Citi: Reiterates "Buy" rating on TOPSPORTS (06110) with target price of HK$1.7; first-half net profit in line with expectations

Citi issued a research report stating that it gives TOPSPORTS (06110) a "Buy" rating with a target price of HK$1.7. TOPSPORTS's net profit for the first half of fiscal 2027, ended August, was broadly in line with the bank's expectations, while operating cash flow rose 36% year-on-year to RMB1.844 billion, equivalent to 2.8 times net profit, indicating continued strong earnings quality. Thanks to strong free cash flow and a solid balance sheet, the company's payout ratio for the first half rose slightly by 1 percentage point year-on-year to 103%. The interim dividend was RMB11 cents per share, lower than RMB13 cents per share in the same period last year. The company managed inventory prudently, with inventory balances down 16% year-on-year and down 10% from the end of the first half to RMB4.918 billion, while inventory days fell 3.6 days year-on-year to 146 days.