Photo/Shetuwang

Sept. 23 (NBD) – Topsports International Holdings Limited, a Chinese sportswear retailer, will launch a roadshow on Tuesday for its Hong Kong IPO (initial public offering) and the company is expected to debut on the bourse on October 10, a media report revealed on Monday.

The company seeks to raise about 1 billion U.S. dollars through the float, according to an early report by Bloomberg.

Topsports, a unit of women's shoe retailer Belle International Holdings Ltd, sells sportwear and shoes for brands including Adidas, Nike, Converse and Puma in China.

National Business Daily (NBD) found Belle rang the opening bell at the Hong Kong stock exchange as early as 2007, with its market cap once surpassing 140 billion Hong Kong dollars (17.8 billion U.S. dollars). However, due to stagnant performance, the company chose to delist from the stock exchange in 2017. Sending Topsports to go public might be Belle's effort to return to the capital market and spark a revival.

A report from consulting firm Frost & Sullivan showed last year, China became the second largest sports footwear and apparel retail market after the U.S. in terms of total retail sales value. Spending on sports-related goods and services in China is expected to reach 610.1 billion yuan (86.3 billion U.S. dollars) by 2023.

In 2018, Topsports secured a market share of 15.9 percent, ranking first in China's sportswear retail market in terms of the sales volume, according to Frost & Sullivan.

The prospectus indicated that revenue of Topsports ascended at a CAGR (compound annual growth rate) of 22.5 percent from 21.7 billion yuan for fiscal 2017 ended February 28, 2017 to 32.6 billion yuan for fiscal 2019, while its net profit rose at a CAGR of 29.2 percent from 1.3 billion yuan for fiscal 2017 to 2.2 billion yuan for fiscal 2019.

Despite the increase in its revenue and net profit, the gross profit margin decreased from 43.2 percent for fiscal 2017 to 41.6 percent for fiscal 2018. With regard to the issue, Topsports explained that they sold sportswear products at lower-than-usual discounts to the MSRPs in the fiscal year 2017.

It's also worth noting that in 2017, the number of stores that were shut down by Topsports was registered at 817, exceeding half of its new openings. In 2018, 125 outlets were closed while only 76 were opened. For the fiscal year ended February 28, 2019, the company opened 1,415 new stores, and closed as many as 1,374, NBD noticed.

Email: lansuying@nbd.com.cn