20221019-招银国际-特步国际-01368.HK-Guidance_softens_with_mounting_inventory_risks_8页_1mb

报告摘要

Xtep (1368 HK) Company Update Summary

Core Content

Xtep, a Chinese sportswear company, has revised its guidance for 4Q22E and FY23E due to weakening demand and increasing inventory risks. Despite these challenges, the company remains a BUY with a revised target price (TP) of HK$10.52, which implies a 19x FY23E P/E ratio. This is considered reasonable given the company's projected 20% net profit CAGR from FY21 to FY24E and its current valuation at 0.9x PEG.

Main Points

Guidance Softening: Xtep has become more cautious about 4Q22E and FY23E due to the impact of the 10-1 Golden Week and potential increases in retail discounts to clear inventory.
Inventory Pressure: The inventory to sales ratio slightly worsened to 4.5–5.0 months in 3Q22E, compared to 4.5 months in 2Q22.
Performance in 3Q22E: Retail sales grew by 20–25% YoY, inline with CMBI estimates, but growth slowed in September 2022 to low-teens. Retail discounts remained at 25–30% off, consistent with previous quarters.
Earnings Revision: CMBI has revised down FY22E, FY23E, and FY24E net profit estimates by ~8%, ~10%, and ~8% respectively. The target price has been reduced from HK$17.04 to HK$10.52.
Valuation: The company is currently trading at a 15x FY23E P/E and 1.8x P/B, with a yield of 5.2%. It is considered undervalued with a 0.9x PEG.
Outlook for 2025: Management remains optimistic about the 2025 target, believing that 20%+ YoY retail sales growth is achievable with no disruption from the pandemic, supported by current branding, product, and channel quality.
Performance Trends: The company's performance in 3Q22E was weaker than previous quarters, with a slowdown in sales growth and margin pressure.

Key Financials

Metric	FY20A	FY21A	FY22E	FY23E	FY24E
Revenue (RMB mn)	8,172	10,013	12,591	14,672	16,774
YoY growth (%)	-0.1	22.5	25.7	16.5	14.3
Net income (RMB mn)	513	908	1,052	1,248	1,579
EPS (RMB)	0.206	0.355	0.406	0.474	0.599
YoY growth (%)	-31.6	72.1	14.3	16.7	26.5
P/E (x)	32.8	18.8	16.5	14.5	11.5
P/B (x)	2.4	2.1	2.1	2.0	1.8
Yield (%)	1.7	3.2	3.0	4.1	5.2
ROE (%)	7.0	11.4	12.4	13.7	16.0
Net gearing (%)	Net cash	Net cash	Net cash	Net cash	Net cash

Key Assumptions

Segment Sales:
- Shoes: Expected to grow at 15.7% in FY23E.
- Apparel: Projected to grow at 18.0% in FY23E.
- Accessories: Expected to grow at 7.0% in FY23E.
Segment Growth:
- Mass market: 15.9% growth in FY23E.
- Athleisure: 12.7% growth in FY23E.
- Professional sports: 50.8% growth in FY23E.
Operating Margins:
- Gross margin: Expected to be 42.1% in FY23E.
- EBIT margin: Expected to be 12.9% in FY23E.
- Net profit margin: Expected to be 8.5% in FY23E.

Valuation Comparison

Company	Ticker	Rating	12m TP (LC)	Price (LC)	Up/Downside	Mkt. Cap (HK$ mn)	Year End	P/E (x)	P/B (x)	ROE (%)	3yrs PEG (x)	Yield (%)
Xstep Intl	1368 HK	BUY	17.04	12.62	35%	33,252	Dec-21	23.8	3.3	13.5	1.1	2.5
Anta Sports	2020 HK	BUY	122.05	92.00	33%	249,653	Dec-21	26.8	6.3	25.5	1.7	1.5
Li Ning	2331 HK	BUY	80.64	69.90	15%	183,011	Dec-21	33.1	6.3	26.1	1.8	0.9
Nike Inc	NKE US	NR	n/a	111.79	n/a	1,376,068	May-22	29.6	11.2	43.1	2.3	1.1
Adidas	ADS GY	NR	n/a	157.16	n/a	236,591	Dec-21	23.1	4.4	29.5	(4.3)	1.9
Puma	PUM GY	NR	n/a	62.84	n/a	74,274	Dec-21	23.8	3.8	16.0	1.3	1.4
Under Armour	UAA US	NR	n/a	9.08	n/a	30,521	Mar-23	17.8	2.1	n/a	3.9	0.0
Lululemon	LULU US	NR	n/a	319.44	n/a	319,975	Jan-22	33.0	12.6	38.4	1.7	0.0
Skechers	SKX US	NR	n/a	39.29	n/a	48,018	Dec-21	14.6	1.6	23.3	(3.1)	0.0
Vf Corp	VFC US	NR	n/a	43.76	n/a	133,413	Apr-22	14.4	4.4	30.4	8.1	4.7
Columbia	COLM US	NR	n/a	74.35	n/a	36,228	Dec-21	14.4	3.1	18.5	1.9	1.6

Financial Summary

Income Statement:
- Revenue: RMB 14,672 million in FY23E.
- Gross profit: RMB 6,172 million in FY23E.
- EBIT: RMB 1,900 million in FY23E.
- Net profit: RMB 1,248 million in FY23E.
Cash Flow Summary:
- Net cash from operating: RMB 813 million in FY23E.
- Capex & investments: RMB -414 million in FY22E.

Conclusion

Xtep is currently undervalued and shows potential for future growth. While short-term challenges such as inventory risks and slowing sales growth are present, the company's long-term outlook remains positive. CMBI maintains a BUY rating with a revised target price of HK$10.52, reflecting a more conservative outlook but still indicating strong value potential.

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