中国体育用品：从2017年得出的三大教训（英文版）_30页_816kb

报告摘要

China Sporting Goods: Key Developments in 2017

Core Content Overview

In 2017, the China Sporting Goods sector continued to grow at a healthy pace, roughly two times GDP growth. Despite this, the sector underwent notable changes, particularly in brand preferences, channel management, and corporate restructuring. Analysts from HSBC highlighted three main themes:

Shift in Consumer Preferences: A growing preference for both athleisure and domestic brands, especially Anta and Li Ning, over international brands like Nike and Adidas.
Consolidation and Channel Optimization: Smaller regional players, such as Xidelong and Deerway, exited the market due to poor performance, while stronger domestic brands consolidated their positions through improved product offerings, channel management, and brand equity.
Privatisation of Distributors: The privatisation of Belle and Pou Sheng indicated the need for change in the sector, especially in response to market volatility and restructuring efforts.

Main Viewpoints and Key Information

1. Consumer Preference Shift

Adidas overtook Nike in market share, reflecting the growing popularity of athleisure.
Anta was the only domestic brand to outperform the industry in growth, driven by better product offerings, effective channel management, and international brand equity.
Xtep lost its position to 361 Degrees, highlighting the challenges of restructuring and managing inventory effectively.

2. Retail Performance in 4Q17

Pou Sheng reported a strong 20% YoY sales growth, surpassing the previous 13% in 3Q17.
Xstep also saw improved same-store sales growth.
Anta is expected to achieve +20% YoY brand retail sales growth in 4Q17, aided by successful 11.11 online promotions.
Li Ning is forecasted to see high single-digit growth, up from low single-digit in 3Q17.

3. Valuation and Investment Outlook

Li Ning is highlighted as the top pick with the best risk-reward profile. Its target price was increased to HKD7.70 (from HKD7.30) after rolling over valuation from FY18 to FY18-19e, despite lower earnings.
Anta Sports received a target price increase to HKD43.80 (from HKD38.00), driven by higher FY19e estimates, higher multiples, and valuation roll-forward.
China Dongxiang is rated Buy with a higher target price of HKD3.70 (from HKD2.80), due to potential catalysts in the sportswear and investment segments.
Xstep Int'l remains on Hold as its recovery is already priced in.

4. Investment Drivers

Li Ning: Expected to benefit from the addition of the kids wear segment, improved wholesale business, and stronger Southern China coverage.
Anta: The undisputed domestic leader with a higher ROE and dividend yield compared to international peers, and increasing southbound interest.
China Dongxiang: A new CEO with experience in the sportswear industry is expected to bring reforms, and the investment business remains a key cashflow driver.

5. Market Share Trends

China sportswear market share by brands from 2012 to 2017 shows a shift towards Anta and Li Ning.
Xstep slipped in market share to 361 Degrees, partly due to poor inventory management and restructuring.

Key Financial and Valuation Metrics

Company	Current Price (HKD)	TP New (HKD)	Rating	Upside	FY18e PE	FY19e PE	FY18e EPS Growth	FY19e EPS Growth	FY18e Div Yield	FY19e Div Yield
Li Ning	6.29	7.70	Buy	22%	18.1	14.1	34%	28%	2.1%	2.7%
Anta Sports	38.40	43.80	Buy	14%	21.5	18.0	25%	20%	3.3%	3.9%
China Dongxiang	1.60	1.90	Buy	19%	9.6	9.8	-14%	-3%	6.3%	6.1%
Xstep Int'l	3.59	3.70	Hold	3%	10.0	9.2	-15%	32%	5.5%	6.5%

Investment Risks

Weaker-than-expected retail demand
Higher-than-expected wholesale discounts
Higher-than-expected increase in operating costs

Summary of Key Changes in the Sector

Anta and Li Ning emerged as leading domestic brands, with Anta widening its market share gap.
Xstep and Xidelong faced challenges, with Xidelong filing for bankruptcy and Xstep undergoing restructuring.
Belle and Pou Sheng were privatized, indicating a need for restructuring and cost optimization.
O2O initiatives became more prominent, with stores offering online ordering and delivery, helping to capture sales opportunities.

Conclusion

The China Sporting Goods sector showed resilience in 2017 despite changes in brand dynamics and market conditions. Li Ning and Anta were highlighted as top performers, with Li Ning showing the best risk-reward profile. The sector is expected to continue growing, with a focus on athleisure, kids wear, and channel optimization. The privatisation of certain distributors points to a shift in strategy, while southbound investor interest supports the valuation of domestic brands. Overall, the sector remains a constructive investment opportunity with strong long-term potential.