| Valuation method | Value, HK$ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 34.50 | 500 |
| Intrinsic value (DCF) | 13.65 | 137 |
| Graham-Dodd Method | 3.40 | -41 |
| Graham Formula | 16.30 | 183 |
361 Degrees International Limited is a prominent Chinese sportswear manufacturer and retailer headquartered in Xiamen, China. Operating in the competitive athletic footwear and apparel sector, the company serves both adult and children's markets through its 361° core and 361° Kids brands. With a network of over 5,270 retail stores across China and a strong e-commerce presence on platforms like Tmall, Taobao, and JD.com, 361 Degrees has established itself as a significant player in China's growing sportswear industry. The company's comprehensive product portfolio includes performance footwear, athletic apparel, and accessories designed for various sports and casual lifestyle use. As consumer health consciousness and sports participation continue to rise in China, 361 Degrees leverages its domestic manufacturing capabilities and extensive distribution network to capture market share in the rapidly expanding Chinese sportswear market, competing with both international giants and local competitors.
361 Degrees presents a mixed investment case with several notable strengths and challenges. The company demonstrates solid financial fundamentals with HKD 10.07 billion in revenue and HKD 1.15 billion net income, reflecting healthy profitability margins. With a low beta of 0.305, the stock shows defensive characteristics relative to market volatility. The company maintains a strong balance sheet with HKD 4.25 billion in cash against only HKD 264.5 million in debt, providing financial flexibility. However, operating cash flow of HKD 69.8 million appears relatively weak compared to net income, and capital expenditures of HKD -268.7 million suggest significant ongoing investment requirements. The dividend yield appears attractive at HKD 0.41 per share, but investors should monitor the sustainability of this payout given the cash flow dynamics. The primary investment thesis hinges on 361 Degrees' ability to compete effectively in China's crowded sportswear market against both established global brands and aggressive local competitors.
361 Degrees operates in the highly competitive Chinese sportswear market, where it occupies a middle-tier position between premium international brands and value-oriented local competitors. The company's competitive advantage stems from its deep understanding of the Chinese consumer market, extensive domestic distribution network of over 5,270 stores, and dual-brand strategy targeting both adults and children. Its manufacturing capabilities provide cost advantages and supply chain control, while its multi-channel approach combining physical retail with e-commerce platforms (Tmall, Taobao, JD) ensures broad market reach. However, 361 Degrees faces intense competition from global giants like Nike and Adidas that command premium brand recognition and from local leaders like Anta and Li Ning that have successfully upgraded their brand positioning. The company's challenge lies in differentiating its products in a saturated market while maintaining price competitiveness. Its focus on the children's segment through 361° Kids provides a growth avenue but also faces specialized competition. The company's relatively weaker brand equity compared to market leaders limits its pricing power and margin potential, requiring continued investment in marketing and product innovation to enhance brand perception and customer loyalty.