According to Zheshang Securities Co.,Ltd., a research note has reiterated its Buy rating on 361 DEGREES (01361), forecasting the company's FY26/27/28 revenue to rise +8%/7%/7% to RMB 12.0/12.9/13.8 billion, with net profit attributable to shareholders up +9%/9%/9% to RMB 1.43/1.56/1.70 billion. This corresponds to PE ratios of 6.4/5.8/5.3X. As a leading mass-market sportswear player with a strong quality-to-price ratio, the company is outpacing the industry in growth, and its future super store expansion and internationalization are worth watching. The dividend payout ratio is expected to remain at 45% in FY26, implying a dividend yield of 7%, which, combined with its growth potential, valuation level, and dividend appeal, makes the stock attractive.
The main points from Zheshang Securities Co.,Ltd. are as follows:
In FY26Q3, offline large-scale retail sales grew by a mid-single-digit percentage year-on-year, childrenswear offline retail sales also achieved mid-single-digit growth, and e-commerce retail sales grew by a mid-to-high single-digit percentage. Despite volatile weather and a weak retail environment, the company still delivered resilient growth. By category, the running category maintained solid growth in FY26Q3, the basketball category still grew amid intensifying competition, and the newly launched tennis shoes in Q3 received a positive response. In FY26Q3, offline discounts were around 70% of full price, e-commerce footwear and apparel discounts remained stable, and the inventory-to-sales ratio held steady at 4.5-5X, with both discounts and inventory in a healthy state.
Super store expansion proceeded smoothly, with the full-year net opening target achieved ahead of schedule. In FY26Q3, 21 new super stores were added, bringing the total number of domestic super stores to 208, plus 2 overseas. Since the beginning of 2026, a cumulative net 83 stores have been opened, already surpassing the full-year FY26 net opening target for super stores. Overall performance of super stores has been excellent, with outstanding results in lowering operating costs, improving store efficiency, and attracting new members. The new member recruitment ratio rose to 75%, a marked improvement from the previous 65%.
Overseas business revenue continued to grow rapidly, with a clear medium-to-long-term share target. In FY26Q3, overseas revenue maintained high-speed growth. The company has sponsored five consecutive Asian Games, and its sponsorship of the 2026 Nagoya Asian Games in Japan helped boost brand exposure there. 361 Degrees running ambassador Wang Jiahao significantly set a new personal best at the Berlin Marathon on September 27. Since 2023, 361 Degrees has set up a booth in Berlin for four consecutive years, enhancing the brand's international visibility. Full-year FY26 overseas revenue is expected to account for 4%-5% of total revenue, and the overseas business as a whole remains profitable. The company is actively seeking incremental opportunities to drive continued expansion of its overseas business scale, and overseas revenue share is expected to increase substantially over the next 3-5 years.
Risk warnings: Risks include changes in consumer trends, overseas business expansion falling short of expectations, and super store rollout progressing slower than anticipated.
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