特步国际(1368.HK)：业绩有亮点,但股价涨幅过高短期有压力,调高至“中性”

Please see important notice on the last page. 1 of 9Company ReportXTEP INTERNATIONAL(1368.HK) Xtep announced 1H2013 results. Highlights: as at 30th June, 2013, 1) net cash increased 6.1% from the end of 2012; 2) inventory decreased by about RMB100mn from the end of 2012, while inventory to sale ratio improved to 5.1x; 3) the No. of Xtep stores decreased only by 75 to a total of 7,435. The net closure was the smallest in the industry. We think the outstanding results were mainly due to 1) effective internal execution; 2) certain degree of self-production, to the benefit of flexible deployment of production plans; and 3) clear market positioning, increasing brand awareness from entertainment marketing and enhanced professional sportswear image from marathon event campaigns. 1H2013 results in line with expectation. Total revenue decreased 19.5% to RMB2.1bn. GP margin remained relatively stable, only dropping 0.7pct to 40.2%, mainly due to the decrease in wholesale discount from 60% off down to 62% off. NP margin dropped 1.7pct to 16.2% due to the increase of effective tax rate, which was mainly due to 1) the expiry of preferential tax exemption of subsidiaries; 2) underprovision of income tax from the past period; 3) the withholding tax rate of 2.5% for dividends. Basic EPS was RMB0.16. The company proposed interim dividend of HK$0.10 per share, equivalent to a 50.8% dividend payout ratio. Retails are slowly improving. The company's sales order from 1Q14 Trade Fair recorded high single digit decrease from a year earlier, which was better than 4Q13. SSSG was flat in 2Q13 and July as in 1Q13, implying no more deterioration in retails. Average discount rate was 30% off, with 10% off for new products and up to 50% off for off-season products. Inventory improved continuously, with inventory to sale ratio dropping to 5.1x (1Q13: 5.5x). If the ratio reaches 4.5-5x in 4Q13, and SSSG turns to positive in 4Q13-1Q14, we will see an inflection point for sales order to take place in 3Q14 Trade Fair. Recent sharp rally may lead to short-term pressure, upgrade to "Neutral". We expect 2013-2015E EPS to be RMB0.27, RMB0.27 and RMB0.29. As at 30th June, 2013, the company holds cash and cash equivalents of RMB2.8bn, with net cash per share of RMB1.28. Based on 5-yr average P/E of 6.5x and 2013E EPS of RMB0.27, we derived share price (excluding net cash per share) of HK$2.19. By adding back HK$1.81 of 2013E net cash per share, we have 1-yr TP of HK$4.00. Maintain “Neutral” rating. Financials RMB mn 2011 2012 2013E2014E2015ERevenue 5,540 5,550 4,483 4,606 5,011 Growth (%) 24.3% 0.2% -19.2%2.7%8.8%Gross margin 40.8% 40.7% 40.0%40.2%40.3%Net income 965 807 579 608 666 Growth (%) 18.6% -16.4% -28.2%5.0%9.5%Basic EPS (RMB) 0.44 0.37 0.27 0.27 0.29 Growth (%) 18.6% -16.4% -28.2%2.0%8.0%DPS (RMB) 0.21 0.23 0.13 0.14 0.15 P/E (x) 7.09 8.48 11.81 11.57 10.71 Source: Company data, CMS (HK) estimate Neutral (Previous: Sell) Target Price：HK$ 4.00 Current price：HK$3.89 China Merchants Securities (HK) Ivy Zhao 0755-25310166 ivyzhao@cmschina.com.cn 25 Aug 2013 Key data HSI Index 21895.40HSCEI Index 9967.77S/O(mn) 2176.32S/O (HK$)(mn) 2176.54Mkt cap (HK$) (mn) 8489BVPS(HKD) 1.96Major shareholder Holding (%)Quncheng 60Free float 39IndustrySportswearShare performance %1m 6m12mAbsolute 13 2815Relative 13 329 -20-100102030Aug /12Dec/12May / 13(%)1368.H KHS I Ind ex Source: Bloomberg Related research 1.Slow growth in both sales order & SSS, rating cut-20120323 2.Slash 2012-2014 earning estimation, reiterate “Underperform”-20120821 3.2013 adjustment year, expect sharp decline in sales & profit-20130319 Recent sharp rally lead to ST pressure, upgrade to "Neutral" 请务必阅读正文之后的免责条款部分 2 of 9公司报告特步国际(1368.HK) 特步国际(“特步”或“公司”)公布中期业绩，业绩基本