Everbright Securities Maintains "Buy" Rating on BOSIDENG (03998) as Down Apparel Business Shows Steady Growth

Stock News12-01

Everbright Securities reiterated its "Buy" rating on BOSIDENG (03998), noting that the company achieved stable revenue growth and improved net profit margin year-on-year in the first half of the fiscal year despite external volatility. The core down apparel business and flagship BOSIDENG brand both posted high single-digit revenue growth, reflecting solid and improving operational quality. With autumn and winter being peak seasons for down apparel, the brokerage expects the company’s leading brand advantage to drive sales in the second half of the fiscal year.

Key financial highlights for H1 FY2025/26: - Revenue reached RMB 8.93 billion (+1.4% YoY), with net profit attributable to shareholders at RMB 1.19 billion (+5.3% YoY). - EPS stood at RMB 0.10, with an interim dividend of 6.3 HK cents per share. - Gross margin edged up 0.1 ppt to 50%, while operating margin rose 0.3 ppt to 17%. Net margin improved 0.5 ppt to 13.3%.

Business segment breakdown: - Down apparel (73.6% of revenue) grew steadily, led by: - Flagship BOSIDENG brand (87.1% of down segment revenue) - Self-operated (+6.6% YoY) and wholesale (+7.9% YoY) channels - Online sales: RMB 1.38 billion (+2.4% YoY), accounting for 21.1% of down apparel revenue - Offline sales estimated to grow ~9% YoY - Store network expanded to 3,558 (+88 stores from FY start), including 3,140 BOSIDENG-branded outlets.

Margin and efficiency improvements: - Down apparel gross margin: 59.1% (BOSIDENG brand: 64.8%) - Operating expense ratio declined 1.1 ppt to 32.4% - Inventory days reduced by 11 days to 178; receivables days down 4 days to 59 - Operating cash outflow narrowed 68.9% YoY

Brand enhancement initiatives: Recent upgrades include: - "Overlap Evolution" new product line - Nanjing Road flagship store renovation - Paris Fashion Week showcase of "Master Puff" collection - Collaboration with UK designer Kim Jones for premium BOSIDENG AREAL line - Second partnership with Errolson Hugh for VERTEX hybrid down series

Risks: Weak consumer demand, extreme weather, ineffective marketing spend, underperformance of new products/smaller brands.

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