FY25E指引在1H25超预期后保持不变

Xtep (1368 HK) FY25E guidanceunchangedafter 1H25beat Target PriceHK$7.39(Previous TPHK$7.20)Up/Downside20.1%Current PriceHK$6.15 Xtep’s1H25 results were stronger than expected, mainly due to other incomeand Saucony. Going into 2H25E, even though the macro backdrop is still quiteworrying, Xtep should still be able to achieve itsrather prudent FY25E guidance,in our view. Therefore, with its fairly undemanding valuation of 11x FY25E P/E,we maintained BUY and lift TP to HK$ 7.39. Retail sales growth has trended betterin 3Q25 QTD.According tomanagement, retail sales growth inJul 2025 is faster than that in Jun 2025,for both core Xtep brand and Saucony brand. China Consumer DiscretionaryWalter WOO(852) 3761 8776walterwoo@cmbi.com.hk FY25Eguidance maintained.Despite the results beat in 1H25,management has kept the FY25E guidance unchanged (positive group-level sales growth,30%-40% Saucony sales growth, as well as 10%+group-level net profit growth). Even with a more challenging macro backdrop (bad weather, weakdemand and deepening discounts), we are still confident on Xtep toachieve its FY25E guidance,because of: 1)aseries of new productlaunches, such as the newer versions of 160X (the 7.0, 7.0 PRO and 7.0Monster) and a new collection named QINGYUN, echoing the busymarathon seasons in 2H25E;2) recent ramp-up of kidswear.Xtep haspartneredwith many major institutions(like the National HealthCommission, Peking UniversityThird Hospital,Tsinghua University andothers) in order to provide a more all-round solution for the kids to growbetter, faster and stronger.It also rebranded its kids wear line into “XtepYouth”, hence the growth should be boosted in the near future. We believe both the short-term and long-term growth outlook forSauconyishighly intact, despite some prudence in margin expansion.We are even more confident for Saucony to achieve itsFY25Etarget(eventhough the margin assumption is quite conservative). Saucony’s retail salesgrowth did slow down slightly to just 20%+ in 2Q25 (partly due to the shift ine-commerce business strategy, where some lower-priced product offeringswereremoved and less discounts were given), but we still believe it can re-accelerate in 2H25E, thanks to: 1)the launch of new flagship productTriumph 23, 2) sustainable product category expansion (more items for OGseries and apparel will be introduced), 3) likely store expansion acceleration(CMBI est. 40, up from 30 in FY25E).Management has reiterated onceagain their ambitions to double Saucony’s sales in 3 years’ time. Saucony’sOP margin expansion in 1H25 was impressive, but weareslightly moreprudent for 2H25E (CMBIest. 7% for FY25E), as it is expected to do moremarketing around all the product launches, crossovers and openings of newstores (some of those are flagship stores). Source: FactSet Recent Reports:361 Degrees (1361 HK)-Guidanceunchanged but we are concerned(15Aug25) Xtep (1368 HK)-2Q25 was weak butguidance remained intact(17Jul25) Anta Sports (2020 HK)-Anta brand’smiss offset by other brands’ beat(16Jul25) Li Ning (2331 HK)-2Q25 roughly inlineand transition in progress(15Jul25) Topsports (6110 HK)-Prudent guidancebutstrong cash flow & yield(23May25) Xtep (1368 HK)-Inline 1Q25 results anda moderate outlook(18Apr25) Maintain BUY and lift TP slightly to HK$ 7.39, basedon 14x FY25E P/E(unchanged).We have fine-tuned our FY25E/ 26E/ 27E net profit forecasts by+3%/ 0%/-3%, in order to factor in theearnings beat in 1H25, the weaker-than-expected GP margin, but the better-than-expected OP margin for Saucony.Thestock is trading at 11x FY25E P/E, still highly attractive vs its 8-year average of 15xor its13% 3-year net profit CAGR. DTC transformationis still on track.The Company will repurchase 100 to 200stores in 4Q25E (unchanged) and 300 to 400 stores (previously mentioned 200 to400) in FY26E. The capex needed for this repurchase is about RMB 400mn and willall be funded by internal cash flow, according to the Company.According to ourestimates, this act may drag sales/ net profit by 2-3%/ 4-5% in FY25E/ 26E, however,this negative shall be largely priced in. 1H25 results were better than expected.Xtep’s sales increased by7% YoY toRMB 6.8bn, inline with CMBI est., and the net profit surged by 21% YoY to RMB913mn, 28% higher than CMBI est.We believe this stronger-than-expected resultswere due to: 1) absence of K-Swiss and Palladium’s losses, 2) more-than-expectedotherincome,and3) greater-than-expected operating leverage for Saucony (OPmargin jumped to 10% in 1H25 vs 4% in 1H24).Working capital wasfairly strongand healthy as well, inventory level increased only by 3% YoY and receivablesgrewby only 10% YoY in 1H25. Earnings revision Resultssummary Operating numbers Assumptions Valuation Source:Bloomberg, CMBIGM estimates Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this researchreport, in whole or in part, certifies that with respect to the securit