20180709-中国银河国际证券-特步国际-01368.HK-Running_Specialist._Initiate_with_BUY._15页_1mb

报告摘要

Xtep International [1368.HK] Summary

Core Content

Xtep International, listed on the Hong Kong Stock Exchange (1368.HK), is a Chinese sportswear brand that has undergone significant transformation since 2015. The company has repositioned itself as a professional running products brand, aiming to capitalize on the growing popularity of running in China. Despite initial financial setbacks due to one-off items and legacy issues, the company is expected to show recovery and growth from 2018 onwards.

Main Points

Brand Transformation: Xtep initiated a three-year reform program called "3+ Revolution" in 2015, focusing on becoming a professional sportswear brand. This has led to a significant shift in product mix, with approximately 50% now dedicated to professional sportswear.
E-commerce Growth: Xtep has been a top performer in e-commerce, with 21% of revenue coming from online sales in 2017, the highest among domestic brands. This has been supported by exclusive online products and a coordinated O2O model.
Channel Reforms: Xtep simplified its distribution network, with 60% of stores now directly operated by exclusive distributors. This has improved store profitability and inventory management.
Financial Recovery: The company's financial performance is expected to recover from 2018 onwards, with operating profit growth of 37.4% in 2018E and EPS CAGR of 24.4% from FY2017 to FY2020E.
Investment Thesis: The company is recommended for a "BUY" rating, with a target price of HK$6.67 based on a 17x 2019E PER multiple, which is higher than its historical range but justified by earnings recovery and market re-rating.

Key Financials (RMB m)

Metric	FY2016	FY2017	FY2018E	FY2019E	FY2020E
Revenue	5,397	5,113	5,575	6,160	6,621
YoY Change	1.9%	-5.2%	9.0%	10.5%	7.5%
Net Profit After Tax	528	408	574	701	787
YoY Change	-15.2%	-22.7%	40.7%	22.0%	12.3%
EPS (RMB)	0.24	0.19	0.26	0.32	0.36
YoY Change	-17.5%	-21.3%	40.7%	22.0%	12.3%
ROE	10.9%	8.2%	11.0%	12.9%	13.6%
P/E	17.7x	22.5x	16.0x	13.1x	11.6x
Dividend Yield	3.4%	4.5%	3.8%	4.6%	5.2%

Key Financial Metrics

EPS Growth: Expected to grow at 40.7% in FY2018E, 21.6% in FY2019E, and 12.6% in FY2020E, with a CAGR of 24.4% from FY2017 to FY2020E.
Operating Profit Growth: Projected to grow by 37.4% in FY2018E, with continued margin expansion.
Store Growth: Store count is expected to increase by 6% to 6,350 in 2018E, with a 7% improvement in per-store productivity.
Valuation: Target price of HK$6.67 is based on a 17x 2019E PER multiple, which implies a ~1x PEG ratio given the 17.0% EPS CAGR between FY2018E and FY2020E.

Investment Highlights

Professional Branding: Xtep has successfully transformed into a professional running brand, with a focus on footwear for runners.
Product Improvements: Introduced three key product series (Dynamic Foam, Reactive Coil, Air Mega) and partnered with leading materials companies to enhance product quality.
Marketing Strategy: Actively involved in sports events, including being a strategic partner of the Chinese Athletic Association and sponsoring 29 major marathons in 2017.
E-commerce Success: Strong online performance with exclusive products and an O2O model, contributing to improved inventory turnover and store efficiency.
Channel Optimization: Reduced the number of stores to optimize performance and increased the role of exclusive distributors in managing stores directly.

Key Ratios

Ratio	FY2016	FY2017	FY2018E	FY2019E	FY2020E
ROE	10.9%	8.2%	11.0%	12.9%	13.6%
ROA	6.5%	5.0%	6.4%	8.2%	8.5%
P/E	17.7x	22.5x	16.0x	13.1x	11.6x
P/B	1.9x	1.8x	1.7x	1.6x	1.5x
Dividend Yield	3.4%	4.5%	3.8%	4.6%	5.2%

Market Context

China's Sporting Goods Market: Running is now the most popular sport in China, with the number of participants expected to grow at a CAGR of 26% from 2017 to 2020E.
Industry Trends: Xtep is positioned to benefit from the rising participation in marathons and road races, which are still in early stages of development in China compared to the US.
E-commerce Penetration: With a strong online presence and a high contribution to revenue, Xtep is expected to continue leveraging e-commerce for growth and higher margins.

Strategic Initiatives

"3+ Revolution": A three-year reform plan focusing on Products+, Sports+, and Internet+.
O2O Model: Helps coordinate e-commerce and physical stores, improving inventory turnover and store efficiency.
Exclusive Online Products: ~50% of SKUs are exclusive to e-commerce, preventing cannibalization and improving turnover.
Inventory Management: Implemented an ERP system and inventory-sharing strategy to optimize stock levels and delivery times.

Conclusion

Xtep's transformation into a professional running brand, combined with its successful channel reforms and strong e-commerce performance, positions it well for future growth. The company is expected to recover financially from 2018E onwards, with positive EPS growth and improved margins. The investment thesis supports a "BUY" rating, with a target price based on a re-rated PER multiple.

展开完整摘要