Tianfeng Securities: 361 Degrees (01361) Deepens Comprehensive Channel Transformation

The company released its annual report.

In 2025, the global economy is experiencing a weak recovery amidst multiple challenges, while China's economy, driven by industrial upgrading and domestic demand improvement, has shown strong resilience and endogenous growth momentum.

2025 Annual company revenue 111 billion yuan, a year-over-year increase of 10.6%, net profit attributable to parent company 13 billion yuan, a year-over-year increase of 14.0%。

Final dividend for the year was 11.3 Hong Kong cents per share, making a total dividend payout of 31.7 Hong Kong cents per share for this fiscal year, with a payout ratio of 45%.

Expand category boundaries and deepen scenario coverage, strengthening the brand's potential as a children’s sports label.

In 2025, 361 Degrees Children continued to focus on resource integration and professional capacity building, solidifying the brand’s industry status as the official partner of the Chinese Jump Rope National Team and the Beijing Guoan Youth Training partner.

At the channel development level, 361 Degrees Kids is actively shifting towards the profound delivery of brand experiences. It closely follows the changes in aesthetic upgrades and scientific parenting philosophies among new-generation families, while simultaneously advancing the differentiated renewal of terminal spatial imagery and the scenario-based upgrade of product displays.

By the end of 2025, 361 Degrees Kids will have 2,364 sales outlets across mainland China, with a significant expansion in average store size. This forms a modernized store coverage system led by flagship stores and fifth-generation outlets, continuously unlocking the benefits of channel upgrades.

Deepening overall channel transformation and tapping into diversified growth potential.

Based on its global development strategy, the company is comprehensively strengthening its channel system. It is promoting the integration of online and offline channels, innovating retail formats, and accelerating the construction of an efficient omnichannel collaborative ecosystem. By enhancing customer acquisition capabilities at points of sale and deepening refined operations, it drives simultaneous improvements in retail efficiency and market share. In response to the rapid evolution of the digital retail environment, it is also speeding up the iterative upgrade of e-commerce channels.

In 2025, the company’s retail sales flow and brand momentum both online and offline will increase simultaneously, with strong growth momentum across all channels.

361 Degrees flagship stores, known for their 'integrated' and 'full-category' immersive experience, have become a key driver for the company in enhancing brand differentiation. By the end of 2025, a total of 127 361 Degrees flagship stores have been completed, successfully reaching the milestone of 100 stores nationwide, further refreshing the brand image.

On the international market front, the company is accelerating its global layout by leveraging cross-border e-commerce to break geographical barriers. By the end of 2025, it will have 1,253 offline sales outlets across the Americas, Europe, and the Belt and Road regions. The successive openings of the 361 Degrees Kuala Lumpur overseas flagship store and Cambodia's first overseas flagship store mark key breakthroughs in the brand's international expansion.

By 2025, the 361 Degrees brand will have 5,394 core stores in mainland China, with the average store size increasing to 165 square meters, and the proportion of stores in shopping malls and department stores continuing to rise.

Additionally, the physical market layout of the Finnish outdoor sports brand ONEWAY in the Greater China region has started to show results. ONEWAY has successfully expanded to six offline stores, precisely serving the in-depth needs of core users for professional and general outdoor products.

Adjusted profit forecast, maintaining a 'buy' rating.

We have revised our earnings forecasts for fiscal years 2026-2027 and added forecasts for fiscal year 2028. We expect the company's revenues for 2026-2028 to reach RMB 12.35 billion/13.87 billion/15.45 billion respectively (previous forecasts for 2026 and 2027 were RMB 12.8 billion/14.5 billion); net profits attributable to shareholders will be RMB 1.479 billion/1.633 billion/1.801 billion respectively (previous forecasts for 2026 and 2027 were RMB 1.4 billion/1.6 billion); EPS will be RMB 0.72/0.79/0.87 per share; corresponding PE ratios will be 7x, 7x, and 6x.

Risk warnings: Intensified market competition, weaker-than-expected consumer demand, currency fluctuations, and other risks.

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