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1、 Disclosures 2) channel, products, and brand equity drive consolidation: smaller regional players continued to exit the business and while this is an opportunity for other domestic brands, improving customer experience remains key to garner market share; and 3) privatisation of Belle and Pou Sheng p
2、oints to a need for change: while the two biggest distributors of international brands should benefit from strong top-line momentum, the challenges they faced are a key lesson for all retailers. Its freezing! We believe a colder-than-expected winter has boosted retail sell-through of the sector duri
3、ng 4Q17, which is supported by retail data reported by Pou Sheng (3813 HK, not rated) and Xtep. For Pou Sheng, 4Q sales accelerated to 20% yoy from 13% in 3Q, whereas domestic brand peer Xtep also saw faster same-store-sales growth (SSSG). For 4Q, we expect Antas brand retail sales growth to reach +
4、20% yoy (from mid-teens in 3Q) thanks in part to a successful 11.11 online event promotions. For Li Ning, we forecast an acceleration to high single-digit growth (from low single-digit growth in 3Q). Switch preference from Anta to Li Ning. We see the best risk-reward profile in Li Ning and raise our
5、 TP to HKD7.70 (from HKD7.30) after rolling over our valuation from FY18 to FY18-19e, which is partially offset by lower earnings; reiterate Buy. We think the recent share price correction has more than priced in potentially higher opex. Despite having the highest earnings growth in the sector, Li N
6、ing is trading at 20% discount on FY19e PE to Anta. We maintain a Buy and increase our TP for Anta to HKD43.80 (from HKD38.00) from a combination of higher FY19e estimates, higher multiples, and valuation roll- forward. We are 7% ahead of consensus net profit as we see stronger top-line growth. We r
7、ate Dongxiang a Buy given potential catalysts on both sportswear and investment segments. We set a higher TP of HKD3.70 for Xtep (from HKD2.80) but maintain a Hold because we think a potential recovery is already in the price. 27 January 2018 Scott Chan*, CFA Analyst The Hongkong and Shanghai Bankin
8、g Corporation Limited scotttkchan .hk +852 3941 7005 Erwan Rambourg Global Co-Head Consumer increasing southbound interest is also supportive. China Dongxiang 3818 HK Market Cap: USD1,162m 3m ADTV: USD1m 1.60 1.80 1.90 Buy 19% 9.6 9.8 -14% -3% 6.3% 6.1% Multiple drivers in the making: New CEO with e
9、xtensive experience in the sportswear industry should bring forward more reforms to the subdued Kappa business. Investment business remains key to cashflow to our 6% yield assumptions; Ant Financials likely listing still a potential catalyst (Barrons, 15 May 2017). Xtep 1368 HK Market Cap: USD1,021m
10、 3m ADTV: USD1m 3.59 2.80 3.70 Hold 3% 10.0 9.2 1% 8% 5.5% 6.5% Fairly priced for a potentially robust recovery: 2017 was a year of transition as the company moved towards functional sports products while kids wear business saw the last stage of restructuring. A recovery is likely in 2018 after inve
11、ntory repurchasing on the back of healthy sell-through; but we believe the stock is fairly valued here. Source: Bloomberg, HSBC estimates. *No change in ratings. Priced as of close on 25 Jan. China Sporting Goods Share price performance since 2017 Source: Thomson Reuters Datastream, HSBC -30% -20% -
12、10% 0% 10% 20% 30% 40% 50% 60% 70% 80% Jan-17Feb-17 Mar-17Apr-17May-17Jun-17Jul-17Aug-17Sep-17Oct-17Nov-17Dec-17Jan-18 Anta HSI Li Ning China Dongxiang Xtep 3 EQUITIES TEXTILES, APPAREL maintain Buy Li Ning Top-line growth trend Source: Company data, HSBC 16% 17% 13% 10% 13% 0% 2% 4% 6% 8% 10% 12% 1
13、4% 16% 18% 20% 2014201520162017e2018e EQUITIES TEXTILES, APPAREL increasing southbound interest also supportive Raise PE-based target price to HKD43.80 (from HKD38.00) mainly on higher multiple and roll-over of valuation; reiterate Buy EQUITIES TEXTILES, APPAREL Higher dividend yield: Based on our 7
14、0% payout assumption, Anta offers a c3% dividend yield compared with Nike and adidas at 1-2%; and Stronger balance sheet: Anta sits on a net cash of RMB10bn as of 1H17, which represents c10% of market cap. Anta trading valuation metrics vs international peers Source: HSBC estimates. Based on 25 Jan
15、closing Estimates revision Anta Sports Estimates revision FY17e FY18e FY19e Revenue New 16,325 20,241 23,821 Old 16,325 20,241 23,453 Change 0% 0% 2% EBIT New 4,148 5,148 6,143 Old 4,148 5,148 5,953 Change 0% 0% 3% Net profit New 3,117 3,881 4,638 Old 3,117 3,881 4,489 Change 0% 0% 3% Source: HSBC e
16、stimates We make no change to our FY17e and FY18e estimates. For FY17e, we expect the company to deliver a 31% net profit growth on the back of 22% sales growth. We raise our FY19e revenue and net profit assumption by 2-3% as we are increasingly confident on longer-term growth after sustained strong execution. 0 5 10 15 20 25 30 35 40 CY18e PE (x)CY18e EPS growth (%)CY18e ROE (%)CY18e dividend yield (%) AntaadidasNikePuma
