Investment Rating - The report maintains an "Outperform" rating for the company, with a target price of HKD 6.35, corresponding to a 10x PE for 2025 [2][12]. Core Insights - The company has shown strong turnover growth across all categories, particularly in children's wear and e-commerce, with e-commerce turnover growing 30-35% YoY in 24Q4 [8][9]. - E-commerce has been the fastest-growing channel since 2023, with expectations for improved profitability due to cost control and exclusive online products [9][10]. - The company is enhancing store efficiency and has opened its first direct store in Southeast Asia, indicating a strategic expansion [10][11]. - Continuous product innovation is expected to drive turnover, with several new product launches planned for 24Q4 [10][11]. - Brand popularity is being enhanced through events and collaborations, which are expected to increase consumer engagement [11]. Financial Data and Forecast - Revenue is projected to grow from RMB 8,423 million in 2023 to RMB 13,000 million by 2026, with a CAGR of approximately 13.9% [2][6]. - Net profit attributable to shareholders is expected to increase from RMB 961 million in 2024 to RMB 1,475 million in 2026, reflecting a strong growth trajectory [2][6]. - The gross margin is forecasted to improve gradually from 41.1% in 2023 to 42% in 2026, indicating effective cost management [2][6].

Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [1][3] Core Views - The company reported a robust performance in Q4 2024, with the main brand's offline retail sales growing approximately 10%, children's clothing sales increasing by 10-15%, and e-commerce sales rising by 30-35% [2][3] - The growth in children's clothing and e-commerce has accelerated compared to the previous quarter, indicating a positive trend in consumer demand [3][4] - The company continues to launch competitive new products, including winter down jackets and various running shoes, enhancing consumer experience [5][6] - The financial outlook has been slightly adjusted downward for 2025-2026 due to macroeconomic uncertainties, with projected net profits of 1.14 billion, 1.30 billion, and 1.46 billion yuan for 2024-2026, reflecting year-on-year growth rates of 18.1%, 14.3%, and 12.4% respectively [3][7] Summary by Sections Retail Performance - In Q4 2024, the adult apparel offline sales grew by about 10%, children's apparel by 10-15%, and e-commerce by 30-35%, with both children's and e-commerce sales accelerating compared to Q3 [3][4] Product Development - The company has introduced multiple new products, including the "ULTRA series" down jackets and various running shoes, which have been well-received in the market [5][6] Financial Forecast - The company expects net profits to be 1.14 billion, 1.30 billion, and 1.46 billion yuan for 2024-2026, with corresponding year-on-year growth rates of 18.1%, 14.3%, and 12.4% [3][7] - The target price remains at 4.5-5.1 HKD, corresponding to a PE ratio of 7-8x for 2025 [3][7]

Investment Rating - The report maintains a "Buy" rating for 361 Degrees (01361) [6][7] Core Views - The company is expected to perform well in 2025, with optimistic projections for its future performance [1] - 361 Degrees has shown strong growth in its main brand and children's wear segment, with offline retail sales increasing by approximately 10% and 10%-15% respectively in Q4 2024 [1] - The e-commerce platform recorded a significant year-on-year growth of 30%-35% in overall turnover during Q4 2024 [1] Product Innovation - The company has focused on technology-driven product innovation, launching several new products in Q4 2024, including the "ULTRA Series Extreme Down," "Winter Dry Down Technology Down Jacket," and the "JOKER1" signature shoe for Nikola Jokic [2] - Other notable products include the "361° Yupeng Windbreaker," the "Speed FLOAT2" running shoe with top-tier cushioning, and the "361° x Oee" New Year collaboration series [2] Brand Influence and Professional Positioning - 361 Degrees has expanded its brand influence through strategic partnerships with marathons in cities like Fuzhou, Beijing, and Nanjing, and by hosting the 10KM Speed Series in Nanjing and Xi'an [3] - The company successfully held brand day events, launched new products, and organized the Women's Fitness City Pop-up events in cities such as Suzhou, Shenzhen, Hangzhou, and Chengdu [3] - The brand has also strengthened its professional positioning by becoming the official sportswear provider for the 2025 Asian Winter Games in Harbin and establishing a strategic partnership with Zhengzhou No. 9 High School in football [3] E-commerce Channel