The King of Cash Last week the self-styled ''King of Trainers'' reported strong half-year results with sales and profits substantially ahead of our above-consensus forecasts. However, the standout performance was a GBP647m year-on-year increase in net cash. Although timing effects will result in partial reversal in 2H this nevertheless means JD has achieved far better control of net working capital than we had anticipated. Having now had the opportunity to follow up with management we update forecasts with EPS rising over 50% this year, though largely unchanged for FY Jan-22 onwards. Still, with stronger cash generation our DCF-derived target increases to 840p. Maintain Outperform. Strong sales, particularly in USA... Sports Fashion LFL sales declined just 4% on our calculations, despite store closures for nearly half of the period. Online grew c.110% year-on-year we estimate, whilst store LFL''s fell 27% over the entire period but were up around 10% when open. US fiscal stimulus was a major driver (Finish Line +50% from reopening to end of the period) so momentum will almost certainly now fade somewhat. We forecast LFL sales -6% in 2H leaving full year profit forecasts ahead of consensus. ...partly offset by higher costs due to channel shift Gross margins declined just 150bps in the main division in H1 as strong US gains were offset by increased clearance costs of stale Winter stock. Inventories down 16% yoy strongly suggest a ''clean'' position for the remainder of the year. Group opex only declined 1% yoy though and, stripping out government support and one-time COVID costs, rose 7% - we suspect largely driven by channel shift. For FY Jan-22 channel mix as well as absolute revenues will be major determinants of profitability. Each 1% shift in channel impacts margins c.25bps we estimate. Updating forecasts and valuation Changes to our forecasts are shown in Figure 1. For FY Jan-22 we still sit 9% ahead of consensus EPS (Figure 2). On our...