Investment Rating - The report maintains an "Outperform" rating for the company, with a target price of HKD 6.65, corresponding to a 12x price-to-earnings ratio for 2025 [4][15]. Core Insights - The main brand's turnover showed improvement in Q4 2024, with a year-on-year growth of over 30% and a healthy inventory turnover of four months. Retail discounts improved to 70-75% in Q4 2024 compared to 70% in Q4 2023 [4][11]. - Saucony's revenue is expected to exceed 1 billion RMB, with a 50% year-on-year growth in Q4 2024 and a 60% increase for the entire year. The brand became profitable in 2023 and is expected to see further profitability improvements with full ownership from January 2024 [4][12]. - The company is expanding its product offerings and upgrading its channels, including new concept stores in major cities and a diverse product range that includes shoes and apparel [4][13]. - The main brand and Saucony have solidified their positions in the marathon shoe market, with the main brand achieving a wear rate of 22.4% in the Shanghai Marathon, surpassing international brands [4][14]. - The company is optimistic about its running product matrix and anticipates a second growth curve with Saucony's profitability. Estimated net profits for 2024 and 2025 are projected at 1.26 billion RMB and 1.39 billion RMB, respectively [4][15]. Financial Data and Forecast - The company's revenue is projected to grow from 14,346 million RMB in 2023 to 18,331 million RMB by 2026, with a compound annual growth rate of approximately 11.64% [3][8]. - Net profit is expected to increase from 1,044 million RMB in 2023 to 1,564 million RMB in 2026, reflecting a year-on-year growth rate of 12.25% [3][8]. - The gross margin is forecasted to improve gradually from 42.17% in 2023 to 43.25% in 2026, indicating enhanced operational efficiency [3][8].

Investment Rating - The report maintains an "OUTPERFORM" rating for the company, with a target price of HKD 6.65, corresponding to a 12x price-to-earnings ratio for 2025 [4][15]. Core Insights - The main brand's turnover showed improvement in Q4 2024, with a year-on-year growth of over 30% and a healthy inventory turnover of four months [4][11]. - Saucony's revenue is expected to exceed RMB 1 billion in 2024, with a 50% year-on-year growth in Q4 2024 and a 60% increase for the entire year [4][12]. - The company is optimistic about its running product matrix and anticipates that Saucony's profitability will contribute to a second growth curve [4][15]. Financial Data and Forecast - Revenue projections indicate a growth from RMB 14,346 million in 2023 to RMB 18,331 million by 2026, with a compound annual growth rate (CAGR) of approximately 11.64% [3][8]. - Net profit is forecasted to increase from RMB 1,044 million in 2023 to RMB 1,564 million by 2026, reflecting a strong growth trajectory [3][8]. - The gross margin is expected to improve gradually from 42.17% in 2023 to 43.25% in 2026 [3][8]. Brand Performance - The main brand achieved a completion rate of 22.4% in the Shanghai Marathon, surpassing international brands, while Saucony maintained a top-three position in wear rates [4][14]. - The company has opened new concept stores to enhance brand visibility and product offerings, including collaborations with designers and the introduction of new product lines [4][13]. Market Position - The report highlights the company's strong position in the marathon shoe market, with both the main brand and Saucony leading in wear rates at major marathons [4][14]. - The company is focusing on channel upgrades and product matrix expansion to sustain growth and enhance profitability [4][12][13].

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The main brand of the company shows steady growth, with a high single-digit year-on-year increase in Q4 retail sales, and discounts ranging from 70% to 75%. The inventory turnover ratio is approximately 4 months, with an overall year-on-year increase in retail sales for the year [2][4]. - The subsidiary brand, Saucony, experienced a remarkable performance with a year-on-year sales increase of approximately 50% in Q4 and over 60% for the entire year [2][4]. - The company maintains a healthy inventory and discount level, leading the industry. The inventory turnover ratio remains stable compared to Q3 2024, and the discount levels are considered healthy [5][7]. Summary by Sections Retail Performance - The main brand's Q4 sales growth is driven by pre-holiday sales, particularly during the Golden Week and Double Eleven shopping festival. E-commerce channels are expected to outperform offline channels due to holiday promotions, while offline sales may face pressure from weak foot traffic [5][6]. Inventory and Discount Management - The inventory turnover ratio is around 4 months, indicating a healthy inventory level. The discount range of 70% to 75% is viewed as sustainable and healthy for the industry [5][6]. Future Outlook - The company is expected to continue benefiting from healthy inventory and discount levels, with projections for net profit growth of 24%, 17%, and 13% for the years 2024, 2025, and 2026, respectively. The corresponding price-to-earnings ratios are projected to be 11, 9, and 8 times [5][9].