Development - The company has deepened its e-commerce channel construction, leveraging the National Day and "Double 11" shopping festivals to enhance brand exposure and product recognition [4] - Key products such as the "Feiran 3.5" and "Feiran 3" running shoes, the "Rain Screen 8th Generation" with FLYTEX waterproof membrane, and the "361° Studio" co-creation series performed exceptionally well during the "Double 11" period [4] Professionalism and Global Strategy - 361 Degrees has emphasized technology as the driving force for its growth, adopting a "technology-first, brand-first" development strategy [5] - The company is increasing its investment in professional sports, aiming to build a resource matrix that includes major sports events, professional teams, elite athletes, and endorsements [5] - With a global strategic vision, the company is working to establish emotional connections with a broader user base [5] Financial Projections - The report forecasts revenues of 10.09 billion RMB, 11.69 billion RMB, and 13.45 billion RMB for 2024, 2025, and 2026 respectively [6] - Net profits attributable to the parent company are projected to be 1.11 billion RMB, 1.29 billion RMB, and 1.53 billion RMB for the same periods [6] - The corresponding EPS is expected to be 0.54 RMB, 0.62 RMB, and 0.74 RMB per share, with P/E ratios of 7X, 6X, and 5X respectively [6] Industry and Market Data - The company operates in the non-essential consumer goods sector, specifically in textiles and apparel [7] - As of the report date, the company's total market capitalization on the Hong Kong stock exchange is 8.33 billion HKD, with a total share capital of 2.07 billion shares [7] - The company's net asset value per share is 4.94 HKD, with a debt-to-asset ratio of 27.10% [7]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company has shown strong retail performance in Q4, with expectations for sales to be catalyzed by the upcoming Winter Asian Games [6] - The company has been focusing on product innovation and brand enhancement, which is expected to drive growth in the coming years [6] - The financial forecasts indicate a steady increase in revenue and net profit over the next few years, with a projected net profit of 10.9 billion RMB in FY2024 [6][17] Financial Data and Profit Forecast - Revenue (in billion RMB): FY2022: 69.6, FY2023: 84.23, FY2024E: 97.8, FY2025E: 111.3, FY2026E: 125.0 [3][17] - Year-on-year growth rate for revenue: FY2022: 17%, FY2023: 21%, FY2024E: 16%, FY2025E: 14%, FY2026E: 12% [3] - Net profit (in billion RMB): FY2022: 7.5, FY2023: 9.6, FY2024E: 10.9, FY2025E: 12.5, FY2026E: 14.2 [3][17] - Year-on-year growth rate for net profit: FY2022: 24%, FY2023: 29%, FY2024E: 13%, FY2025E: 15%, FY2026E: 13% [3] - Earnings per share (in RMB): FY2022: 0.36, FY2023: 0.46, FY2024E: 0.53, FY2025E: 0.61, FY2026E: 0.69 [3] Retail Performance - The company's main brand saw a 10% growth in offline sales in Q4, while children's clothing grew by 10-15% [6] - E-commerce sales increased by 30-35%, showing a significant acceleration compared to the previous quarter [6] - The inventory turnover ratio improved, with inventory levels decreasing to 4-4.5 months [6] Product and Brand Development - The company launched several successful products in Q4, including signature shoes and high-performance apparel [6] - As an official partner of the upcoming Winter Asian Games, the company is expected to enhance brand recognition and drive sales [6] Market Position and Future Outlook - The company has been deepening its operational capabilities in product, brand, and channel management over the past few years [6] - The focus on high cost-performance products and strong functionality is expected to help the company gain market share and achieve growth faster than the industry average [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][4][12] Core Insights - The company has shown a positive trend in its Q4 performance, with significant improvements in both offline and online sales, particularly in the children's clothing segment and e-commerce [4][5] - The company is expected to maintain its profit forecasts for 2024-2026, with projected net profits of 1.14 billion, 1.35 billion, and 1.58 billion CNY respectively, indicating a strong growth trajectory [4][7] - The company is expanding its product matrix in professional sports categories, enhancing brand recognition through strategic partnerships and marketing initiatives [6][4] Financial Summary - Revenue is projected to grow from 8.423 billion CNY in 2023 to 11.850 billion CNY in 2025, reflecting a year-on-year growth rate of 17.4% [7] - Net profit is expected to increase from 961 million CNY in 2023 to 1.354 billion CNY in 2025, with a year-on-year growth rate of 19.1% [7] - The company's P/E ratio is projected to decrease from 7.94 in 2023 to 5.64 in 2025, indicating an attractive valuation [7]

