14 Aug 2025
1H25 revenue increased by 11.0% YoY to Rmb5.70bn, with adults footwear and apparel up by 12.8% and 1.6% YoY, respectively, while kidswear surged by 11.4% YoY. GPM edged up by 0.2ppt YoY to 41.5%, as adult footwear/apparel GPM up 0.5/1.1 ppt YoY on effective cost control and better pricing, while partially offset by a 0.8ppt YoY decline in kids apparel products due to higher sales from lower margin value-for-money products to improve cross-selling. Selling expense surged by 13.2% YoY to Rmb1,037m (selling expense ratio – 1H25: 18.2%, 1H24: 17.8%) as commissions and other service fees paid to e-commerce platforms, including Tmall, Taobao, and JD.com, were up by 45% YoY amid a 45% YoY increase in web-exclusive products sold online during the period, while admin expense was up by 6.7% YoY to Rmb332m due to a 12% increase in R&D costs to Rmb160m and a 24% YoY increase in D&A. R&D ratio was flat at 2.8% in 1H25. Finance cost was down by 34% YoY to Rmb5.4m with less bank loans and lower funding costs (edged down 0.2ppt YoY). Effective tax rate was slightly up to 22.9% (1H24: 21.9%). As a result, NP surged by 8.6% YoY to Rmb857.7m, which accounted for 67% of our FY25 new estimates of Rmb1,280m.