CICC reiterated its "Outperform Industry" rating and HK$5.62 target price for 361 DEGREES (01361), representing 14% upside potential. The firm maintained its 2025/26 EPS forecasts at RMB 0.64/0.72, with current valuations at 7.2x/6.3x 2025/26 P/E. The target price implies 8x 2025 P/E.

Q2 operational results met expectations: Offline sales for both the core brand and children's wear grew approximately 10% year-on-year. E-commerce platform sales surged roughly 20% YoY. Retail discounts held steady at around 29% off, while inventory-to-sales ratio remained stable at 4.5-5x.

361° Super Product Stores demonstrated remarkable progress, with 39 new outlets opening in Guangzhou, Changsha, Tianjin, Shanghai, and Dalian during Q2. Positioned in premium commercial districts with stable foot traffic, these stores typically span 800-1,000 square meters. By late June, the nationwide count reached 49 stores distributed across tier-1 (6%), tier-2 (40%), and lower-tier cities (54%). Channel breakdown shows 55% in department stores/shopping malls, 25% in outlet malls, and 20% in street-front locations. These spacious format stores featuring comprehensive product ranges and strong value proposition are expected to drive future revenue growth while potentially achieving higher profitability through operational efficiencies.

Product innovation accelerated with new running shoe models like the professional-grade "Feibiao FUTURE 2" and value-oriented "Qianxing 1.0". The portfolio expanded further with cycling gear ("Shineng" series), debut professional badminton shoes ("Zhisheng PRO"), and women's tennis collection ("Sweet Classic"). Brand visibility increased through sponsorship of Qingdao Marathon and amplified exposure from basketball endorsements during major tournaments.