Key Points Industry and Company * **Company**: 361° * **Industry**: Sports apparel and footwear Core Views and Arguments * **Expansion Plans**: 361° is focusing on expanding in Southeast Asia, particularly in countries like the Philippines, Vietnam, and Thailand. They have opened a large, 300-square-meter flagship store in Malaysia to test the market and assess its impact. The company will continue to expand through a combination of direct sales and dealer partnerships [1]. * **Online Channel Growth**: The company's online channel is experiencing strong growth. The discount rate for the fourth quarter was maintained between 4.5 and 5.5, similar to previous trends. New product sales accounted for approximately 76% to 78% of total sales [2]. * **Brand Category Matrix**: 361° will continue to focus on running as the core category, leveraging the increasing number of runners and their diverse needs. They will enhance product competitiveness through core technology advantages and increase brand exposure through sponsorships of large events like the Asian Winter Games [3]. * **Domestic Channel Expansion**: The company plans to continue opening large stores and upgrading store images. They have introduced the 10th generation store image, which has significantly improved brand image and sales performance. They also plan to open more super stores to meet consumers' one-stop shopping needs [4]. * **Future Growth Expectations**: The company is optimistic about future growth despite intense competition. They have launched new product lines that have performed well in the market. Basketball will continue to be a key area for young consumer engagement. They plan to sponsor NBA stars to visit China in 2025 to enhance brand influence and sales [5]. * **E-commerce Performance**: The company's e-commerce channel performed well in the fourth quarter, particularly during the Double 11 shopping festival. They launched many hot-selling products and achieved good results. They plan to continue promoting new products during the Spring Festival [6]. * **E-commerce Profitability**: The e-commerce channel has a higher gross margin than the average level due to the direct sales model. However, the net profit margin is relatively low due to the need to amortize a large amount of fixed costs. The company expects the profit margin to gradually improve as the e-commerce business volume increases [7]. * **Children's Wear Business**: The children's wear business performed well in 2024, ranking second in the children's sports brand market. The company plans to continue investing in brand endorsement and product innovation in 2025. They also plan to strengthen store layout in first-tier and second-tier cities and large shopping centers [8]. * **Competition in Low- and Medium-Tier Cities**: The company's competitiveness in low- and medium-tier cities is reflected in several aspects. They have a large number of stores in first-tier and second-tier cities, accounting for about 25% of the total. The remaining 70% of stores are distributed in third-tier and lower cities. They encourage the opening of large stores, especially in shopping centers and trade centers, to better adapt to consumers' changing consumption habits [9]. * **Outdoor Products**: Outdoor products currently account for about 3% of the company's overall revenue and are growing well. They sponsored the 9th Asian Winter Games, which brought more exposure opportunities for outdoor products. They plan to continue to strengthen new product launches, such as waterproof and moisture-proof functional products, to meet consumer needs and promote the growth of the outdoor product line [10]. * **Running Shoes**: The company's running shoes, especially the knitted shoe series, performed well in 2024. The sales volume of top-end running shoes like Lifeng and Feiran reached about 500,000 pairs in the first half of the year. The sales volume of Feiran 33.5, a carbon plate racing shoe, reached 300,000 pairs in the fourth quarter, far exceeding expectations [12]. * **Price Strategy**: From the perspective of footwear, 70% of the products are priced between 350 and 500 yuan. The products priced above 500 yuan and below 350 yuan account for 15% each. According to the order data of the first three quarters of 2025, the average selling price (ASP) of the company has basically remained stable, and some categories