Nomura released a research report stating that the company's performance in 1HFY25 exceeded expectations, maintaining a target price of HK$5.63 for bosideng (03998) for FY25/26 EPS forecasts of 0.33/0.38 yuan, while maintaining an 'outperform industry' rating. The company focuses on strengthening its core down jacket business and emphasizes the 'fashionable functional technology clothing' segment, driving innovation in new product categories, while further improving the quality and efficiency of single-store operations to enhance fine operational capabilities.

The company announced its 1H FY25 performance: revenue grew by 18% to 8.8 billion yuan, and net income attributable to the parent grew by 23% to 1.1 billion yuan, surpassing the bank's expectations, mainly due to the strong growth of the brand's down jacket business. The company declared an interim dividend of 6.0 HKD cents per share, corresponding to a payout ratio of approximately 54%.

The report mentions that the company's down jacket business continues to achieve healthy growth. The revenue from the branded down jacket business in 1HFY25 increased by 23% to 6.1 billion yuan, of which self-operated revenue increased by 37% to 2.3 billion yuan, and wholesale revenue increased by 13% to 3.4 billion yuan. The company focuses on optimizing channel quality, continues to expand the creation of Top store system, solidifies single-store operations, with a net closure of 29 stores to 3,188 during the period. Online business emphasizes core product categories and fine-tuned operations, with revenue increasing by 24% to 1.4 billion yuan.

From a brand perspective, in 1H FY25 the core brand bosideng's revenue grew by 19% to 5.3 billion yuan, accounting for 87% of down jacket revenue. Xuezhongfei is focusing on cost-effectiveness, driving the brand upward, with revenue increasing by 47% to 0.39 billion yuan. Bingjie continues to focus on online channels, with revenue increasing by 62%. OEM business in 1H FY25 still saw a revenue growth of 13% to 2.3 billion yuan, demonstrating the company's good customer service capabilities. The women's clothing business was affected by the retail environment, with revenue decreasing by 22% to 0.31 billion yuan, while the diversified clothing business saw a revenue increase of 21% to 0.12 billion yuan.

The bank stated that bosideng's gross margin remained stable year-on-year, with operational efficiency continuing to improve. The company's gross margin for 1HFY25 was 49.9%. Thanks to the improvement in the company's operational efficiency, the sales expense ratio decreased by 1.3 percentage points during the period; the amortization of stock options increased and led to a 0.9 percentage point increase in the management expense ratio. Government subsidies amounted to 0.2 billion yuan (vs. 0.11 billion yuan in 1HFY24), resulting in a 0.2 percentage point increase in operating profit margin for 1HFY25, with the branded down jacket business contributing to a 1.2 percentage point increase in operating profit.

1HFY25