24 Aug 2023
Xtep’s 1H23 revenue was up by 14.8% YoY to Rmb6,522m, mainly driven by i) 10.9% YoY growth from core brand sales to Rmb5,430m as a result of the strong orders from distributors for its signature brands and new functional products and ii) 18.9%/119.9% YoY increase to Rmb749m/Rmb344m for K&P/S&M. Overall GPM was up by 0.9ppt YoY to 42.9% amid increase in demand of the higher-margin functional products. Xtep expects its FY23 GPM to further improve as subsidies to distributors are no longer necessary after the pandemic. On the cost side, SG&A was up by 26% YoY to Rmb2,147m driven by i) 35% YoY up in S&D expense to Rmb1,510m on a 48% up in A&P due to resumption of marathon sponsorships; ii) sponsorship for the FISU World University Games, iii) appointment of new Xtep basketball spokespersons, and iv) increase in the advertising campaigns. As a result, NP surged by 12.7% YoY to Rmb665m. Interim-DPS was at HK$0.137, representing a payout ratio of 50%.