CICC has released a research report, essentially maintaining its 2025/26 EPS forecasts for XTEP INT'L (01368) at RMB 0.49/0.55, while introducing a 2027 EPS forecast of RMB 0.61. The current share price implies an 8x P/E ratio for 2026. The firm reiterates its Outperform industry rating. Considering the downward shift in the sector's valuation benchmark, CICC has lowered its target price by 11% to HK$6.47, corresponding to an 11x 2026 P/E, suggesting a 27% potential upside from the current share price. The key points from CICC are as follows.
Recent company developments include the announcement of its Q4 2025 operational performance: the core XTEP brand's retail sell-through was flat year-on-year, with retail discounts at 70-75% and channel inventory turnover standing at 4.5 months by end-December. The Saucony brand achieved retail sell-through growth exceeding 30% year-on-year.
The retail environment showed some volatility, but the core brand's operations remained stable in Q4 2025. The core XTEP brand's retail sell-through was flat YoY, with online channels, particularly live-streaming e-commerce, performing well. On a monthly basis, performance was solid in October-November, supported by the Golden Week and Double Eleven promotions, but relatively subdued in December due to weather impacts. Despite the fluctuating retail environment, the core brand's retail discounts were maintained at 70-75%, remaining stable quarter-on-quarter. Channel inventory turnover was 4.5 months at the end of December, indicating a healthy level.
Performance in functional categories remained strong. For the full year, the running category achieved double-digit retail sales growth. The Saucony brand's growth accelerated quarter-on-quarter, meeting its full-year guidance. Saucony's Q4 2025 retail sell-through grew over 30% YoY, driven by robust offline channel growth, with average store productivity reaching RMB 450,000 per month and improved operational efficiency following e-commerce adjustments. The brand continued to launch new sport-casual products, and apparel investment yielded double-digit growth. New store openings met expectations, primarily located in core business districts of Tier 1 and 2 cities.
For 2026, the core brand will focus on enhancing offline store productivity, while the Saucony brand will pursue premiumization. The core XTEP brand is progressively optimizing its offline channels; management indicated that 200 stores were converted to a DTC model in Q4 2025, with further conversions planned for 2026. Regarding new store formats, the company opened Gold Standard Pilot stores in Xi'an and Shanghai's Nanxiang in H2 2025, with performance so far meeting expectations; 20-30 new Gold Standard Pilot stores are planned for 2026. The company continues to accelerate the rollout of selected outlet stores, having opened over 20 in 2025, with plans for 70-100 in 2026; existing outlet stores already achieve over RMB 1 million in monthly sales.
For Saucony, management plans to strengthen its premium sports image offline in 2026, targeting high-end consumers through channel upgrades to boost store productivity. Continued investment in R&D will focus on increasing the proportion of apparel and casual OG series.
Risks include intensified industry competition, weaker-than-expected retail environment, and potential setbacks in channel transformation.
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