Investment Rating - The report maintains a "Buy" rating for 361 Degrees (01361) [3] Core Views - 361 Degrees demonstrated resilience in demand despite a weak retail environment, with H1 2024 revenue growing 19.2% YoY to RMB 5.14 billion, meeting expectations [3] - Net profit attributable to shareholders increased 12.2% YoY to RMB 790 million, slightly below expectations due to a slight decline in gross margin and other income [3] - The company proposed an interim dividend of HKD 0.165 per share, representing a payout ratio of 40% [3] - Both adult and children's apparel segments showed strong growth, with children's apparel revenue up 24.2% YoY to RMB 1.13 billion, accounting for 22.0% of total revenue [3] - Offline channels improved in quality and efficiency, with offline revenue growing 20% YoY to RMB 3.89 billion, and e-commerce revenue increasing 16.1% YoY to RMB 1.25 billion [4] - The company's inventory turnover accelerated, with inventory turnover days decreasing by 1 day YoY to 85 days [4] - The report slightly lowered profit forecasts for 2024-2026 due to weak market recovery, with expected net profits of RMB 1.09 billion, RMB 1.25 billion, and RMB 1.42 billion, respectively [5] Financial Performance - H1 2024 gross margin decreased by 0.4 percentage points to 41.3%, while net profit margin attributable to shareholders fell by 0.9 percentage points to 15.4% [4] - Sales expense ratio increased by 0.2 percentage points to 17.8%, while management expense ratio decreased by 0.5 percentage points to 6.1% [4] - Operating cash flow was RMB 160 million, with cash and cash equivalents declining 4% to RMB 3.41 billion [4] - Accounts receivable turnover days decreased by 1 day YoY to 148 days, while accounts payable turnover days decreased by 21 days YoY to 89 days [4] Growth Drivers - Adult apparel revenue grew 18.1% YoY to RMB 3.94 billion, driven by volume growth, with footwear and apparel sales increasing 20.1% and 15.7%, respectively [3] - Children's apparel revenue growth was driven by a 26% increase in sales volume, despite a 1.4% decline in average wholesale price [3] - The company expanded its offline store network, with adult and children's stores increasing by 98 and 102, respectively, compared to H1 2023 [4] - The proportion of 9th-generation adult stores and 4th-generation children's stores increased to 74% and 89%, respectively, driving higher store efficiency [4] Future Outlook - The company is expected to continue its growth trajectory, with revenue forecasts for 2024-2026 at RMB 9.78 billion, RMB 11.13 billion, and RMB 12.50 billion, respectively [6] - Net profit attributable to shareholders is projected to grow at a CAGR of 13% from 2024 to 2026, reaching RMB 1.42 billion by 2026 [6] - The company's focus on product and brand upgrades, along with optimized channel operations, positions it for faster-than-industry growth in the long term [5]
361度：销售延续高增，童装表现亮眼