According to reports from GTHT, they have maintained their profit forecasts for XTEP INT'L (01368) at RMB 1.37 billion, RMB 1.49 billion, and RMB 1.61 billion for 2025-2027. Given that the company is the third-largest domestic sports group and is opening a second growth curve with Saucony, they assign a 15X PE for 2026, leading to a target price of HK$8.74 (based on an exchange rate of 1 HKD = 0.92 RMB) while maintaining a "Buy" rating.
The report mentions that Q3 was affected by weather disturbances, impacting the main brand’s revenue performance, while functional products performed excellently. The main brand saw low single-digit revenue growth in Q3, with discounts ranging from 30% to 75%, and inventory levels of 4 to 4.5 months. When analyzing month by month, the revenue trends in July and August were positive, but warm weather in September might affect autumn and winter product sales.
In terms of channels, e-commerce growth appears to outpace offline growth. From a product perspective, the company shows significant competitive advantages in functional products like running, with revenue growth likely exceeding that of lifestyle products. GTHT also noted that Saucony continued strong offline growth in Q3 while actively adjusting e-commerce strategies, indicating positive growth potential moving forward.
Saucony’s Q3 revenue showed a year-on-year increase of over 20%, and channel analysis indicates that offline revenue growth may surpass online revenue growth, mainly due to the company's proactive adjustments in e-commerce, such as tightening low-price products and optimizing supply chain operations. GTHT maintains its annual forecast for XTEP, projecting positive revenue growth for the main brand and over 30% growth for Saucony in 2025, as well as an overall group profit growth of approximately 10%.
In terms of inventory, the firm believes current levels are healthy and expect them to fall below RMB 2 billion by the end of 2025. Regarding dividends, GTHT predicts a payout ratio of no less than 50% for the full year.