Xtep International Holdings Limited (01368) H1 2025 Earnings Call August 18, 2025 04:00 AM ET Moderatormedia friends, good afternoon. Welcome to XTAB's twenty twenty five Interim Results Online Webcast and Conference Call. I am Sofia, Director of Investors Relations. On the line, we also have our management, including Group Chairman and CEO, Mr. Ding Xue Bo Group President, Mr. Tian Zhong Executive Director, Mr. Ricky Young Group CFO, Ms. Donna Ding. Today's webcast and conference call will be conducted in ...

Financial Data and Key Metrics Changes - The group's total revenue increased by 7.1% to JPY 6,838 million [7] - Operating profit rose by 9.1% to JPY 1,305 million, with an operating profit margin improvement of 0.4 percentage points to 19.19% [8] - Net profit for the first half of the year was JPY 914 million, reflecting a year-on-year increase of 21.5% [9] - Annualized return on equity increased by 3.3 percentage points to 19.7% [9] - Operating cash flows were CHF 774 million, with net cash increasing by 94.3% to CHF 1.913 billion [9] Business Line Data and Key Metrics Changes - Revenue from the XTEP core brand increased by 4.5% to JPY 6,053 million, while the professional sports division, including Saucony and Merrell, saw revenue growth of over 32% to JPY 785 million [8][16] - The mass market segment's gross profit increased by 4% to JPY 2,641 million, with a slight decrease in gross margin by 0.3 percentage points [15] - The professional sports division's operating profit surged nearly 2.4 times to JPY 79 million, with an operating profit margin improvement to 10% [17] Market Data and Key Metrics Changes - Over 300 marathons were held in China in the first half of the year, with more than 3 million participants, indicating a growing interest in running events [24] - The group's brands maintained high wear rates in major marathons, with Saucony achieving second place in overall wear rates at the Wuxi Marathon [25] Company Strategy and Development Direction - The company is focused on strengthening its core strategy of running, enhancing synergies among its brands, and expanding its product portfolio [23][35] - Plans include optimizing retail channel management, improving customer experience, and expanding into shopping malls and outlets [27] - The company aims to reinforce its position as China's leading running brand through flagship products and a professional to mass influence strategy [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term development of the sports industry, supported by government investments in public health and sports activities [3][5] - The company plans to implement refined operational management to improve efficiency and create greater returns for investors [6] - The outlook remains positive, with expectations of continued growth driven by the popularity of running and marathon events in China [24][36] Other Important Information - The company declared an interim dividend of HKD 0.18 per share, a year-on-year increase of 15.4%, maintaining a dividend payout ratio of 50% [9] - The company achieved an AA rating in the 2025 MSCI ESG rating, marking its fourth consecutive year of rating improvement [34] Q&A Session Summary Question: What is the outlook for the running market in China? - Management highlighted the increasing popularity of marathons, with over 300 events and 3 million participants in the first half of the year, indicating strong growth potential in the running market [24] Question: How does the company plan to enhance its brand image? - The company will continue to reinforce its high-end sports brand image through flagship products and marketing campaigns, particularly for Saucony [31][36] Question: What are the expectations for the professional sports division? - The professional sports division is expected to maintain a mid to high single-digit operating profit margin for the full year, with continued product launches and marketing efforts [17][36]