< p > > a href= "//m.pmae.cn/news/index_c.asp" > XTEP < /a > International (3.47, -0.30, -7.96%, real-time quotes) (1368, buy): the retail side continues to improve, which will help the company to grow in the future.

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< p > operating profit margin remained at 20% level, and net profit fell 25% in the whole year.

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In 2013 P, XTEP's revenue fell 21.7% to 4 billion 340 million yuan (the same below).

Although the discount to distributors increased from 62% off to 60 percent off, the company had good control over production costs, so gross margins fell only slightly from 0.5% to 40.2%.

Due to good control of operating expenses, the operating profit margin remained at 20% level.

Net profit fell 25% to 600 million yuan in the whole year.

Annual dividend payments of HK $0.18 per share, dividend payout rate of 51.3%; 13 years dividend yield equals 4.8%.

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< p > < strong > retail end continues to improve, < /strong > /p >

The growth of the same store at the retail end in the month of P > one or two is probably a low unit number, which has been improved over the same period last year.

We expect the same store growth for the whole year to be low to around the unit.

Retail discount is currently at a level of 7.5 to 20 percent off.

The ratio of Treasury to sales has dropped to 5 times. We believe that the Treasury sales ratio can continue to drop to 5 times.

In 13 years, the company closed 150 stores.

At present, the number of stores is around more than 7300.

We estimate that the number of stores will remain at this level this year.

In addition, the coverage of the DRP system has increased to 80%, which helps the company's inventory and retail end management.

Overall, < a href= "//m.pmae.cn/news/index_s.asp" > retail > /a > end continues to improve.

We believe this will help future wholesale orders and supplementary orders growth.

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< p > < strong > operation days remained stable, net cash increased by 230 million yuan < /strong > < /p >

< p > benefiting from better capital control and inventory policy, the company recorded stable working capital turnover days, and the total working capital days were 95 days, of which the stock days were 79 days, and the days of receivables were 92 days.

The cash flow of the company is relatively good, which is 660 million yuan.

Net cash increased by 230 million yuan to 2 billion 860 million yuan during the period, equivalent to HK $1.66 per share.

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< p > < strong > maintain buy rating, target price HK $4.49 < /strong > /p >

< p > because XTEP's retail situation continues to improve, it helps the company's future growth, good assets, negative cash flow and dividend yield.

The target price is HK $4.49, equivalent to 13.5 times earnings per share forecast in 2014.

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< p > < strong > important risk < /strong > < /p >

< p > we think that the more important risks are: 1) the improvement of retail end is slower than expected and 2) the consumption power of < a href= "//m.pmae.cn" > consumer < /a > is lower than expected.

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