Key investment points
Short term: the leading retail of sports clothing shows resilience under the epidemic
Under the repeated impact of the 22q1 epidemic, the sports clothing leader still showed strong retail resilience. Tebu expects that the company's 22q1 water growth is still expected to reach 30%, which shows that consumers' demand for sports clothing is still strong in areas with weak impact of the epidemic.
At the same time, in the case of January + February, we can see that leading brands including Anta (benefiting from the Winter Olympic Games at the same time), Li Ning and Biem.L.Fdlkk Garment Co.Ltd(002832) also continue to maintain excellent retail growth. The short-term excellent performance makes us more confident in the potential demand for sports clothing.
Medium and long term: the three leading companies have their own advantages, and the market share of Chinese brands continues to rise
Despite the short-term epidemic, the layout of the four sports clothing leaders in the medium and long term is also very clear.
Anta sports has a unique multi brand matrix. Under the background of the diversification of Chinese sports, the company's high-quality brands including mass sports, sports fashion, high-end skiing, top outdoor and other subdivided tracks make it occupy an excellent position in the market with differentiated consumption in the future.
The successful rejuvenation of Li Ning's brand image in the past five years has enabled the brand to establish a new understanding after 95 / 00. On this basis, the industry's top resources are accelerating to tilt to Li Ning. On the one hand, the company is accelerating the long-term cooperation with leading factories. At the same time, the company is also rapidly promoting the construction of benchmark stores and starting to cooperate with head dealers, hoping to grasp the current brand dividend with the fastest speed in the next few years. Tebu has laid a deep foundation in the field of professional running shoes. We believe that in addition to the basic sector that running shoes are constantly recognized by professional runners, the continuous reform of the company's channels and supply chain and the continuous introduction of other brand categories are expected to continue to expand the overall scale of the brand.
Biem.L.Fdlkk Garment Co.Ltd(002832) deeply rooted in the middle and high-end sports and leisure men's wear market. Relying on its unique positioning, constantly improving product power and rapid channel expansion, the company has successfully opened up its market segments.
From the perspective of market share and referring to Euromonitor's data, the market share of Anta's main brand and Li Ning increased by 0.7pct and 1.4pct to 9.3% / 8.2% year-on-year respectively in 2021, showing a strong domestic substitution trend. On the contrary, the market share of overseas leading brands decreased year-on-year.
Valuation: the valuation of sports apparel leader is close to the lowest point of the epidemic in 20 years
After the sharp correction of the sports clothing leader, the valuation is close to the bottom. Hong Kong stock leaders have made significant corrections in the past 22 years. Anta has retreated from the highest point to the lowest point by more than 40% in 22 years, Li Ning has retreated by more than 45% in 22 years, and Tebu international has also retreated by 45%.
After the sharp correction, the valuation of leading companies has been close to the lowest level in March of 20 years. We compared the valuation levels of several leading companies in the period of the worst epidemic in March of 20 years. Anta and Li Ning returned to the level of about 15% higher than the low valuation point at that time
However, what we want to emphasize is that compared with March of 20 years, on the one hand, China has rich experience in epidemic prevention and control. On the other hand, after the Xinjiang cotton incident, the market pattern, resource reserve and product competitiveness of domestic sports clothing brands have been greatly improved. At this time, the sports clothing leader should have higher confidence and valuation than at that time.
Investment suggestion: long term optimistic about China's sports clothing investment opportunities
In the short term, the sales data of sports clothing is still robust in the case of a relatively sluggish overall consumption environment. In the long run, the sports apparel industry is a rare golden track in the consumer goods track, where the influence of Chinese brands has been formed, the ability of listed companies has been mature, and the demand of the industry is still growing rapidly. For the leading companies among them, we believe that although they still face many tests such as the epidemic and the liquidity of Hong Kong stocks in the short term, the leading companies still at the bottom of the valuation are still worth holding for a long time. Anta sports (24x / 19x in 22 / 23), Li Ning (26x / 21x in 22 / 23), Tebu International (18x / 14x in 22 / 23) and Biem.L.Fdlkk Garment Co.Ltd(002832) (17x / 14x in 22 / 23) maintain the buy rating.
Risk tip: the deterioration of the epidemic situation exceeded expectations, and the recovery of terminal demand was less than expected
