Huaxi Securities Maintains "Buy" Rating on BOSIDENG (03998), Highlights Strong Growth in Core Brand

Stock News11-28

Huaxi Securities reiterated its "Buy" rating on BOSIDENG (03998), citing multiple growth drivers across short, medium, and long-term horizons.

In the near term, the company is expected to benefit from a low base effect during the peak season in H2 FY25/26, with franchisees likely to operate more efficiently post-inventory adjustments. Direct-operated pop-up stores and online channels are projected to accelerate growth compared to H1 performance.

Medium-term growth will be driven by BOSIDENG's outdoor product line, including upgraded iterations of sun-protective clothing, lightweight down jackets, and versatile all-season outerwear like the three-way convertible down parka.

Long-term potential lies in market share expansion for functional apparel categories, filling regional distribution gaps, improving single-store efficiency, and optimizing cost controls to enhance net profit margins.

Key financial highlights for FY25/26 H1: - Total revenue reached RMB 8.928 billion, with down apparel contributing RMB 6.568 billion - Net profit attributable to shareholders stood at RMB 1.189 billion - Operating cash flow totaled RMB 1.084 billion - Interim dividend of 6.3 HK cents per share declared (60.87% payout ratio)

Brand performance breakdown: 1) Core brand BOSIDENG grew 8.3% to RMB 5.719 billion, primarily driven by store expansion (3558 total stores, +88 net new) 2) Snow Flying and Bing Jie sub-brands generated RMB 378 million and RMB 15 million respectively 3) Online sales reached RMB 1.426 billion (+2.2% YoY), accounting for 21.7% of down apparel revenue

Operational improvements: - Gross margin expanded 0.2ppt to 50.0% - OPM increased 0.3ppt to 17.0%, supported by 1.7ppt reduction in sales expense ratio - Inventory declined 20% YoY to RMB 4.735 billion, with turnover days improving by 11 days - Membership base grew to 21.4 million across Tmall and JD platforms, with 11 million TikTok followers

Potential risks include slower-than-expected store expansion, warmer winter weather, underperformance in sun-protective apparel sales, and systemic market risks.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment