Analysis of Bosideng's Sales Expense Ratio: Assessing the Sustainability of Growth Driven by High Marketing Investment

Based on the obtained data, I will conduct an in-depth analysis of Bosideng’s sales expense ratio for you:

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According to Bosideng’s FY2024/25 (for the year ended March 31, 2025) performance data [1][2]:

Indicator	FY2024/25	YoY Change
Operating Revenue	RMB 25.902 billion	+11.6%
Sales and Distribution Expenses	RMB 8.524 billion	+5.8%
Sales Expense Ratio	32.9%	-1.8pct
Gross Profit Margin	57.3%	-2.3pct
Operating Profit	RMB 4.967 billion	+12.9%
Net Profit Attributable to Shareholders	RMB 3.514 billion	+14.3%
Net Profit Margin	13.57%	+0.3pct

: The ‘56%’ you mentioned actually refers to the , calculated as: RMB 8.524 billion ÷ RMB 14.84 billion (gross profit) ≈ , which indeed reflects that Bosideng invests more than half of its gross profit in marketing.

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According to the annual report disclosure, Bosideng’s high marketing investment is mainly allocated to [1][3]:

1. Brand Building and International Fashion Weeks
   • The ‘Cloud Trail Journey’ show at Paris Fashion Week
   • The ‘Metamorphosis’ sky show at Shanghai Tower
   • Launched the high-end AREAL product line in collaboration with international designer Kim Jones

2. Digital Marketing and Live E-Commerce
   • Approximately
     80%
     of revenue from Douyin comes from live streaming sales
   • Innovative sales methods using PGC (Professional-Generated Content)
   • Online sales account for 34.5% of branded down jacket business

3. Channel Upgrading and Store Optimization
   • Expanded high-potential flagship stores, image flagship stores, and concept stores
   • The first VERTEX concept store in China opened at Shenyang MixC
   • The number of regular outlets reached 3,558 at the end of the period, with a net increase of 88

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Company	Sales Expense Ratio	Net Profit Margin	Expense Input-Output Ratio
Bosideng	32.9%	13.6%	1:0.41
HLA	~15-18%	~12-15%	1:0.70-0.85
Li Ning	~30-35%	~8-12%	1:0.27-0.40
Anta	~25-30%	~12-15%	1:0.45-0.60

:

• Bosideng’s sales expense ratio is at a relatively high level in the
  apparel industry
  , similar to Li Ning’s
• However, its
  net profit margin remains above 13%
  , indicating that the conversion efficiency of marketing investment is relatively stable
• The expense input-output ratio (approx. 1:0.41) is better than Li Ning’s, indicating that brand premium capacity is being unlocked

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1. Continuous Enhancement of Brand Momentum
   • MSCI ESG
     AAA Rating
     (first in Asia’s textile and apparel industry) [3]
   • International recognitions including ISPO Award Global Design Award and Red Dot Design Award
   • Continuous exposure at international fashion weeks strengthens high-end brand image

2. Improved Channel Efficiency
   • Inventory turnover days decreased to
     178 days
     , a year-on-year reduction of 11 days [2]
   • Increased proportion of self-operated online channels, improving profit quality
   • Refined operation system (differentiated strategies by store type)

3. Stable Market Share
   • Unshakable leading position in the down jacket category
   • Continuous advancement of high-end strategy, with price bands extending upward

1. Gross Profit Margin Pressure
   • Gross profit margin decreased by 2.3 pct year-on-year to 57.3% [1]
   • High marketing expenses and discount promotions may erode profit margins

2. Macroeconomic Consumer Environment
   • Economic weakness may affect sales of mid-to-high priced products
   • Weather factors (warm winters) cause seasonal fluctuations

3. Intensified Industry Competition
   • Competition from international brands such as Canada Goose and Moncler
   • High-end catch-up by local brands

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Marketing Investment → Enhanced Brand Awareness → Product Premium Capacity → Stabilized Gross Profit Margin
    ↓                                    ↓
Channel Optimization → Improved Operational Efficiency → Expense Ratio Control → Improved Net Profit Margin

:
Bosideng’s ‘high marketing investment’ model is , but attention should be paid to:

1. Marginal changes in marketing efficiency
   : If the sales expense ratio exceeds 35% and revenue growth slows, be alert to input-output imbalance
2. Product innovation support
   : Design awards and technological innovations need to be converted into actual sales
3. Cost control capability
   : ‘Extreme management’ of the supply chain is the key to maintaining profits

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Dimension	Assessment
Growth	★★★★☆ Revenue maintains double-digit growth
Profitability	★★★☆☆ Expense ratio is relatively high, but net profit margin is steadily improving
Valuation Level	13-15x PE (2026-2027E), relatively reasonable [2]
Risk Level	Medium (pay attention to consumer recovery progress and weather factors)

: To obtain more detailed Bosideng DCF valuation, peer comparative analysis, and historical financial trend charts, it is recommended to enable the to access professional brokerage database support.

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[1] Bosideng International Holdings Limited FY2024/25 Performance Announcement - HKEXnews (https://www1.hkexnews.hk/listedco/listconews/sehk/2025/0626/2025062601861_c.pdf)

[2] Soochow Securities Research Institute - Bosideng (03998.HK) FY26H1 Performance Review (https://testtoo1.oss-cn-hangzhou.aliyuncs.com/eastmoney_pdf/AP202512011791659433.pdf)

[3] Xinhua Finance - Bosideng Delivers Steady Growth in H1 FY2025/26 (http://www.news.cn/fortune/20251130/822e56c7e5ae4bed8928570e5420001c/c.html)