Core Viewpoint - CICC maintains the EPS forecast for Xtep International at 0.50/0.55 HKD for 2025/26, with a target price of 6.90 HKD, indicating a 29% upside potential from the current stock price [1] Group 1: Xtep Brand Performance - In Q2 2025, Xtep's main brand retail revenue grew by a low single-digit percentage year-on-year, driven by professional categories [2] - The running and outdoor categories led overall growth, with running sales in the first half of 2025 increasing by double digits [2] - Retail discounts for the main brand remained stable at 70-75%, with channel inventory turnover at 4-4.5 months by the end of June [2] Group 2: Saucony and Merrell Growth - Saucony brand saw retail revenue growth of over 20% year-on-year in Q2 2025, focusing on high-end urban consumers and running categories [3] - The brand plans to accelerate offline channel expansion in the second half of 2025, targeting a 30-40% year-on-year revenue growth for the full year [3] - Merrell brand experienced over 50% retail revenue growth in Q2 2025, with a focus on online channel development [3] Group 3: Channel Transformation - The company plans to gradually reclaim 100-200 Xtep main brand stores for DTC transformation in Q4 2025, with a capital expenditure of approximately 400 million HKD [4] - The number of stores involved in the DTC transformation is relatively low, and the management expects limited impact on overall revenue for 2025-2026 [4] - Future plans include accelerating the layout of Xtep main brand in shopping centers and outlet channels, which currently account for about 30% [4]