Investment Rating - The report assigns a "Buy" rating to the company with a current price of 5.68 HKD and a fair value of 6.71 HKD [7]. Core Insights - The main brand of the company is experiencing steady growth, with a healthy recovery in inventory levels. In Q4 2024, the main brand's total channel revenue is expected to grow at a high single-digit percentage year-on-year, with retail discounts improving to a level of 70-75% [7]. - The subsidiary brand, Saucony, continues to show strong growth momentum, with total channel revenue in Q4 2024 expected to increase by approximately 50%, surpassing the previous guidance of over 60% for the entire year [7]. - The company forecasts net profit attributable to shareholders for 2024-2026 to be 1.26 billion, 1.39 billion, and 1.51 billion CNY respectively, and maintains a price-to-earnings (P/E) ratio of 12 for 2025, leading to a fair value estimate of 6.71 HKD per share [7]. Financial Summary - The company's main revenue for 2023 is reported at 12,930 million CNY, with a growth rate of 29.1%. The EBITDA is projected to be 1,515 million CNY, and the net profit attributable to shareholders is expected to be 922 million CNY, reflecting a growth rate of 1.5% [6]. - For the years 2024 to 2026, the main revenue is expected to be 14,396 million CNY, 15,077 million CNY, and 16,462 million CNY respectively, with corresponding growth rates of 0.4%, 4.7%, and 9.2% [6]. - The report indicates that the company's return on equity (ROE) is projected to be 11.0%, 11.6%, 13.1%, 13.5%, and 13.8% from 2022 to 2026 [6].

Investment Rating - Buy rating with a target price of HKD 7.03, implying a 26.7% upside from the current price of HKD 5.5 [4][7] Core Views - The company's Q4 2024 performance was strong, with Saucony growing 50% YoY [2][7] - Xtep's main brand retail sales grew high single-digit YoY in 2024, while Saucony exceeded expectations with over 60% growth [7] - Full-year 2024 profit is expected to achieve 20% growth target [7] - The company is optimistic about 2025 performance, expecting double-digit growth [7] Financial Performance - Revenue is forecasted to grow from RMB 14,712 million in 2024E to RMB 16,676 million in 2026E, representing a 9.4% CAGR [3] - Net profit is projected to increase from RMB 1,242 million in 2024E to RMB 1,576 million in 2026E, a 14.1% CAGR [3] - Gross margin is expected to improve from 40.9% in 2022 to 43.8% in 2026 [8] - ROE is forecasted to rise from 11.4% in 2022 to 14.9% in 2026 [8] Business Development - Xtep main brand: - Continuing to open larger stores and close smaller ones to improve store efficiency [7] - Over 60% of stores are 9th generation stores [7] - Expanding internationally, focusing on Southeast Asia, Middle East, Russia, and cross-border e-commerce [7] - Saucony: - Estimated to exceed RMB 1 billion in scale in 2024 [7] - Store efficiency estimated at RMB 300,000-500,000+ [7] - Plans to open flagship stores in tier 1 cities and expand to tier 2-3 cities [7] - Long-term operating margin target of 20%+ [7] Valuation - Current PE ratio: 10.5x (2024E), 9.5x (2025E), 8.4x (2026E) [3] - Target price of HKD 7.03 represents 12x 2025E EPS [7] - Dividend yield expected to increase from 4.8% in 2024E to 6.0% in 2026E [3]

