谨慎看好，但我们仍有信心

Prudent guidance but we are still confident Target PriceHK$5.55(Previous TPHK$6.05)Up/Downside24.3%Current PriceHK$4.46 Becauseof the warm winter, investors are fully aware of a likely slowdown in2H25;therefore,the FY25 resultswererather inline. The FY26E guidance isconservative and might be slightly lower than expected;however, we areconfident about the growth ahead, given numerous industry and company-specific catalysts.Hence we maintain BUY with TP of HK$ 5.55. And thanks tothe 7% FY26E yield, the downside is also limitedin our view. China Consumer Discretionary Walter WOO(852) 3761 8776walterwoo@cmbi.com.hk Conservative FY26E guidance was announced, but we believe in theCompany’s ability to outperformthe industry.Management has outlinedthe guidance for FY26E. They are now targeting a 10% sales growth (10%for Bosideng brand, 20%+ for Snow Flying and Bengen brand, HSD forOEM, 10% for womenswear), a flattish GP margin and a 10%+ netprofitgrowth.Some investors might be slightly disappointed (as some of them arestill expecting a 10%+ sales growth or the RMB 30bnsales target that wasonce announced bymanagement), but we concur with management’sstrategy to play safe and stay prudent. If the macro environment andweather are favourable,we believea faster-than-expected growth couldeasily be achieved, given Bosideng’s industry-leading ability on productdesign, marketing and store operation, etc.. We seequite afewgrowth drivers for FY26E.Industry-wise, 1) the lowbase (due to warm winter) and 2) the late CNY in FY26Ecouldbothbepositiveto growth ahead.Company-wise, 1) enhance the functionality,fashion appeal and diversity of the extreme cold, puff and high-end businessproduct series (extreme cold series sales wereat RMB 3bn in FY25 and thetarget is RMB 4bn in FY26E), 2) improve the youthfulness of the products,including many crossovers (with Kim jones, Ultraman and Sanrio, etc.) 3)expand into more e-commerce platforms, 4) develop more unique anddistinctive accounts on Douyin, 5) continue to improve the structure of offlinestoresby closing the underperforming stores, adjusting store floor area aswell as product offerings based on the spending power of the commercialareas,6)further enhance customer and membership experiences,7)reasonablere-stocking demand from the distributors(as the channelinventory level is still better than historical average), esp. for the high-endproduct series,and 8) the overall demand should be higher as more storeswereopened last year,andthe Company will continue to expand into morelower-tier markets, northeast markets and morehigh-end channels.Margin-wise, we also see many positive drivers, because: 1) product mix may likelyimprove,andhigh-end and functional products have accounted for almost50% (vs 30% last year) of total sales during the first trader order (eventhoughthe tag prices remained rather flattish or even declinedslightly), 2)raw material (such as the down) priceshave been declining, 3) retaildiscount is likely to improve (as the base was low last year, due to warmwinter),and4) effective tax rate may also trend better in FY26E. Source: FactSet Recent Reports:Topsports (6110 HK)-Prudent guidancebut strong cash flow & yield(23May25) Xtep (1368 HK)-Inline 1Q25 results anda moderate outlook(18Apr25) Anta Sports (2020 HK)-Acquisition ofJack Wolfskin finally announced(14Apr25) Li Ning (2331 HK)-Conservativeguidance but quite expected(31Mar25) Anta Sports (2020 HK)-Prudent targetsbut the trend is encouraging(20Mar25) Xtep (1368 HK)-Building a more all-round company in long run(19Mar25) FY25 results were inline withBBG est.;the inventory level and theyield are all rather healthy.For FY25, Bosideng’s sales increased by 12%YoY to RMB 25.9bn and net profit rose by 14% YoY to RMB 3.5bn, bothinline withBBGest.Other income might have been higher than expected,but that was offset by the lower-than-expected GP margin and higher-than-expected effective tax rate. Overall speaking, the slowdown in sales growth(esp. the direct retail sales business) and rather sharp drop in GP margin(esp. for the brand Bengen)werethe major drags in 2H25. However, in ourview, these factors shouldhaveall beenpriced in as the investors are fullyaware of the warm winter last year. Payout ratio climbed to 84% in FY25(from 81% in FY24),andthanks to that, the historical yield is already at 6%.Inventory days increased by 3 days to 118 days in FY25 (from 115 days inFY24), but thiswasstill a very healthy level (the channel inventorywasalsohealthy,indicated by the 80%sell-through rate in FY25,better thanhistorical average of 79%, as mentioned by management). MaintainBUY and trim TP to HK$ 5.55.Wehavefine-tuned FY26E/ 27Enet profit forecasts by-7%/-3%, in order to factor in: 1) the warm winter lastyear, 2) a slightly conservative FY26Esalestargetand 3) GP margin missof the non-core brands.Even though management has outlined quiteprudent FY26E guidance, we do think the industry setup (low base, lateCNY ahead) and