CICC has released a research report maintaining its "Outperform" rating on 361 Degrees (01361).
The brokerage kept its 2026/27 earnings per share forecasts unchanged at RMB 0.66/0.73. Based on the current share price, this implies price-to-earnings ratios of 6.0/5.3 times for 2026/27. CICC maintained its target price of HK$5.69, corresponding to 7/7 times 2026/2027 price-to-earnings, implying 23% upside from the current share price, and reaffirmed its "Outperform" rating.
The key points from CICC are as follows.
Recent company developments. The company reported its operating results for the third quarter of 2026: offline retail sales for the 361 Degrees main brand and childrenswear both grew by a mid-single-digit percentage year on year, while e-commerce platform sales rose by a mid-to-high single-digit percentage year on year. Third-quarter 2026 sales maintained a steady growth trend, with overseas business continuing to grow on the back of the Asian Games.
Offline channels. In the third quarter of 2026, offline sales for both the main brand and childrenswear achieved mid-single-digit year-on-year growth, remaining resilient even as the overall industry faced pressure. Meanwhile, the company continued to maintain healthy operations, with offline retail discounts flat year on year at 70% of full price, and the inventory-to-sales ratio held in the 4.5-5x range.
Online channels. In the third quarter of 2026, supported by the continued launch of premium products, the company's online sales achieved mid-to-high single-digit year-on-year growth on a high base, with discounts remaining stable.
Overseas business. As an official partner of the Nagoya Asian Games in September, the company further enhanced its brand visibility overseas. Overseas sales growth in the third quarter of 2026 maintained the growth trend seen in the first half of 2026, with both online standalone sites and offline channels performing well.
Superstore rollout beat expectations, with multiple categories driving a continuously enriched product matrix. By the end of the third quarter of 2026, the company had added 21 superstores, bringing the total to 208, reaching its full-year guidance ahead of schedule, reflecting dealer partners' recognition of this retail innovation. The superstores' more comprehensive product layout and better experience helped drive a new-customer acquisition rate of 75%, demonstrating consumer endorsement of this multi-category, one-stop store format. On the product front, in the third quarter of 2026 the company continued to iterate new products in its traditional core categories, launching new items such as the MEGA 3 Pro and Rain Shield 10 in the running shoe category, and the AG7 in the basketball category, continuously enhancing its competitive advantages. At the same time, the company also launched new categories including tennis shoes in the third quarter of 2026 to cater to consumers' increasingly diverse sports needs.
The fourth quarter of 2026 started smoothly, with full-year guidance maintained. The company said that during the Mid-Autumn Festival and National Day holidays, sales continued to maintain healthy growth. It maintained its guidance of 8-10% revenue growth for 2026. In addition, the second quarter of 2027 order fair saw good growth, in line with management's expectations.
Risk warnings: terminal retail environment falling short of expectations, intensifying industry competition, and channel expansion falling short of expectations.
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