Investment Rating - The report maintains a **Buy** rating for Xtep International (1368 HK) with a target price of HK$6.95, representing a **26% upside** from the current price of HK$5.51 [1][2] Core Views - Xtep International is expected to achieve **high single-digit revenue growth** in 2025, driven by its focus on the running segment [4] - The company's 2024 revenue and net profit are forecasted to grow by **1.5% and 21.3%** respectively, with a **7.3% revenue growth** on a like-for-like basis [5][8] - For 2025, revenue and net profit are projected to increase by **2.5% and 11.5%** respectively, with a **9.2% revenue growth** on a like-for-like basis [6][8] Financial Performance - Xtep brand revenue is expected to grow by **4.1% in 2024**, driven by high single-digit growth in retail sales and strong performance in the children's segment [5] - Saucony is projected to achieve **~50% growth in Q4 2024** and **over 60% growth for the full year 2024**, contributing to a **55% increase in the professional sports division revenue** [5] - The company plans to upgrade over **30% of its old stores** to the ninth-generation format in 2025, aiming to drive growth through improved store efficiency [6] - Saucony's new stores are achieving monthly sales of **RMB 500k**, significantly higher than the average of **RMB 300k+**, with plans for further expansion in 2025 [6] Valuation and Forecasts - The report maintains a **12x 2025 P/E** valuation for Xtep International, with a target price of HK$6.95 [7] - Revenue for 2024-2026 is forecasted to grow by **1.5%, 2.5%, and 8.8%** respectively, reaching **RMB 14.56bn, RMB 14.92bn, and RMB 16.24bn** [7][8] - Net profit for 2024-2026 is expected to grow by **21.3%, 11.5%, and 12.7%** respectively, reaching **RMB 1.25bn, RMB 1.39bn, and RMB 1.57bn** [7][8] Financial Ratios - Gross margin is expected to remain stable at **44.2% in 2024**, **44.1% in 2025**, and **44.6% in 2026** [11] - Net profit margin is projected to improve from **8.6% in 2024** to **9.3% in 2025** and **9.7% in 2026** [11] - The company's ROE is forecasted to increase from **13.0% in 2024** to **13.3% in 2025** and **13.8% in 2026** [11]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 7, based on a 12x PE valuation for 2025 [2][3] Core Views - The company's main brand, Xtep, showed steady growth in Q4 2024, with retail sales increasing by high single digits year-over-year and retail discount levels improving to 70-75% off, compared to 75% off in Q3 2024 [5] - The Saucony brand continued its strong growth trajectory, with retail sales increasing by approximately 50% year-over-year in Q4 2024 and over 60% for the full year [5] - Xtep achieved the highest wear rate among global running shoes at the 2024 Shanghai Marathon, solidifying its leadership in the running market [5] - The company expects steady growth for its main brand and high growth for Saucony, which is anticipated to form a second growth curve [5] Financial Performance and Projections - Revenue for 2024E is projected at RMB 14,035 million, a slight decline of 2.2% year-over-year, but growth is expected to resume in 2025E and 2026E with increases of 9.8% and 10.0%, respectively [5] - Operating profit for 2024E is forecasted at RMB 1,879 million, an 18.9% increase year-over-year, with further growth expected in 2025E and 2026E [5] - Net profit attributable to shareholders is projected to grow by 21.8% in 2024E, reaching RMB 1,255 million, with continued growth in subsequent years [5] - Gross margin is expected to improve from 42.2% in 2023A to 45.6% in 2026E, reflecting better profitability [5] Valuation and Market Performance - The company's HKD market capitalization is HKD 15,216 million as of January 14, 2025, with a total of 268,365 million shares outstanding [3] - The stock's 52-week high and low prices are HKD 7.13 and HKD 3.19, respectively, with a current price of HKD 5.67 as of January 14, 2025 [3] - The stock has shown strong relative performance, with a 12-month absolute return of 50.16%, outperforming the Hang Seng Index by 31.84% [3] Industry Comparison - The company's 2025E PE ratio of 8.4x is lower than industry peers such as Anta (15x) and Li Ning (10x), indicating potential undervaluation [7] - The adjusted average PE ratio for the industry is 12x for 2025E, suggesting that the company's valuation is relatively attractive [7] Strategic Developments - The company has successfully divested its KP business, which is expected to improve overall profitability [5] - Saucony expanded its retail presence with new concept stores in Beijing and Shanghai, further enhancing its brand image and market reach [5]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company's main brand has shown strong revenue growth, with a focus on high-performance running shoes driving this increase. The operational metrics remain stable, and revenue is expected to continue growing steadily. The subsidiary brand, Saucony, has also experienced significant growth, with a projected revenue increase of over 60% for the year [5][6][7]. Financial Summary and Valuation Metrics - Revenue projections for the company are as follows: - 2024E: 13,925 million - 2025E: 15,326 million - 2026E: 16,755 million - Year-over-year growth rates for revenue are expected to be -2.9% in 2024, followed by 10.1% in 2025 and 9.3% in 2026 [8]. - Net profit estimates are: - 2024E: 1,239 million - 2025E: 1,398 million - 2026E: 1,573 million - The projected P/E ratios are 11.0 for 2024, 9.8 for 2025, and 8.7 for 2026, indicating a favorable valuation trend [8].

