Key investment points
Sportswear Brands: years of strength accumulation + special events catalyze the new year of domestic products
Taking the 21 / 3 / 24h & M event as the watershed, the domestic products and overseas leaders have walked out of a completely different growth curve. The domestic products with outstanding product power and cost performance, superimposed on top events, athletes, stars and KOL marketing resources have increased brightly. In 2021, Anta / FILA / Li Ning / Tebu Liushui have increased by 25% - 30% / 25% - 30% / 59% / 30% + respectively. In contrast, the revenue of 2021adidas Greater China was + 3% in 20 years, but - 10% in 19 years. The revenue of Nike Greater China in the first three quarters of fiscal year 22 (21 / 6 / 1-22 / 2 / 28) was - 11% year-on-year.
In terms of profitability, the profitability of domestic products caught up with overseas brands under the improvement of retail discounts, the improvement of operating efficiency and the effect of cost leverage. The EBIT profit margin of Nike Greater China in the first three quarters of fiscal year 22 (21 / 6 / 1-2022 / 2 / 28) fell to 34.3% (year-on-year - 5.9pp), the operating profit margin of Adidas Greater China in 2021 fell to 26.0% (- 0.2pp), and the operating profit margin of Li Ning in the same period reached 22.8% (+ 7.6pp). The operating profit margins of Descente, Kolon and other brands of Anta increased significantly (18.4%, + 10.0pp), The operating profit of Tebu's main brand also exceeded the pre epidemic level to 18.2% (+ 2.6pp).
Sports shoes and clothing supply chain: 21h2 Southeast Asia's production capacity shortage has brought short-term pressure, and long-term leading brands continue to bind core suppliers in depth
Vietnam epidemic caused short-term pressure on the global sports supply chain. In the 21st year, international sports brands were affected by the epidemic in Vietnam in the second half of the year, and the supply chain and production capacity were generally under pressure: in the annual report supply chain information disclosed by Adidas in March, it can be found that 96% of adidas shoes and 91% of Adidas clothing were still produced in Asia by 2021, but Vietnam's shutdown caused by the epidemic prevention and control measures in the south from July to September reduced the supply proportion of adidas shoes and clothing to 30% (- 12pp) and 15% (- 6PP) respectively; At the same time, transportation pressure still exists. Adidas mentioned in its 21st Annual report that due to the impact of capacity constraints and container shortage, the on-time delivery rate decreased to 87% (89% in 2020). Nike also mentioned in its 22fyq3 (21 / 12 / 1-2 / 2 / 28) performance that the time for products to be transported from the supply chain to the North American market in this quarter was 6 weeks more than before the epidemic, 2 weeks more than the same period last year.
In the long run, the cooperation between leading brands and core suppliers will continue to deepen. Taking Adidas as an example, in its 2021 annual report, it mentioned that 65% of suppliers have cooperated with them for more than 10 years, 35% of suppliers have cooperated with them for more than 20 years, the number of independent suppliers has also decreased from 138 in 2019 to 114 in 2021, and the number of cooperative factories has decreased from 340 in 2014 to 234 in 2021, reflecting the determination of leading brands to concentrate orders on core suppliers to ensure leading research and development and stable quality and delivery time, It reveals that the production capacity of the high-quality shoes and clothing supply chain represented by Shenzhou International and Huali Industrial Group Company Limited(300979) is still the core asset of brand competition.
Under the bright annual report and the momentum of the beginning of the year, the proportion of Hong Kong stock connect increased again
Although the shareholding ratio of sports leading Hong Kong stock connect has decreased slowly since July 21 due to the slowdown of water growth, with the valuation correction and the release of the annual report, the bright annual report performance in 21 years, the retail performance significantly better than the industry average from January to February and the valuation standard lower than the historical center have driven the increase of the proportion of Hong Kong stock connect led by domestic brands after 3 / 10, As of April 1, the proportion of Anta / Li Ning / Tebu / Shenzhou / taobo Hong Kong stock connect had reached 10.0% / 14.2% / 16.6% / 3.8% / 1.7% respectively.
Investment perspective: the sportswear industry chain is still one of the most worthwhile consumer goods tracks
Although the current epidemic situation in Shanghai, Jilin and other places and the high base caused by the 21 / 3 / 24h & M incident may lead to fluctuations in the short-term growth rate of domestic goods leaders, we are still optimistic about the development potential of the sportswear market and the improvement of the leading market share for a long time. Domestic goods leaders with long-term accumulated investment in product design and R & D, advertising marketing, supply chain and retail management will continue to achieve a growth level higher than the industry average, Continue to focus on recommending Anta sports (22 / 23pe24 / 20x), Li Ning (22 / 23pe30 / 24x) and Tebu International (22 / 23pe22 / 17x), and prompt attention to 361 °;
In addition, although the repeated outbreaks in North Vietnam and China may cause short-term production capacity fluctuations of sports manufacturing leaders, in the medium and long term, the supply chain leaders led by Shenzhou International (22 / 23pe27 / 21x) and Huali Industrial Group Company Limited(300979) (22 / 23pe24 / 20x) are still global scarce resources. The cooperation with the world's best brands will continue to deepen, and the trend of both order volume and price will continue to rise. They will also continue to be recommended.
Risk tips: (1) fluctuations in end consumer demand; (2) Multi brand operation is less than expected; (3) Raw materials and exchange rate fluctuations
