In April, all sports brands ushered in the stress test stage under the influence of the epidemic superposition base. It is expected that April will be the worst month for the annual water growth of all sports brands. Referring to the experience in 2020, ① from the perspective of valuation, the lowest valuation point of Anta / Li Ning in 2020 corresponds to 23.9x/23.6x PE in 2020, and the downward space of current valuation is limited.
② from the perspective of fundamental recovery, once the epidemic situation is effectively controlled and the sales peak season comes, the downstream performance improves month on month, which is expected to bring about the repair of sentiment and valuation (similar to April May 2020). It is suggested to focus on the domestic brands whose brand potential continues to rise, there is still room for store opening and price increase for a long time, and the retail and OEM leaders with attractive valuation and improved business margin. It is recommended to focus on Li Ning, Tebu international, Bosideng, taobo, Anta sports, Huali Industrial Group Company Limited(300979) , Zhe Jiang Taihua New Material Co.Ltd(603055) , Zhejiang Weixing Industrial Development Co.Ltd(002003) , and Shenzhou International.
Last week: the epidemic disturbed the operation and the stock price of China sports company adjusted. Recently, the epidemic in some parts of China is still fermenting, and the duration of the epidemic in East China is longer than expected. The share prices of Chinese sports companies were adjusted to a certain extent last week, and the share prices of Li Ning / Anta / Tebu fell by 9% / 8% / 6% respectively last week. Meanwhile, in this epidemic, due to the serious obstruction of logistics and express delivery, it is difficult for various brands to make online efforts. The online sales of sports shoes and clothing on Alibaba platform in March were – 10% year-on-year.
Flow tracking in March: it generally fell back in the last week and entered the test period of the epidemic. In the second half of March, the epidemic situation in some key cities increased and the high base caused by the Xinjiang cotton incident came, which put some pressure on Chinese and foreign brands. We expect the water flow of Anta / FILA / Li Ning in March to be flat and slightly increased / double-digit decline / single digit growth respectively, and the water flow growth of Anta / FILA / Li Ning 1q22 to be 15% + / 5% / 30% – 35% respectively. April is the month with the worst apparent data of domestic brands. However, with the gradual control of the epidemic in various regions and the arrival of the peak sales season, we judge that there is expected to be a significant month on month improvement in May compared with April.
Online data tracking: high base & blocked express delivery, resulting in a year-on-year decline, and domestic brands continue to take the lead. According to datayes data, in March 2022, the online sales of sports shoes and clothing on Alibaba platform decreased by 10% year-on-year, the growth rate decreased by 58pcts compared with the same period last year, and the growth rate decreased by 7pcts month on month On the one hand, the sales base of online brands in March 2021 is high; On the other hand, the recent outbreak in some parts of China has continued to ferment, and some express logistics have been blocked. At the same time, consumers are worried that express delivery may spread covid-19 virus, which will affect the overall online sales.
Market Overview: last week (from April 6, 2022 to April 10, 2022), textile and clothing lost 300 (- 1.5% vs-1.1%) to Shanghai and Shenzhen, ranking 15th among 60 Zuming Bean Products Co.Ltd(003030) industry categories, of which brand clothing and textile manufacturing increased by – 1.5% and – 1.5% respectively. Cotton prices remained high. On April 8, the prices of national cotton 328 / imported cotton were 22751 / 23527 yuan / ton respectively, up or down – 0.5% / – 1.5% last week, and the price difference between domestic and foreign cotton was – 776 yuan / ton.
Risk factors: the downward trend of consumption exceeded expectations; The epidemic situation rebounded in some areas; Industry competition intensifies; The offline store expansion of the brand company is less than expected; The capacity release of manufacturing companies is less than expected.
Investment strategy: the recent epidemic in some parts of China is still fermenting. The share prices of Chinese sports brand companies adjusted to a certain extent last week. The share prices of Li Ning / Anta / Tebu fell 9% / 8% / 6% respectively last week. At the same time, in this epidemic, due to the serious obstruction of logistics and express delivery, it is difficult for various brands to make efforts. The online sales of Alibaba platform sports shoes and clothing in March were – 10% year-on-year. It is expected that the valuation of each brand will be more attractive and more attractive than that of may once the sentiment test is completed. It is suggested to focus on domestic brands with upward brand potential, long-term room for store opening and price increase, and attractive valuation, as well as retail and OEM leaders with improved business margin.
