22 Mar 2023

FY22 revenue was up 17.3% YoY to Rmb7.0bn, with core brand retail value up by high-teens/low-teens/mid-teens/flat YoY and that of 361º Kids up by 20-25%/20-25%/20-25%/LSG YoY in 1Q/2Q/3Q/4Q. GPM was down by 1.2ppt YoY to 40.5%, with footwear/apparel/accessories/kids GPM record a change of -1.9/+0.2/-2.4/-0.3ppt YoY to 41.2%/41.6%/36.0%/40.9% as raw material costs increase and the company shifted more orders to OEMs during the pandemic, partly offset by the impact of the increase in AWP to recover part of the increase in cost of production. S&D expense surged by 26% YoY to Rmb1,433m (S&D cost ratio – FY22: 20.6%, FY21: 19.2%) as A&P and E-commerce related charges were up by 31%/28% YoY with more A&P and online activities held to promote the brand and increase in charges related to logistic, service fees and trade fairs in online biz, while admin expense was down by 3.0% YoY to Rm541m due to adoption of refined digital management, which effectively control cost on travelling, entertainment, office expenses, while partially offset by a 7.6% YoY increase in R&D to Rmb266m. As a result, NP was up by 24.2% YoY to Rmb747m.

CROSBY Research – 361 Degrees (1361 HK/BUY): Solid FY22 results, Kids segment and online sales continue to drive growth