Net profit rose 14.0% yoy to RMB 1.309bn. This is on the back of the 10.6% yoy increase in revenue to RMB 11.1bn. Final DPS rose was HK$0.113, up 13%. Annual DPS reached HK$0.317, representing a payout ratio of 45.0%.
Maintain BUY with a new TP of HK$7.80.
Earnings slightly beat. 361 Degrees’ earnings exceeded our estimates by 1.9%, primarily due to the improved control on operating expenses. For FY2025, gross margin was maintained at 41.5%. Advertising and promotion (A&P) expenses-to-revenue ratio declined by 2.3 p.p. to 10.5%, which is partially offset by a rise in the administrative expenses. The administrative expenses-to-revenue ratio increased to 7.7% (+0.8p.p.), largely driven by a significant surge in charitable donations (RMB 103.4 million, up 8.2 times yoy). By segment, revenue from adults’ footwear, adults’ apparel, and kids’ products grew by 8.0%, 10.7%, and 10.4%, respectively. In FY2025, the e-commerce segment acted as a key growth catalyst, with revenue rising 25.9% yoy to RMB 3.3 bn, accounting for 29.5% of total revenue. The company ventured into instant retail to align with the latest consumption trends. Cash management posed a mixed performance. Cash inflow from operating activities surged 10.7x yoy to RMB 814.6 mn. However, working capital turnover days increased from 168 to 192 days. Looking forward, 361 Degrees said that they are satisfied with the value of the order for the first three 2026 quarterly trade fairs. Order volume was the primary growth driver.
Optimising retail network. 361 Degrees has been actively optimising the retail network and enhancing the store image. The average store size and sales efficiency continued to increase steadily. While 361 Degrees increased the retail channel mix in the shopping mall and supermarket, it introduced an innovative retail format named super premium stores. Super premium store has a much larger store size, comprehensive multi-category coverage, and one-stop self-service shopping. They have a much higher average ticket value and a better associated purchase. The company opened 127 super premium stores in 2025, and the company will open at least 100 super-premium stores this year.
Broadening product offering. 361 Degrees continued to deliver the professional sports products in the running and basketball segments with excellent quality for money. The company grows the brand through product innovation, the sponsorship of major sporting events, and the appointment of sports celebrities. At the same time, 361 Degrees establishes a more versatile product line, tapping into more sportswear segments such as women’s fitness, outdoor, and skateboards. The company established the physical presence of ONEWAY, a Finnish outdoor sports brand, last year. The brand has opened 7 stores in China. We foresee that ONEWAY could serve as a long-term growth driver.
Earnings revisions. We tune our 361 Degrees’s FY2026E/2027E EPS forecast by +3.4%/+2.0%, to HK$0.780/HK$0.849. Maintain BUY, TP lift to HK$7.80 from HK$7.16. Our new TP represents FY2026E PER of 10.0x.
Risks: (1) intensifying price competitions, (2) weakened retail sentiment.
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