2024Q3 sales and operations are steady, and the Golden Week performance was outstanding. It maintained a “buy” rating of 2024Q3 361° and an increase of about 10% in offline sales of 361° children's clothing, a 10% increase in offline sales of 361° children's clothing, and a 20% increase in e-commerce sales. 2024Q3's sales performance is strong, and the operating indicators are steady. The trend is expected to continue under the promotion of the Q4 e-commerce peak season. The trend is expected to continue under the impetus of the peak Q4 e-commerce season. We maintain profit forecasts. We expect net profit for 2024-2026 to be 1.14/1.35/1.58 billion yuan. The current stock price corresponds to a PE of 6.8/5.7/4.9 times. The company's product side has built a matrix of professional products such as running and basketball and continuously innovated. Channel side reforms and new store upgrades improve store efficiency. Resources are continuously enriched to enhance brand awareness and influence, and continue to maintain a “buy” rating.

The 2024Q3 inventory ratio is steady, and discounts are good. The net month-on-month increase in offline adult and children's store area benefits from the price-performance brand's pricing advantage and improved product competitiveness. The 2024Q3 business index performance is relatively stable. The 2024Q3 inventory ratio remains positive. The discount is about 71 percent off, and the sales rate of new products in the current season is 75%. Offline sales benefit from the Olay store type and store expansion. As of 2024Q3, the children's clothing area increased by a net of 2 square meters to 110 square meters compared to Q2, and a net increase of 4 square meters to 147 square meters compared to Q2. It is expected that the 10th generation adult store will soon land, and the iteration of the store image is expected to further improve store efficiency. As of 2024Q3, there were 196 Ole stores and 151 children's clothing stores, a net increase compared to Q2.

The company continues to strengthen the iteration of professional products in the running category, increasing marketing resources to enhance brand awareness and influence. Product side: The 2024Q3 running field launched the outdoor running shoes Futura S, Feibiao 2, and Rain Screen 8. The tag price is 679/999/499 yuan respectively. The midsole technology all uses self-developed QuikCQT technology to cover outdoor, racing, jogging and other scenarios. Marketing side: Using spokesperson resources to boost the exposure of the brand and related product lines, Dinwiddie's second trip to China created another boom. Pop's first trip to China and participated in the Touchdown and Fire Finals. It is expected that the launch of Jokic's products in 2025 and the China tour will further increase brand exposure. Furthermore, the company officially announced that it will become the official partner of the 2026 Nagoya Asian Games in Japan and the top strategic partner of the 2024 Fuzhou Marathon, which is conducive to further enhancing the brand's global awareness and influence.

Risk warning: Consumer confidence recovery falls short of expectations, product upgrades and channel optimization fall short of expectations.