Shenwan Hongyuan Group Co.,Ltd. released a research report maintaining its earnings forecasts for 361 DEGREES (01361), projecting net profit of RMB 1.44 billion, RMB 1.57 billion, and RMB 1.70 billion for 2026-2028, corresponding to PE ratios of 6x, 5x, and 5x, and reiterating its "Buy" rating.
The brokerage noted that the company has been deeply engaged in the sportswear industry for more than two decades and has accelerated efforts in recent years to strengthen its product, brand, and channel capabilities. Brand upgrading continues to advance, and channel optimization results are gradually emerging. Against the backdrop of consumption tiering, the company's products combine high cost-effectiveness with strong functional advantages, and its channels are mostly located in lower-tier markets. With short-term catalysts from sporting events combined with the company's long-term efficient operations, it is expected to continue achieving growth faster than the industry, increase market share, and the brokerage remains bullish on its future development.
The main views of Shenwan Hongyuan Group Co.,Ltd. are as follows: 361 Degrees released its 26Q3 operating data, with offline sales of the main brand and kids' wear growing steadily, while online performance outpaced offline. In 26Q3, offline sales of both the main brand and kids' wear achieved mid-single-digit growth, while online sales grew at a mid-to-high single-digit rate year-on-year, in line with expectations. Overall sales during the Mid-Autumn and National Day holidays also performed well. In the current weak consumer environment, the company achieved steady sales growth, reflecting the appeal of its products' core competitiveness and high quality-price ratio to consumers' repurchase rates.
Inventory-to-sales ratio remained stable, and discount levels stayed at a stable and healthy level. As of the end of 26Q3, the company's inventory-to-sales ratio remained at 4.5-5x, with sell-through and attachment rates at normal levels. Offline discounts were approximately 30% off, slightly deeper than the 29% off in 26Q2, mainly related to third-quarter weather and consumption trends as well as industry competition. E-commerce footwear and apparel discounts were approximately 55-60% off, with overall inventory and discount levels under control.
Super stores completed the full-year store opening target ahead of schedule, and new customer acquisition capability continued to improve. 361 Degrees added 21 super stores in 26Q3, bringing the domestic total to 208, completing the full-year store opening guidance ahead of schedule. The new customer acquisition rate at super stores was approximately 75%, a steady improvement from the previous roughly 65%. The user base is concentrated in the 30-45 age group, with more family consumption scenarios and clear demand for basic products. Stores attract consumers through a quality product mix, fixed-price and multi-item discounts, and online coupon redemption. The product matrix covers premium items, mid-range price points, and basic products, providing a one-stop shopping experience and effectively boosting attachment rates.
By category, running and basketball categories grew steadily, while new categories such as tennis and HYROX were actively expanded. In 26Q3, 361 Degrees completed iterations of multiple running shoes, including the Magic Carpet 3rd Generation, Feibiao Air 3 non-plated training shoes, and children's running shoes. The running category maintained good growth in the third quarter. The basketball category faces intense market competition, with international brands offering deeper discounts, but the company's basketball business faced less pressure than peers in the third quarter and grew steadily. In the third quarter of 2026, the company newly launched tennis shoes, leveraging the popularity of the US Open and China Open events. With high cost-effectiveness, they gained consumer favor and received positive market feedback. The company uses running, basketball, outdoor, and other functional categories as its foundation, while continuously expanding niche categories such as pickleball shoes and HYROX shoes to create new growth highlights.
The outdoor brand and overseas business continued to be cultivated, with substantial long-term growth potential. One Way advanced both online and offline efforts, with store numbers remaining stable; online coverage already includes platforms such as Tmall, JD.com, Douyin, and Xiaohongshu. Before the peak season, SKUs increased to 160-200, enriching the product matrix. Going forward, the focus will be on capturing female consumer demand, increasing female product-related SKUs, and continuously amplifying the high quality-price ratio advantage. Overseas, the company currently has more than 1,100 overseas sales outlets, with strong growth in overseas markets. As business scale increases and distributor discounts gradually narrow, there is potential for profit margin expansion. Risk warnings: intensifying industry competition risk; terminal demand and seasonal fluctuation risk; and risk of new business expansion falling short of expectations.
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