansion - The company is successfully advancing its superstore format, having opened a total of 126 superstores (including 21 children's clothing superstores) by the end of December 2025, exceeding the management's initial target of 100 stores [3] - The average area of superstores ranges from 800 to 1,200 square meters, showing improved customer acquisition and operational efficiency, with sell-through rates and attachment rates outperforming regular stores [3] Group 3: Brand Development - 361 Degrees continues to strengthen its brand strategy focused on "technology first, brand foremost," enhancing professional product development and key event marketing [4] - The company has entered a new strategic cooperation cycle with the Asian Olympic Council and has been designated as the official supplier for the 2025 WTCC World Tennis Intercontinental Challenge, further bolstering brand development [4] - The company's order performance in the first two quarters of 2026 is expected to exceed industry averages, driven mainly by volume growth, with limited ASP improvement [4]