Introduction to this report:
Q2 The flow was in line with expectations, and the high quality of operation continued. 618 e-commerce performed well, and offline stores were steadily expanding, and the enthusiasm for ordering was high at the 2025 Spring Order Conference.
Key points of investment:
Investment advice: The company is a leader in sports footwear and apparel in the domestic market. Since 2024, the company has led the industry in terms of turnover growth. The cost-effective positioning is in line with current sales trends, and the spring of 2025 will be highly enthusiastic. We maintain the 2024-2026 net profit forecast of 1.13/1.32/1.52 billion yuan, corresponding PE of 7/6/5 times, respectively, and maintain an “increase” rating.
Q2 The flow was in line with expectations, and the high quality of operations continued. The company's Q2 offline bulk sales increased 10% year over year, children's clothing increased 15% year over year, and e-commerce increased 30-35% year over year, in line with expectations; discounts on overalls and children's clothing were about 71% off (Q1 was 30% off), and the inventory sales ratio was 4.5-5 months (continuing the Q1 level), continuing healthy business quality.
618 e-commerce has performed well, and offline stores are steadily expanding. 1) Online: The 361-degree e-commerce channel growth rate during the 618 period reached 99%, ranking first in the same industry. Omni-channel top goods sold over 0.24 million units, an increase of 167% year on year. Among them, sales of Guanqi's leading products increased 79% year on year. The company continues to strengthen brand e-commerce channel construction and launch differentiated explosions, such as Feiran 3, which is ranked in the TOP1 professional marathon running shoe bestseller list. At the same time, the company livestreamed on core mainstream e-commerce platforms such as Tmall, JD, and Douyin, effectively increasing exposure and sales. 2) Offline: Affected by unfavorable weather, the sales performance of Q2 shopping center stores and department stores was superior to street stores. Dazhuang Q2 maintained a net store opening, with an average store area of 143 square meters, an increase of 4 square meters compared to the end of Q1, and the store efficiency was close to 2 million; the average children's clothing store area was 108 square meters, up from the end of Q1. The store efficiency was about 1-1.3 million. It successfully established the image of a fifth-generation store, and H2 fifth-generation stores will be launched at an accelerated pace.
Order enthusiasm is high at the 2025 Spring Order Conference. The expected increase in volume will be the main driving force, and the price will increase by about 7%. Q2 has received some supplementary orders one after another, including popular products such as Feifun 3. Looking ahead to H2, Ding Weidi, one of the company's spokespersons, is expected to begin his trip to China on July 20, which is expected to increase the exposure of the company's basketball products. In addition, in late June, the company held a new product order fair in the spring of 2025. It will launch new products, including the same Jokic model. Dealers are enthusiastic about ordering and are expected to continue to grow well. In terms of volume price, the expected increase in volume is still the main driving force. ASP is expected to increase by more than 7% (orders in 2024 will increase by an average of 5%), mainly due to improvements in the product structure.
Risk warning: Terminal consumption falls short of expectations, Olympic catalytic effect falls short of expectations, etc.