Home >

China'S Sports Shoes Market Has A Good Market Prospect.

2010/10/5 11:52:00 80

October 5th, in the first quarter of 2011,

Anta

Sports (2020.HK, $18.50, Holdings) recorded the largest average order growth rate of about 23%, while China's trend (3818.HK, $4.75, Holdings) increased by 11.8%.

XTEP

International (1368.HK, $6.64, buy) and Lining (2331.HK, $24.20, buy) are about 23% and 12%, respectively, ranking second and three respectively.

We believe that the Guangzhou Asian Games, which opens in November, will continue to stimulate Chinese consumers' interest in sportswear.

Lining in the first quarter of 2011

Order-placing meeting

The order revenue increased by 12% per year, which was in line with management expectations, but lower than our forecast.

The average selling price of footwear jumped by more than 7%, while sales increased by more than 5%. The average selling price and sales volume of clothing increased by 11% and 1% respectively.

Looking ahead, Lining is expected to add 422 new stores by the end of 2010, bringing the total number to 7900.

Although the ratio of advertising and promotion spending to sales decreased from 15.4% in the first half of 2009 to 13.2% in the first half of 2010, the company will put more resources into the brand, and the sixteenth Asian Games in Guangzhou in the second half of next year will stimulate the expenditure of marketing in the second half of the year, so it is expected that the ratio will rise.

Lining

Signing with NBA Evan Evan, who joined the seventy-six Philadelphia team in the next season.

We believe this will further consolidate Lining's position in the sportswear industry.

However, we believe that the company has uncertainties in implementing the reshaping brand plan.

We believe that Lining can continue to play a leading role in the Chinese sportswear industry.

We set the target price of the stock at 27.15 yuan, which is equivalent to 2011 times the expected price earnings ratio in 2011 or two times earnings growth rate 0.7 times.

Anta's order revenue increased by more than 23% in the first quarter of 2011, while the average selling price increased by more than 5%.

The company has a large amount of liquidity, and as at the end of the first half of 2010, its net cash amounted to RMB 4 billion yuan or 1.69 yuan per share.

Sponsoring the Chinese Olympic Committee and the November Asian Games should help further enhance the brand and brand image.

We believe that Anta will continue to maintain its highest gross profit margin and operating profit margin in China's sports apparel companies, which are mainly concentrated in the market.

As Anta's earnings growth continues to be better than that of Lining, we believe that Anta's valuation should be a premium to Lining.

Our target price for the unit is 19.54 yuan, equivalent to 21.4 times the expected price earnings ratio in 2011, or 0.9 times the earnings growth rate calculated at the compound annual growth rate of 25% of the estimated earnings per share in 2009-11.

The sales volume of XTEP in the order meeting increased by 23% annually, of which the sales of clothing and footwear products increased by double figures, while the average selling price of clothing also increased in double figures. The average selling price of footwear products increased by the number of units.

The company launched the Bermingham football club products in the order meeting and got an ideal response.

We believe that this product line will help XTEP promote one of its main products, football apparel and footwear.

Looking forward to the future, we are mainly benefited from the improvement of sales growth at the order meeting. We believe that the sales in the second half of 2010 will exceed the first half of the year.

Driven by an increase in average selling prices, gross margins will continue to rise.

We continue to advise investors to buy the stock, with a target price of 7.62 yuan, equivalent to 14.3 times the expected price earnings ratio in 2011 or a 0.6 fold increase in the earnings growth rate calculated at the compound annual growth rate of 24% of the estimated earnings per share in 2009-11.