CICC maintained 361 degrees and outperformed the industry rating with a target price of HK$4.31

CICC released a research report on January 16, maintaining an “outperforming industry” rating of 361 degrees. The 2022/23 EPS is expected to be 0.38/0.43 yuan, and the 2024 EPS forecast is 0.5 yuan, with a target price of HK$4.31, which is 26% higher than the current stock price. The company released the 4Q22 report, showing resilience superior to that of the industry. CICC believes that its better performance than its peers comes, on the one hand, from the company's flexible sales strategy (such as moderately deepening discounts and expanding member benefits), while also benefiting from the company's relatively broad layout in third- and fourth-tier cities.

CICC said it is optimistic about the company's business performance in 2023. The 361 degree main brand has products in running, basketball, general training and sports lifestyle categories, focusing on professional technology. The bank expects running and basketball to contribute about 40% and 10% of revenue in 2022, respectively. The management plans to continue to expand new categories of business such as women's fitness and enrich product categories while consolidating and increasing the revenue share of running and basketball in 2023. With the improvement of the terminal retail environment and the continuous improvement of 361 degree's brand power and product strength, management plans to continue to expand and optimize the channel network in 2023. Among them, 361 children's stores may grow faster than the main brands.

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