Xtep International (01368.HK) Positive profit alert with 2021 earnings up by no less than 70% March 11, 2022 224

PSR Recommendation: BUY Status: Initiation
Target Price: HKD14.15

Positive profit alert with 2021 earnings up by no less than 70%
Xtep announced a positive profit alert, and is expected to record a significant increase of not
less than 70% in its consolidated profit attributable to ordinary equity holders for the year
2021 as compared to that for the year 2020.
In addition, Xtep also announced the operation data of 4Q2021. Xtep’s core brand products
retail sell-through (including offline and online channels) grew by 20%-25% (mid-teens growth
in 3Q2021), retail discount level stayed at 25%-20%, and inventory turnover was about 4
months, which was flat QoQ. The core brand products retail sell-through increased by more
than 30% in 2021, which was better than a high single-digit growth in the same period last
year. The inventory turnover was about ~4 months, better than ~5 months in 2020. A strong
increase in consolidated revenue for the 2021 driven by: (1) an over 30% growth in core Xtep
brand’s revenue in second half of 2021 due to robust sales orders from distributors following
our successful launch of signature functional and lifestyle products and retail channel upgrade
during the Year; (2) accelerated revenue growth of the core Xtep brand’s e-commerce and
kids’ businesses given the respective completed restructurings from branding, products to
operations. An expansion in the gross profit margin of the core Xtep brand primarily
attributable to (1) our continual effort in product innovations and better product offerings;
and (2) a lower base of comparison triggered by the one-off inventory buy-back in 1H2020.

About the author

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Eric Li
Analyst
Research

李浩然先生(Eric Li) 高級分析師 現任現為輝立証券持牌高級分析師,曾任職股票基金、家族辦公室及證券公司等,擁有多年的證券研究部門從業及投資經驗,並先後於香港最暢銷的財經媒體撰寫投資專欄。畢業於香港理工大學電子計算系。 Eric is currently a licensed research analyst at Phillip Securities. Prior to joining Phillip Securities, he has years of equity research and investment experiences in asset management company, family office and securities company. Meanwhile, he has written investment columns in Hong Kong`s best-selling financial media for years. He holds Bachelor of Arts in Computing from The Hong Kong Polytechnic University.

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