Baosheng International Distribution Network Wide Growth Potential Is Recommended For Investors To Subscribe.

Baosheng International (3813) is the leading sporting goods retailer in mainland China. As of December 31, 2007, it operates 1324 direct outlets in the mainland, and the retail network in Greater China includes 79 outlets in Hongkong and Taiwan.

Most of the retail stores are single brand stores, operating a single sporting goods brand, and displaying the group's (YYSports) logo at the same time.

The Group operates sporting goods products for several leading sporting goods brands in China, such as Nike, Adidas, Lining, Kappa, Reebok, Puma, Converse, HushPuppies, Nautica, Wolverine and Asics.

As of December 31, 2007, the group has established 22 joint ventures with different leading retailers in the different regions of the mainland, and operated 1936 and 2 direct outlets in China and Hongkong respectively.

The group and regional joint ventures have been doing business in most of the major cities in 26 provinces / autonomous regions and municipalities.

In addition, according to the report of Frost&Sullivan commissioned by the group, the joint venture between group and group is a leading sporting goods retailer in Beijing, Tianjin, Zhejiang, Jiangsu, Fujian, Hunan, Hebei, Yunnan, Jilin, Anhui, Anhui, Anhui and niche, and is one of the three sporting goods retailers in almost all other provinces and autonomous regions.

To establish long-term cooperation with Yuyuan as China's leading sporting goods retailer, the group is committed to becoming Brand Company's preferred retail partner.

The group is closely related to Yu Yuan, the world's largest sports shoe manufacturer. Yu Yuan enjoys a high reputation among most leading sporting goods Brand Company, and has established long-term cooperation with them.

By selling retail outlets to sell products that wish to sell Brand Company in China, or to enter into a brand agency agreement with the Brand Company, the group can benefit from Yu Yuan and its existing businesses.

In addition, the Yuyuan inheritance technology enables the group to have a better understanding of the manufacturing business and the Taicang plant.

In the financial year ended 2005, 2006 and September 30, 2007, the group earnings were $207 million 200 thousand, $373 million and $555 million 900 thousand respectively, with a compound annual growth rate of 63.8%. In the same period, the net profit before the minority shareholders was 6 million US dollars, 21 million US dollars and 43 million 900 thousand US dollars respectively, with an annual growth rate of 170.5%.

In addition, the net profit in the 3 months ended December 31, 2007 and the net profit before the minority shareholders were 185 million US dollars and 19 million 700 thousand US dollars respectively, up 82.1% and 164.3% compared with the same period last year.

The big increase in profits and net profits of the public group was mainly due to the expansion of the retail network of the group. In addition, the newly established regional joint venture invested by the group also contributed.

Although the group has been growing rapidly in recent years, the ability of the group to open or purchase new stores will be affected by many factors.

These factors may affect the new store's ability to achieve sales and profitability comparable to the existing stores of the group and whether it can achieve profitability. These factors include: can the group identify suitable locations and locations for retail stores; group's ability to negotiate reasonable points and terms of lease for retail stores; group's ability to maintain effective and cost-effective operation; whether the group can have sufficient management and financial resources; and the group's ability to enhance logistics and other management systems to match the larger retail network.

In the case of HK $3.75, the company's expected price earnings ratio in 08 years will be 21.7 times earnings. To the company's leading sporting goods retailer, the expected price earnings ratio of 08 years is 31.97 times that of Lining (02331.HK) and 21.38 times that of Anta sports (02020.HK). The company's valuation is reasonable, taking into account the positive impact of the Beijing Olympics on the company and the stable and rapid growth capability of the company.

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