Core Viewpoint - 中金 maintains a "outperform" rating for 滔搏 (06110) with an adjusted target price of HKD 4.17, reflecting a 23% increase and corresponding to 18/15 times FY26/27 earnings multiples, indicating a 20% upside potential [1] Financial Performance - For 1HFY26 (March-August 2025), the company reported a revenue decline of 6% year-on-year to RMB 12.3 billion and a net profit drop of 10% to RMB 800 million, aligning with expectations [1] - The company declared an interim dividend of RMB 0.13 per share, resulting in a payout ratio of approximately 102% [1] Revenue Breakdown - Revenue from direct sales and wholesale decreased by 3% and 20% respectively in 1HFY26 [2] - The main brands, Nike and Adidas, saw a revenue decline of 5%, accounting for 88% of total revenue, while other brands experienced a 12% drop [1][2] Operational Efficiency - The company operated 4,688 direct stores, a reduction of 332 stores since the beginning of the fiscal year, with same-store sales area increasing by 6.5% year-on-year [2] - The company is focusing on optimizing retail stores and has introduced innovative retail formats, such as the running specialty store, ektos, in Shanghai [2] Profitability and Cost Control - The gross margin slightly decreased by 0.1 percentage points to 41% due to a higher proportion of promotional online sales and increased retail share [3] - The overall expense ratio only increased by 0.1 percentage points to 33.2%, despite the revenue decline [3] - The net profit margin decreased by 0.3 percentage points to 6.4% with a net profit decline of 9.8% [3] Inventory and Cash Flow Management - The company effectively managed inventory, with a 4.7% decrease in inventory levels by the end of August [4] - Operating cash flow for 1HFY25 was RMB 1.35 billion, with a net cash ratio of approximately 1.7, supporting a high dividend payout ratio of 102% [4] Future Outlook - Management indicated that retail performance in September-October aligns with 2QFY26, focusing on profit maintenance and aiming for flat net profit year-on-year for FY26, with an improvement in net profit margin [5]

Core Viewpoint - 中金 maintains a "outperform" rating for 滔搏 (06110) with FY26/27 EPS estimates of 0.21/0.26 HKD, and raises the target price by 23% to 4.17 HKD, indicating a potential upside of 20% based on the adjusted valuation multiples [1] Financial Performance - For 1HFY26 (March-August 2025), the company reported a revenue decline of 6% year-on-year to 12.3 billion HKD and a net profit drop of 10% to 800 million HKD, aligning with expectations [2] - The company declared an interim dividend of 0.13 HKD per share, resulting in a payout ratio of approximately 102% [2] - Revenue was impacted by fluctuations in terminal retail, with the company focusing on optimizing offline channels and expanding online retail operations [2] - Revenue for the main brands Nike and Adidas fell by 5%, accounting for 88% of total revenue, while other brands saw a 12% decline [2] Gross Margin and Cost Control - The gross margin for 1HFY26 slightly decreased by 0.1 percentage points to 41%, attributed to a higher proportion of promotional online sales and increased retail share [3] - The overall expense ratio only increased by 0.1 percentage points to 33.2% due to effective cost management despite revenue decline [3] - The net profit margin for 1HFY26 was 6.4%, down by 0.3 percentage points year-on-year [3] Inventory Management and Cash Flow - The company effectively managed inventory, with a 4.7% year-on-year decrease in inventory levels by the end of August [4] - Operating cash flow for 1HFY25 was 1.35 billion HKD, with a net cash ratio of approximately 1.7, supporting the high dividend payout [4] Future Outlook - Management indicated that terminal retail trends in September-October are consistent with 2QFY26, focusing on profit maintenance for FY26 with guidance for stable net profit and improved net profit margin [5]