Sponsoring 42 Marathons, XTEP Makes More Than 60% Returns All Year Round.

Benefiting from the development of the domestic marathon and the company's investment in the domestic marathon, XTEP International (1368.HK) earned more than 60.9% yuan to 656 million 500 thousand yuan a year, compared to 408 million 100 thousand yuan in 2017. The average profit of the company is 638 million 900 thousand yuan.

On Monday, at the 2018 China Marathon annual news conference held in Xiamen, Yu Hongchen, secretary and director of the State Sports Administration's track and field sports management center, released the 2018 annual report of the Chinese marathon. The report shows that in 2018, there were 1581 marathon and related sports scale events (more than 800 people running events, more than 300 cross-country events) in China, and 5 million 830 thousand of the total number of participants.

In a performance report Tuesday, Ding Shuibo, chairman of Fujian company, said that in 2018, XTEP won the first global brand of the international marathon, fourth of the global brand, held in Beijing, Shanghai, Guangzhou and Xiamen marathon in the market share of 10-20%.

According to the company, in 2018, XTEP sponsored 42 important marathons and running events, with a total participation of about 700 thousand.

After the annual performance was released, XTEP international rapidly opened up on Tuesday afternoon, and the increase was almost 5%. However, the profit taking market fled, and it fell back all day.

At the opening of Wednesday, XTEP international shares soared and investors began to enter the market in large numbers. After opening at 5.300 Hong Kong dollars, XTEP International did not oscillate with the big market, and the morning market rose more and more rapidly by 15%.

Tai ho also sang XTEP international today to raise the target price of Fujian company from HK $5.5 to HK $6.2 to HK $6.2 and maintain a "buy" rating. The bank expects XTEP international to maintain strong growth momentum this year, and to increase its earnings in 2019 and 2010 respectively by 9% and 11% respectively.

Jefferies Group LLC Furui also raised the target price of XTEP international by 13% from 4.6 HK $5.2 to HK $5.2 on Wednesday. The bank also raised Fujian's revenue growth forecast of 2% this year and raised its core profit forecast by 2.5%.

After the opening of the afternoon market, XTEP international rose more and more, and finally experienced a "flying sensation" in the open market. The highest value was HK $6.450, a sharp rise of 21.7%. The turnover was HK $160 million a day, and 26 million 450 thousand shares were traded on a daily basis, 11 times the daily average volume.

In 2018, XTEP international revenue increased from 24.8% yuan to 6 billion 383 million 200 thousand yuan, far exceeding the 6 billion 150 million yuan expected by the market. The double sales growth rate of retail business was recorded in the same store, while the electricity business revenue accounted for over 20%.

Ding Shuibo said in the annual report that XTEP international is now a brand management company with a clear brand image and a focus on professional running, making the company unique in the industry.

Last week, the company announced the signing of a joint venture with the footwear giant Wolverine Worldwide Inc. (NYSE: WWW) and a number of Affiliated Companies in the mainland, Hongkong and Macao markets to develop, marketing and distribute Merrell shoes and Saucony St. John's brand shoes, clothing and accessories. The joint venture aims at a second tier market and consumers.

On Tuesday's performance meeting, Ding Shuibo further indicated that the company will continue its strategy of last year in the near future, continue to accelerate terminal construction, and practice multi brand strategy. In the future, it will strive to enter the first and second tier markets and expand XTEP international from a single Brand Company to a multi brand portfolio.

Yang Lubin, chief financial officer, said at the performance conference that Merrell and Saucony will take the lead in the sale of e-commerce platforms in the year. It is expected that 30-50 stores will be started next year. It is estimated that two brands will open 200 stores in the next third years, and the scale effect should be achieved. The real outbreak is expected to reach fourth, Fifth stores in 400-500 years, and it is expected to make a greater contribution to the company's revenue and profits.

Aiming at the completion of the acquisition of Amer Sports (AMEAS.HE) from Finland's high-end sporting goods giant, Anta sports (2020.HK), Ding Shuibo said the company was looking for potential buyers, but stressed that it would not make a decision easily.

In 2018, XTEP international realized gross margin of 44.3%, an increase of 40 basis points compared with the same period last year, achieving a five consecutive rise, while the gross profit margin in 2014 was only 40.8%. Footwear gross margin increased by 60 basis points to 45% annually, and the gross profit margin of clothing improved by 40 basis points to 42.2%.

The operating profit rate was 16.4% in 2018, up 220 basis points, but it has not been restored to four years ago.

Because of the promotion of star endorsement and promotion of running activities, XTEP International's advertising and promotion expenses increased by 47.1% to 968 million 200 thousand yuan in 2018, and 658 million yuan in 2017, and the marketing rate also rose 230 basis points to 15.2%.

By the end of December, XTEP international had operated 6230 stores, with a total annual growth of about 200, mainly in shopping centres. The number of exclusive agents is now stable at 40, and about 60% of the shops are directly run by only one generation.

The company's annual earnings per share were 0.302 yuan, an increase of 60.6% over the same period last year, and the final interest rate was 9.5 Hong Kong cents, together with the 10.5 cents interest rate. The annual dividend payout rate was 60%.

On Wednesday, XTEP International (1368.HK) closed at HK $6.350, up 19.81%, reaching a new high of nearly eight and a half years at the end of 2010.