CICC: Maintains "Outperform" rating on 361 DEGREES (01361); 3Q26 continues healthy growth.

CICC released a research report maintaining its 2026/27 EPS forecasts for 361 DEGREES (01361) at RMB 0.66/0.73 unchanged. The current share price corresponds to 6.0/5.3x 2026/27 P/E. It maintains its target price of HKD 5.69, corresponding to 7/7x 2026/2027 P/E, implying 23% upside from the current share price, and maintains its "Outperform" rating. CICC's key views are as follows: Company Update The company announced its operating conditions for the third quarter of 2026: offline retail sales of the 361 DEGREES main brand and childrenswear both grew by a mid-single-digit percentage year-on-year, while sales on e-commerce platforms grew by a mid-to-high-single-digit percentage year-on-year. 3Q26 sales continued a steady growth trend, with overseas business continuing to grow with the support of the Asian Games On the offline channel side, in 3Q26 both the main brand and childrenswear achieved mid-single-digit year-on-year growth in offline sales, remaining resilient despite overall industry pressure. Meanwhile, the company continued to maintain healthy operations, with offline retail discounts flat year-on-year at 30% off, and the inventory-to-sales ratio maintained in the 4.5-5x range. On the online channel side, in 3Q26, supported by the continued launch of standout products, the company achieved mid-to-high-single-digit year-on-year growth in online sales despite a high base, with discounts remaining stable. On the overseas business side, as an official partner of the Nagoya Asian Games in September, the company further enhanced the brand's overseas visibility. In 3Q26, overseas sales growth maintained the growth trend of 1H26, with good performance in both online standalone sites and offline channels. Super stores progressed ahead of expectations, with multiple categories gaining momentum to continuously enrich the product matrix As of the end of 3Q26, the company added 21 super stores, bringing the total to 208, reaching the full-year guidance ahead of schedule, reflecting distribution partners' recognition of this retail innovation. The more comprehensive product layout and better experience of super stores helped drive a new customer acquisition rate of 75%, demonstrating consumers' affirmation of this multi-category one-stop store layout. On the product side, in 3Q26 the company continued to iterate new products in traditional core categories In the running shoe category, it launched new products such as MEGA 3 Pro and Rain Shield 10th Generation, and in the basketball category it launched AG7 and others, continuously enhancing competitive advantages. At the same time, the company also launched new categories including tennis shoes in 3Q26 to cater to consumers' more diversified sports needs. 4Q26 started smoothly, with full-year guidance maintained. The company stated that during the Mid-Autumn Festival and National Day holidays, sales continued to maintain healthy growth momentum. It maintains its 2026 revenue guidance of 8-10% year-on-year growth. In addition, the 2Q27 order fair showed good growth, in line with management expectations. Risk Terminal retail environment worse than expected, intensified industry competition, and channel expansion worse than expected.