Core Viewpoint - Xtep International (01368) reaffirms its full-year performance guidance for 2025, expecting strong growth in Q4, while maintaining profit forecasts for 2025-2027. The target price is set at HKD 7.7, based on a 12.5x mid-term P/E ratio for 2026, aligning with long-term average valuation levels since 2015 [1]. Group 1 - Xtep's main brand retail sales recorded low single-digit year-on-year growth in Q3, driven by double-digit percentage expansion in e-commerce sales and strong demand for running shoes [1]. - The "X Young" series continues to positively impact the overall brand performance, with average retail discounts maintained at 25%-30% and channel inventory turnover at 4-4.5 months [1]. - Despite concerns regarding the impact of e-commerce adjustments on the Double Eleven promotion, management anticipates a gradual recovery in e-commerce sales in Q4 [1]. Group 2 - Saucony contributed significantly to the group's growth, with retail sales increasing over 20% year-on-year, primarily due to more than 30% growth in offline business driven by rising consumer demand for high-end sports and running shoes [2]. - Strategic operational adjustments were made in the online business, focusing on reducing exposure to low-priced products and tightening discount levels, which may limit short-term growth but is expected to improve profit margins [2]. - Management expects this cautious operational strategy to support a gradual recovery in e-commerce sales in Q4 [2].