Jinwu Financial News | Guosen Securities Research Report indicates that TOPSPORTS (06110) will experience a reduced decline in revenue for the third quarter of fiscal year 2025 (September to November 2024). The slowdown in revenue growth and the decrease in the number of stores this year are primarily affected by weak macro consumer demand and declining offline foot traffic. The company currently prioritizes maintaining healthy inventory and expects significant improvements by the end of the fiscal year. The management has maintained its guidance this fiscal year, and the pessimistic expectations are relatively sufficient. In the next fiscal year, healthy inventory is expected to support good growth, while channel adjustments are also expected to stabilize. Moreover, based on the company's strong cash-generating capability, a high dividend payout is anticipated, with a mid-term payout ratio reaching 99%, and an annual expectation of 100%.
The firm stated that for the brand side, the main brand Adidas has performed excellently this year, with high single-digit revenue growth in Greater China during the first three quarters. The company has raised its full-year guidance three times and expects a 10% year-on-year increase in annual revenue. Nike is in a transitional period, with relatively poor performance this year. The FY25Q2 results, ending in November, will be disclosed on December 19. If the guidance improves, it is expected to boost TOPSPORTS' valuation. With the new CEO taking office, Nike restoring its core competitive edge in product innovation, and the launch of new products, FY2026 Nike performance is likely to rebound, coupled with improved market conditions under China's consumer stimulus policies, thus giving TOPSPORTS a solid fundamental resilience. Additionally, among the company's non-core brands, the outdoor sports brand maintains a high level of prosperity.
The firm stated that it maintains its profit forecast, expecting net income for the fiscal years 2025 to 2027 to be 1.44/1.79/1.92 billion yuan, year-on-year -35.1%/+24.5%/+7.6%. The reasonable valuation range is between 3.8 to 4.0 Hong Kong dollars, corresponding to a 15 to 16 times PE ratio for fiscal year 2025, maintaining an "outperform the market" rating.