may remain flat or have a slight unit increase. The company has done a lot of work in price control, setting the price within the comfort range of consumers, and will continue to maintain the quality-price advantage in 2025 [13]. * **Urban and Rural Market Strategy**: The company's urban and rural market strategy is mainly carried out by first-tier distributors and their authorized retailers. They have a 25% market share in first-tier and second-tier cities. Due to the company's price positioning and product positioning, which rely more on the mass market, there is still a lot of room for growth in third-tier and lower cities. These areas have a significant increase in demand for basic sports equipment such as running and basketball. The company hopes to seize the demand of consumers who have not yet formed fitness habits for equipment [14]. * **Cash Utilization**: The company has a substantial cash balance and is considering dividend payments or share buybacks to maximize shareholder returns. They plan to announce specific plans in the future [15]. * **Store Innovation**: The company has introduced many innovative store types in the past year. The efficiency of different store types is as follows: the 10th generation store has significantly improved brand image and sales performance. The 8th generation store has been upgraded to the 10th generation. Children's wear stores have also been upgraded to the 5th generation. The new stores are also the 5th generation. From the perspective of business format, they are mainly concentrated in landmark locations and shopping centers, rather than incremental business formats such as outlet stores. The terminal sales discount is between 7 and 7.3, and the sales turnover growth is good, but the price growth is low, and the profit margin is 8% to 12% on average, compared with the original 15% to 25% of the commission [16]. * **Industry Competition Outlook**: The company expects the market competition in 2025 to remain intense, with significant competition pressure in both offline channels and product categories and prices. However, they are optimistic about the future. The order meetings for the first three quarters of 2025 have ended, and the results are good. They will continue to increase investment in e-commerce business, and currently 80% of online sales come from new products. They will also strengthen the development of independent operation teams to maintain growth momentum. In the children's wear category, they will also continue to improve, and the 5th generation children's wear store image and new layout in shopping centers will further promote the development of this field [18]. * **Cash Utilization Plan**: The company plans to maintain a dividend payment guidance of not less than 40% and hopes to steadily increase the dividend yield. Currently, the dividend yield is about 8%, which is at a high level in the industry. For cash utilization, the company is very cautious and conservative and will carefully study various options, including increasing the dividend payment ratio, DTC model, and acquisitions. They may consider these options at the right time, but the focus is still on doing a good job with existing products and brand operations [19]. * **Overall Valuation and Growth Logic**: The company's current valuation is relatively low, but the dividend yield is about 8%, which is very attractive. From an investment perspective, the company's future growth logic is clear and supported by data, including new market online sales, new product ratio, independent operation team development of e-commerce business, and continuous improvement of sports children's wear. These factors have provided a solid foundation for the company's future development [20]. Other Important Content * **Overall Operating Data**: The overall operating data for the fourth quarter of 2024 was good. The main brand's growth rate was about 10%, and the children's wear growth rate was 10% to 12%. The online growth rate was 30% to 35%, which met the company's expectations [24]. * **Order Meeting**: The order meetings for the spring, summer, and autumn quarters of 2025 have ended, and the results were good, mainly reflected in the increase in order volume and a slight increase in price. The company is optimistic about the market outlook for 2025 [32]. * **Social Responsibility**: The company quickly responded to the 6.8 magnitude earthquake in Shigatse, Tibet on January 7, 2024, and donated 8 million yuan of warm materials to help the affected people. This reflects the company's concern for the affected people and its sense of social responsibility [31].

