361 Degrees International (1361) H1 2024 earnings summary

Executive summary

• Revenue rose 19.2% year-over-year to RMB5,141.3 million for the six months ended 30 June 2024, with net profit attributable to equity shareholders up 12.2% to RMB789.7 million and basic EPS up 12.4% to RMB38.2 cents.

• Interim dividend payout ratio reached 40.3%, with a proposed interim dividend of HK$16.5 cents per share.

• Kids segment and e-commerce both delivered robust double-digit growth, with Kids revenue up 24.2% and e-commerce up 16.1% year-over-year, becoming key drivers of overall performance.

• Continued investment in R&D and brand building, leveraging high-profile endorsements, sports event sponsorships, and international expansion.

• The group received multiple industry and capital market awards.

Financial highlights

• Revenue rose 19.2% year-over-year to RMB5,141.3 million; gross profit increased 18.3% to RMB2,125.0 million.

• Net profit attributable to equity shareholders grew 12.2% to RMB789.7 million.

• Gross profit margin was 41.3%, slightly down from 41.7% last year; operating profit margin declined to 20.6% from 23.0%.

• Net cash generated from operating activities was RMB160.1 million, up from RMB2.2 million in the prior year period.

• Capital expenditure increased to RMB123.4 million, mainly for machinery upgrades and store renovations.

Outlook and guidance

• Industry outlook remains positive, with strong demand for sportswear and favorable government policies supporting growth.

• Management expects continued growth in the second half of 2024, leveraging major sports events and the Paris Olympics to boost demand.

• Focus remains on technology-driven product innovation, omni-channel expansion, and international market penetration.

• Kids sportswear market expected to remain a key growth driver amid rising demand for functional and professional products.

• R&D expenses are expected to rise in H2 2024, with the full-year ratio projected between 3% and 4% of revenue.