Bright interim results, Xstep's multiple brands continue driving earnings growth

It is estimated that the net profit of returning mothers in the first half of 2022 will increase by no less than 35% year-on-year, mainly due to the contribution of revenue growth of no less than 35% year-on-year. The revenue growth mainly comes from 1. Xtep's main brand and children's business have made breakthroughs in product innovation, retail channel upgrade, and brand awareness promotion, with good retail performance, which further contributed to the impressive performance of previous order fairs. At the same time, Xtep's children's and Xtep's e-commerce 2. The sales of Sokoni in the professional sports sector are strong, its popularity in the running circle is improved, and the e-commerce performance is better, which in turn drives the revenue to increase by more than 100% year-on-year; 3. In fashion sports, Gasway and paladin performed better than the company's expectations, and their revenue in the first half of the year increased by more than 30% year-on-year.

Everbright Securities believes that the profit growth is mainly due to the controlled epidemic, the supply chain in Vietnam has improved, the goods can be delivered one after another, and the demand for products in Europe and the United States is relatively strong.

In 2022Q2, Xstep's main brand continues to strengthen its running shoe matrix, covering the needs of the general public and professional runners through different series such as 160X3.0, Speed 3.0, Shock Spin PRO, and Light PRO. The company also formulated a "10-year sustainable development plan"; Xstep Kids co-branded with the China Aerospace Museum to jointly carry out aerospace science and technology public welfare action; Cameron Norrie wore the brand's shirt and won the top four of the men's singles at Wimbledon in 22 years; professional sports brand Socony launched a new generation of stable The professional sports brand Socony launched a new generation of stable and lightweight running shoes "Tempus Tanto".

According to Everbright Securities, the main brand and the new brand have their highlights, capturing the needs of various consumers.

In the second quarter, the growth rate of the retail flow of Xstep's main brand slowed down, but the company actively responded by digesting inventory through e-commerce or Outlets. The company is trying to cooperate with international brand distributors and layout stores in shopping centers in high-tier cities and has now joined hands with Baosheng to complete the opening of one store each in Hebei and Anhui. Everbright Securities continues to be optimistic that the company will benefit from the trend of sports and fitness and national trends, and the strength of its multi-brand layout, but there is still uncertainty about the impact of the epidemic.