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 profit attributable to equity shareholders up 12.2% to RMB789.7 million and basic EPS up 12.4% to RMB38.2 cents.

• Interim dividend of HK$0.165 per share declared, representing a 40.3% payout ratio.

• Kids segment revenue increased 24.2% to RMB1,131.6 million (22% of total), and e-commerce revenue grew 16.1% to RMB1,252.7 million (24.4% of total), both driving overall performance.

• The group expanded its international presence, enhanced R&D investment, and leveraged high-profile endorsements and sports event sponsorships.

• Multiple industry and capital market awards received for product innovation, IR, and marketing.

Financial highlights

• Gross profit increased 18.3% to RMB2,125.0 million; gross profit margin was 41.3%, down 0.4 ppt year-over-year.

• Operating profit rose 6.8% to RMB1,060.4 million; 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.

• Inventory turnover days improved to 85; trade receivables turnover days: 148; trade payables turnover days: 89.

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

Outlook and guidance

• 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.

• R&D expenses ratio expected to rise to 3–4% in 2024 due to increased activities in the second half.