20240110-招银国际-特步国际-01368.HK-4Q23_was_inline_but_macro_is_still_challenging_9页_1mb

Xtep (1368 HK) Equity Research Update

Overview

This report analyzes Xtep's performance for the fourth quarter of 2023 and provides forward-looking guidance for the 2024 fiscal year. The key sectors covered include running apparel, non-running segments, and overall financial metrics.

Key Findings

• 4Q23 Performance: Retail sales grew more than 30%, inline with management guidance and slightly better than estimates. Growth was attributed to a low base, favorable weather, and modest e-commerce contribution. However, concerns persist over the challenging macroeconomic environment.
• Management Guidance: No FY24E sales guidance finalized, but conservative forecast of 10-11% growth is expected. Buying pressure from major players in an Olympic year may overshadow Xtep, though valuation remains attractive.
• Segment Analysis: The running segment, driven by new products like the 160X 5.0, shows strength. Conversely, the non-running segment faces risks in ASP increases and e-commerce growth, leading to reduced net profit forecasts.
• Financial Forecasts: Net profit for FY24E-FY25E is revised down by 7-9%, with P/E ratios at 8x/7x. Target price lowered to HK$7.07 (85.5% upside).
• Market Position: Xtep is rated BUY, but peers like Anta and Topsports are expected to benefit more in 2024 due to Nike/Adidas exposure.

Valuation and Recommendation

• Rating: BUY, based on distressed valuation (8x/7x FY23E/FY24E P/E).
• Target Price: HK$7.07 (down from HK$7.62).
• Competition: Xtep may not be a top pick for widespread gains, with industry expected to underperform due to macro challenges.
• Key Metrics:
  • Revenue growth: 14.4% for FY23E, 11.2% for FY24E.
  • Net profit margin: 7.2% for FY23E, 8.5% for FY25E.
  • EV/Sales ratio: 0.6 for FY24E.

Detailed Analysis

• Segments: Running segment drives growth via value products, while non-running sales, ASPs, and e-commerce growth face scrutiny.
• Risks: Inventory clearance widened QoQ, but margins are expected to expand. Full-year NP forecasts cut due to slower sales momentum.
• Forward Outlook: Unrealized opportunities in value products, but cautious stance on e-commerce and overall market conditions.

Financial Summary

• Key Ratios: P/E has fallen from 21.0x to 7.0x, P/B from 2.4x to 0.9x. ROE improved to 15.8%.
• Target Price Impact: 13x FY24E P/E; potential upside of 85.5%.
• Major Assumptions: Sales growth slowed in mass market and athleisure, with mass market leading at 8.7% for FY24E.

For specific data details, refer to company and CMB estimates.