Investment Rating - The report maintains a "Buy" rating for the company, with a projected 2025 PE ratio of 6x [1] Core Views - The company is expected to achieve revenue and profit growth of 19% and 20% respectively in 2024, driven by product and channel optimization [1] - Net profit attributable to the parent company is forecasted to reach RMB 1.158 billion in 2024, RMB 1.362 billion in 2025, and RMB 1.580 billion in 2026 [1] - The company's performance growth is impressive, supported by its leading position in the sportswear industry [1] Business Performance Adult Business - Adult offline channel sales grew by approximately 10% in Q4 2024 [7] - The company optimized its offline store structure, with the number of adult stores increasing by 98 to 5,740 in H1 2024 [7] - The proportion of 9th-generation stores increased by 9.5 percentage points to 74% by the end of 2024 [7] Children's Business - Children's offline sales grew by 10%-15% YoY in Q4 2024, outperforming the adult segment [3] - The average store size for children's stores increased by 5㎡ to 108㎡ in H1 2024 [3] - The proportion of department stores in children's channels rose by 1.2 percentage points to 58.5% by the end of 2024 [3] E-commerce Business - E-commerce sales grew by 30%-35% YoY in Q4 2024, with strong performance during the "Double 11" shopping festival [3] - Sales of the Feiran series increased by 59% during the "Double 11" period, with over 300,000 pairs of running shoes sold across all channels [3] Financial Projections - Revenue is expected to grow from RMB 8.423 billion in 2023 to RMB 13.354 billion in 2026, with a CAGR of 15.1% [11] - Net profit attributable to the parent company is projected to increase from RMB 961 million in 2023 to RMB 1.580 billion in 2026 [11] - The company's ROE is expected to improve from 10.7% in 2023 to 12.1% in 2026 [11] Valuation - The company's P/E ratio is expected to decline from 7.9x in 2023 to 4.8x in 2026 [11] - The P/B ratio is projected to decrease from 0.8x in 2023 to 0.5x in 2026 [11] - EV/EBITDA is forecasted to drop from 3.6x in 2023 to 0.9x in 2026 [12]

Investment Rating - The report maintains a "Buy" rating for 361 Degrees (01361 HK) [1][4] Core Views - 361 Degrees continues to focus on the mass market with a product matrix that offers quality-price advantages [1] - Despite a weak domestic consumption environment, the company's Q4 2024 sales growth remains robust and ahead of peers [1] - Positive feedback from the first three quarters of 2025 order meetings supports the growth outlook [1] Financial Performance - Q4 2024 sales growth: Main brand offline sales grew by approximately 10%, kids' offline sales by 10%-15%, and e-commerce sales by 30%-35% [1] - Discounts in Q4 2024 remained stable at 7-7 3折 [1] - Inventory turnover ratio in Q4 2024 was 4 5-5 times, with 80% of inventory aged within 180 days, indicating a healthy inventory structure [1] Product and Channel Strategy - The company emphasizes technology-driven product innovation, launching new products such as the JOKER1 signature shoe and the FLOAT2 running shoe [1] - E-commerce channel saw strong growth, with 80% of products being new, benefiting from the Double 11 shopping festival [1] - Offline stores introduced new formats, with main brand store efficiency reaching 2-2 5 million RMB and kids' store efficiency at 1-1 3 million RMB [1] Financial Forecasts - 2024-2026 net profit attributable to the parent company is forecasted at 1 131, 1 329, and 1 548 billion RMB, respectively, with corresponding P/E ratios of 7x, 6x, and 5x [1] - Revenue growth is expected to be 17 72% in 2024, 15 77% in 2025, and 15 40% in 2026 [4] - Net profit growth is projected at 17 67% in 2024, 17 51% in 2025, and 16 41% in 2026 [4] Key Financial Ratios - ROE is expected to increase from 10 59% in 2023 to 11 82% in 2026 [2] - Gross margin remains stable at around 41% from 2023 to 2026 [2] - Net profit margin is forecasted to be 11 41% in 2023, slightly increasing to 11 64% by 2026 [2]

Summary of the Conference Call Company Overview - The conference call was held for 361 Degrees, a leading sports brand in China, focusing on its recent performance and market strategies [1] Key Industry Insights - The overall offline retail growth rate for the industry is in the low double digits, with 361 Degrees achieving a 15% year-on-year growth in October [2] - The company reported a strong performance in November, maintaining a similar growth rate as October, with retail sales growth around 15% [3] - The discount rate remained stable at approximately 71% in November, indicating effective inventory management [12] Core Business Performance - The running segment contributes about 50% to the company's revenue, highlighting its importance as a core product line [5] - The company is focusing on product iteration, with the launch of new models like the Flyrun 4, which is expected to enhance sales [5][15] - The basketball segment is also gaining traction, with partnerships with NBA stars driving brand visibility and sales [6][27] Market Trends and Consumer Behavior - There is a noticeable shift in consumer behavior