China Securities Co., Ltd.: Maintains "buy" rating on XTEP INT'L (01368) with 25Q3 Saucony brand retail sales up more than 20%

China Securities Co., Ltd. released a research report, maintaining a "buy" rating for XTEP INT'L (01368), predicting the company's revenue for 2025-2027 to be 14.32 billion, 15.26 billion, and 16.37 billion RMB, with year-on-year growth of +5.5%, +6.6%, and +7.2% respectively; net profit attributable to shareholders is expected to be 1.37 billion, 1.52 billion, and 1.67 billion RMB, with a year-on-year increase of +10.5%, +11.1%, and +10.0%, and profit margins of 9.6%, 10.0%, and 10.2% respectively. The company released a report on its operational performance in the third quarter of 2025: in Q3 of 2025, Xtep's main brand retail sales saw a slight increase year-on-year, with retail discounts at around 7-7.5% and inventory turnover at about 4-4.5 months. Saucony brand retail sales in Q3 of 2025 grew by over 20%. The report states that in Q3 of 2025, Xtep's main brand saw a slight increase in revenue, with online growth continuing to outpace offline, and children's products outperforming adult products. Discounts on products in Q3 of 2025 remained at 7-7.5% compared to the previous quarter. As of the end of Q3, the company's channel inventory turnover days were at 4-4.5 months, staying the same compared to the previous quarter. The company continues to promote its full product line for running, upgrade offline stores, and focus on outlet expansions. Saucony brand revenue in Q3 of 2025 grew by over 20%, with offline sales still showing strong growth of over 30%, and e-commerce undergoing adjustments. By the end of September, Saucony had more than 170 stores, with nearly 30 added since the beginning of the year. Looking ahead to Q4 of 2025: 1) Xtep plans to regain distribution rights for approximately 400-500 Xtep stores in the second half of 2025 and 2026 (approximately 100 in 2025), which is expected to have a short-term impact on income; 2) Saucony brand will continue to open offline stores (with plans to open 30-50 new offline stores throughout the year) and appropriately reduce online product discounts.