XTEP Management Will Continue To Raise Prices

Yesterday, the mainland consumer concept unit XTEP International (01368.HK) was listed in Hong Kong.

In the Hang Seng Index fell 1.83% of the trend, XTEP's decline once reached 16%, and finally closed at HK $3.8, compared with the stock price of HK $4.05, down 6.17%.

Although the first day break, XTEP management is relatively optimistic, said it will continue to raise prices this year to cope with rising costs.

For XTEP, which is not ideal for its listing, analysts of the Securities Research Division said that XTEP's popularity and sales network in the mainland is not as good as Lining and Anta. It is difficult to enhance the interest of Hongkong's capital market.

In addition, the first day of the fall of XTEP and the recent Hong Kong stock market were soft, and several new shares were not subject to market concerns.

However, XTEP chairman and chief executive Ding Shuibo believes that the current share price is only a short-term performance.

At yesterday's launch conference, He Ruibo, chief financial officer of XTEP, said that although the cost was rising, XTEP itself was a brand operator. There was room for price increase, and the cost pressure could be passed on to consumers. The company raised its price by 10% last year. It is expected that the price will rise by 10% this year.

In addition, Ding Shuibo said in an interview that the company intends to acquire international sports brands.

But he did not disclose further the takeover timetable, saying only that the acquisition target needed to be suitable for the Chinese market and XTEP's positioning, and also engaged in clothing or footwear business.

For the future market space, Ding Shuibo said that at present, the company's fashion sporting goods accounted for 18.9% of the mainland market, ranking first.

This year's Olympic Games may promote short-term sales of sportswear and apparel industry, and because of the steady improvement of the living standards of the mainland residents, the market space after the Olympic Games can also be guaranteed.

It is understood that XTEP international was founded in 1999 when it was only a OEM (Foundry) enterprise, making shoes for international brands.

In 2002, XTEP launched the XTEP brand aimed at the mass market, and launched the Colin brand (Koling) in 2007.

In addition, XTEP international has obtained the authorization of China Disney Sports brand product in 2006, and launched the related brand series products last year.

XTEP said that the contribution rate of the company's OEM sales is decreasing year by year, and the management expects that OEM will account for less than 2% of the total revenue this year.

According to the prospectus, OEM sales accounted for 7.8% of the company's total revenue last year, and XTEP brand accounted for 87.9%.

In 2007, XTEP made a total profit of 222 million yuan. The company forecasts that the profit after tax will be no less than HK $520 million as of the end of this year.

Following the XTEP, another small consumer of Mainland consumer enterprises is expected to go public on the 12 day. According to the margin subscription data of Sun Hung Kai, Shun Cheng, Hui Li, Tai Fu and Everbright Securities, the small stock of the public offering in June 2nd received a HK $247 million margin subscription, which has exceeded 1.7 times.

According to the securities industry, the current situation of small margin subscriptions is related to Hongkong capital market's familiarity with the brand.