towards cost-saving, with consumers prioritizing quality at lower price points [9] - The company has a strong presence in lower-tier cities, where 75% to 80% of sales are generated, indicating a strategic focus on these markets [9] - The competitive landscape is intensifying, particularly in the basketball segment, where international brands pose significant challenges [27] Future Outlook - The company is optimistic about maintaining growth above the industry average through product innovation and effective cost management [11] - Plans for expanding retail presence include opening larger stores in high-traffic areas, adapting to consumer preferences [16][18] - The company is preparing for a strong 2025, with a focus on maintaining a conservative and stable order book [10][32] Financial Guidance - The company has not provided specific revenue guidance for 2025 but indicated a strong order book for the first half of the year, suggesting a low double-digit growth expectation [31] - The management emphasized the importance of maintaining a gross profit margin of no less than 40% [32] Additional Notes - The company is investing in R&D to enhance product quality and functionality, which is seen as crucial for maintaining competitive advantage [15][32] - The upcoming product launches and marketing strategies are expected to leverage the popularity of sports events and endorsements from athletes [24][28] This summary encapsulates the key points discussed during the conference call, providing insights into the company's performance, market trends, and future strategies.

Summary of Conference Call Company and Industry - The conference call involved **361 Degrees**, a sportswear company, discussing its performance and strategies in the context of the sportswear industry, particularly focusing on e-commerce growth and market dynamics. Key Points and Arguments 1. **Consumer Confidence and Sales Performance** - The introduction of 4G policies in late September positively impacted consumer confidence, leading to a steady increase in sales during the Golden Week and Double Eleven shopping festival, outperforming competitors [3][4][6] 2. **E-commerce Growth** - E-commerce remains a crucial growth driver, with online sales showing significant differentiation from offline channels. The company has successfully launched exclusive online products, contributing to a robust growth trajectory [5][14][15] 3. **Sales Data and Projections** - For the Double Eleven period, the main brand achieved approximately 60% growth, with overall sales data remaining stable post-event. The company anticipates maintaining a steady growth rate into December [4][10][9] 4. **Product Launches and Market Strategy** - Upcoming product launches, including the highly anticipated "Yue Jiqi" series, are expected to generate significant consumer interest and sales momentum [7][10] 5. **Competitive Landscape and Pricing Strategy** - The company is aware of increasing competition in the e-commerce space but believes its unique product offerings and pricing strategy will help maintain its market position. The average discount rate during November was around 71-72% [6][12][27] 6. **Market Segmentation and Consumer Behavior** - The company targets various consumer segments, particularly focusing on low-tier cities where price sensitivity is high. This strategy has allowed 361 Degrees to stand out among competitors [22][27] 7. **Product Development and Innovation** - Continuous investment in product development, particularly in running and basketball categories, is a priority. The company aims to enhance product functionality and appeal to both casual and professional athletes [19][25][26] 8. **Financial Guidance and Performance Outlook** - The company remains confident in achieving its sales revenue target of over 10 billion for 2024, with an expected growth rate close to 20% [10][33] 9. **Supply Chain and Production Efficiency** - The company emphasizes maintaining high production quality and efficiency through strategic partnerships with OEMs, ensuring flexibility in production to meet market demands [36][39] 10. **Brand Positioning and Marketing Strategy** - 361 Degrees differentiates itself through a unified pricing strategy across different sales channels, avoiding the pitfalls of price wars that competitors face. The brand also leverages endorsements from NBA stars to enhance its market presence [41][46] Other Important but Possibly Overlooked Content - The company has a strong focus on maintaining a healthy relationship with distributors, ensuring low bad debt levels and a stable receivables turnover [36][37] - The management highlighted the importance of adapting to consumer trends and preferences, particularly in the context of post-pandemic shopping behaviors [14][33] - The company is exploring new market opportunities, including international expansion, particularly in Southeast Asia [43][44] This summary encapsulates the key insights and strategic directions discussed during the conference call, providing a comprehensive overview of 361 Degrees' current market position and future outlook.