The results in the first half of fiscal year 2020 exceeded expectations. Revenue rose 14.3 per cent year-on-year to 899 million yuan. The overall gross profit margin improved 4.8 percentage points year-on-year to 62.4%, mainly due to the company's transformation from a wholesale model to a large cargo flow model. Income from the investment segment in the first half of fiscal year 2020 fell 19.4 per cent year-on-year to 166 million yuan, resulting in a 1.7 per cent year-on-year decline in operating profit margin to 27.5 per cent. Net profit surged 36.6 per cent year-on-year to 188 million yuan.

The earnings per share forecasts for fiscal year 2020-2022 were lowered by 15.8 per cent, 10.5 per cent and 13.0 per cent to 0.092 yuan, 0.102 yuan and 0.105 yuan respectively. The forecast gross profit margin for the fiscal year 2020-2022 was raised by 2.4 percentage points, 1.4 percentage points and 1.4 percentage points respectively to 59.3%, 58.6% and 59.1%, mainly due to the company's transformation from a wholesale model to a large cargo flow model. However, we expect higher advertising and sales costs and lower returns from the investment business segment for the 2020-2022 fiscal year, which reduces our forecast for net profit.

Lower the target price to HK $1.18 but still maintain the "buy". The company continues to deepen the business model of "brand + product" and "brand + retail", which has brought continuous improvement to the company's core sportswear business. However, the investment business will continue to have a very significant impact on the company's net profit in the future, which increases the uncertainty of the company's profitability. We lowered the target price to reflect the adjustment in the profit forecast. The new target price is equivalent to 11.6 times, 10.5 times and 10.1 times the price-to-earnings ratio for fiscal year 2020, fiscal year 2021 and fiscal year 2022, respectively, and 35.6% upside.