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Net profit rose 8.6% yoy to RMB 857.7mn. This is on the back of the 11.0%yoy increase in revenue to RMB 5.705bn. Interim DPS rose 23.6% yoy to HK$0.204.

E-commerce shines, sales of online exclusive products jumped 45% yoy

Maintain BUY and lift TP to HK$7.38.

Earnings in-lines with the management guidance. The company maintained a doubledigit growth in revenue while the OPEX-to-revenue ratio relatively remained stable. GPM expanded 0.2 p.p. to 41.5%. In term of Opex to revenue ratio, the increase in staff costs offset the slightly lower advertising and promotional expenses. Lower income and gains from nonoperating activities, particular a sharp decline in interest income, dragged the growth in net profit. During the period, the company improved cash flow management. Cash from operating activities up 227% yoy to RMB524mn, mainly due to a decrease in inventories (- RMB222.2mn). Day receivable lowered by 3 days yoy to 146 days. The company has been in negotiation with distributors and it is expecting a gradual decline in day receivables over time. For dividend, Interim DPS rose 23.6% yoy to HK$0.204 .The company increased the payout ratio to 45.0% from 40.3% a year earlier.

Products and channels. In 1H2025, revenue from the adult footwear, adult apparel, and kids' business increased by 12.8%, 1.6%, and 11.4% yoy, respectively. Amongst, adult footwear registered an increase in both total units sold (+7.1%) and the average wholesale price (+5.2%). We believe the establishment and the strong recognition of its professional product matrix in running and basketball are the main drivers. By segment, running /basketball grew by 20%+/10% yoy respectively. E-commerce shines, with revenue from the online-exclusive products jumping 45.0% yoy to RMB1.82bn, contributing 31.8% of the company’s revenue. The management mentioned offline/online retail sales grew at ~10%/~20% yoy while the retail discount remained stable since Q3.

Optimisation of sales network. For the POS of the 361° core brand and 361 Kids, the company managed to increase the average store size while the number of POS contracted. The Super Premium Store has reinforced the brand’s differentiated image with its integrated full-category consumer experience. This new retail format showed a much higher sale and a boost in associated-purchase rate. As of June 2025, there were 49 Super Premium Stores nationwide, of which 4 were for kids' wear. The company maintains the opening target of 100 Super Premium Stores this year.

Brand buildings and category expansion. The company powers up its brands through the sponsorship of major sport events and the appointment of celebrities and top-tier athletes. 361 Degrees develops the "ONE WAY" outdoor brand in China. The company will open 5 offline stores before Oct 2025. Moreover, 361 Degrees broadened its product range to include yoga wear, skateboards, badminton shoes, and women’s tennis apparel, in addition to upgrading professional running shoes and basketball shoes. Soon after the interim results announcement, 361 Degrees announced its strategic cooperation with Standard Robots in the fields of robot apparel, footwear, and accessories, showing the company’s active exploration of new product categories.

Earning revisions. We slightly tune down our EPS forecast for FY25E/FY26E by 1.8%/2.0% to HK$0.671/0.769. 361 Degrees maintained the 2025 earnings guidance, such as revenue growth at 10-15% and NPM at 10-12%. We are confident that the company can achieve the above targets

Maintain BUY and lift the TP to HK$7.38. We lift the target price for 361 Degrees based on the FY25E PER to 11.0x. This is to reflect the strong retail sales growth over the past few years.

Risks: (1) Weakening retail market, especially for the offline retail market, (2) intensifying price competitions