Incident Overview
The company announced 2024Q1 operating data: 361 degree retail sales of major brands increased by about double digits year on year, retail sales of 361 degree children's clothing brands increased by about 20%-25% year on year, and retail sales of 361 degree e-commerce platforms increased by about 20%-25% year on year.
Analytical judgment:
It is still rare for a company to maintain high double growth in 24Q1. (1) By channel, although the 24Q1 sales growth rate slowed down compared to 23Q4 (2023Q4 main brand retail sales increased by more than 20% year on year, children's wear/ e-commerce retail sales increased by about 40%/over 30% year on year), maintaining high double growth in the context of a high base and sluggish consumption can reflect brand resilience. Our analysis mainly benefits from its cost-effective positioning in line with current consumer trends, and the brand still has room to open and expand its area. (2) From the product perspective:
Q1 Running Shoes launched a new color scheme for professional marathon racing shoes “Flying Fire 3”, and the “Fast Family” series; the basketball side signed a new pop contract after Jokic, greatly increasing brand awareness. The company insisted on deepening the upgrading and iteration of cost-effective and highly functional products, and the product strength continued to improve. (3) Judging from marketing activities, the Qingdao Marathon Honor partner will participate in the event in April 361.
Investment advice
According to our analysis, (1) In the short term, the consumption downgrade trend has benefited 361 degrees. Most of the brand's products focus on popular routes, and stores are concentrated in third-tier urban agglomerations; in addition, in 2023, the company officially announced that the 2023-2023 NBA champion star Jokic is the global brand ambassador. In December, Jokic first appeared in combat boots “BIG3 Future”, which gained exposure from domestic and foreign media, further increasing 361? The level of attention paid to professional basketball products is expected to continue to drive the company's basketball category sales this year. (2) Looking ahead to 24 years: According to the pace of opening stores in '23, we expect that the main brand and children's clothing stores will each increase by 100-200 stores this year, and the current area of the main brand/children's clothing store is estimated to be around 140/100 square meters, and there is room for expansion, so the same store is expected to grow by more than 10%; (3) Overseas currently accounts for 2%, and it is estimated that it will continue to maintain high double-digit growth in 24 years. Maintaining the profit forecast, the estimated revenue for 24/25/26 is 100.78/116.16/$13.353 billion; the net profit due to mother for 24-26 is $11.81/13.95/16.30 billion; corresponding to 24-26 EPS $0.57/0.79, and the closing price on April 10, 2024 is HK$4.85 (market value exceeding 10 billion yuan) corresponding to 24-26 PE is 8/7/6X (corresponding 1 HKD = RMB 0.92), maintaining the “buy” evaluation grade.
Risk warning
Excellent product system reform results fall short of expectations; risk of improving store efficiency falling short of expectations; risk of increasing investment in new brand promotion; systemic risk.