Investment Rating - Maintain "Buy" rating [1] Core Views - The company is expected to achieve revenues of RMB 16 billion, RMB 17.9 billion, and RMB 19.8 billion in 2024-2026, with net profits of RMB 1.21 billion, RMB 1.41 billion, and RMB 1.65 billion respectively [1] - EPS is projected to be RMB 0.46, RMB 0.53, and RMB 0.63 per share for 2024-2026, with corresponding P/E ratios of 12x, 11x, and 9x [1] - Saucony is a key growth driver for the company, with retail sales growing over 60% in 2024, and is expected to continue expanding its product matrix and opening new stores in high-tier cities [2] - The company's leading position in the running sector is reinforced by its performance in major marathons, with a 49.8% wear rate among sub-3-hour runners in the Xiamen Marathon [14] - The synergy between the main brand, Saucony, and Merrell is expected to further enhance market share and expand the customer base [2] Financial Performance - The main brand of the company recorded high single-digit year-on-year growth in retail sales for Q4 2024 and the full year 2024 [12] - Saucony's retail sales grew approximately 50% year-on-year in Q4 2024 and over 60% for the full year 2024 [12] - The main brand's inventory turnover remained healthy at around four months, with retail discount levels improving slightly to 70-75% off in Q4 2024 compared to 70% off in Q4 2023 [13] Market Position and Strategy - The company's main brand continues to dominate the running sector, with a strong presence in major marathons and a leading position in the minds of runners [14] - The company operates through three brands: the main brand targeting the mass market, Saucony serving high-end and mature customers, and Merrell focusing on trail running and outdoor sports [14] - The company plans to leverage its running ecosystem and brand synergy to further increase market share and expand its customer base [2] Stock Performance - The stock price of the company has shown significant growth, with a 52% increase over the period from January 2024 to September 2024 [4]

Investment Rating - Buy (Maintained) [2] Core Views - The report highlights that Xtep International's Q4 2024 retail performance met expectations, with the main brand achieving high single-digit growth across all channels, driven by functional running shoes, which grew by approximately 30% in 2024 [5] - Saucony, a subsidiary brand, continued its strong performance with a 50% growth in Q4 2024 and over 60% growth for the full year, surpassing the RMB 1 billion retail sales milestone in 2024 [5] - Online sales outperformed offline, with the main brand's e-commerce sales growing over 20% in Q4 2024, while offline sales saw low single-digit growth despite reduced foot traffic [5] - Inventory levels remained healthy, with a stock-to-sales ratio of around 4 months for the main brand, and discount rates improved year-over-year, indicating robust operational quality [5] - The company plans to further optimize its multi-brand strategy, focusing on core running businesses and enhancing the brand image of Saucony by opening flagship stores in first-tier cities [5] - Xtep International's full-year performance is expected to be positive, with inventory levels projected to decrease and cash flow improving, driven by strong retail recovery in Q4 2024 [5] Financial Data and Profit Forecast - Revenue for FY2024E is projected at RMB 13.3 billion, a 7% decline year-over-year, but expected to grow by 9% in FY2025E and FY2026E to RMB 14.5 billion and RMB 15.8 billion, respectively [4] - Net profit attributable to shareholders is forecasted to grow by 20% in FY2024E to RMB 1.24 billion, followed by 13% and 9% growth in FY2025E and FY2026E, reaching RMB 1.39 billion and RMB 1.51 billion, respectively [4] - Gross margin is expected to remain stable at 45% from FY2024E to FY2026E, while the P/E ratio is projected to decrease from 11x in FY2024E to 9x in FY2026E [4] Channel and Inventory Performance - The main brand's average monthly store sales in H1 2024 were approximately RMB 190,000, with further improvements expected by year-end due to flagship store expansions and operational optimizations [5] - The main brand's discount rate in Q4 2024 was 7-7.5%, slightly deeper than the previous quarter due to promotional activities but improved compared to the same period in 2023 [5] - Saucony's flagship stores in Beijing and Shanghai achieved monthly sales exceeding RMB 600,000, showcasing strong brand performance in key markets [5] Strategic Focus and Future Plans - Xtep International plans to continue optimizing its channel structure by introducing new running store formats in 2025, with over 60% of the main brand's stores already upgraded to the ninth generation [5] - The company will increase investment in Saucony, focusing on product and channel expansion, including the introduction of new SKUs such as commuter, OG, and retro series, aiming to make Saucony a key growth driver over the next five years [5] - The company has divested its fashion sports brand to focus on core running businesses, which is expected to strengthen its competitive advantage in the professional sports segment [5]