Lyon: China's sportswear industry still fluctuates in the second half of the year, the target price of Anta Sports (02020) Yuyuan Group (00551) drops to HK$15

The Zhitong Finance App learned that in the second quarter of this year, macroeconomic and geopolitical headwinds intensified, the retail environment weakened, and sales of Chinese sportswear brands slowed in the second quarter of this year, reflecting weak demand and the removal of inventories from international brands, which increased competitive risk. However, under strict implementation, organic profitability, that is, excluding one-time projects, was generally maintained. OEM manufacturers (OEMs) in Greater China are facing multiple headwinds that hit gross profit margins. In the sector, the bank chose Anta Sports (02020), which gave it a “outperforming the market” rating, with a target price of HK$110, and focused on the short-term gradual improvement of Li Ning (02331) and high-interest OEMs Shenzhou International (02313) and Yuyuan Group (00551).

In terms of sports brands in China, sales trends are still fluctuating, but the quality of growth has improved; the gross margins of the covered companies all improved in the first half of the year, benefiting from discount controls, favorable brand and product portfolios, and channel restructuring. Anta's operating profit margin increased 0.7 percentage points year over year to 27%, while XTEP's operating profit margin contracted year over year. On the OEM side, the bank believes that the worst is over. Yuyuan's sales volume may have bottomed out after being weak in July, and Shenzhou's performance in the second half of the year is also expected to be better than in the first half; Shenzhou and Yuyuan forecast dividend rates of about 5.6% and 7.5% respectively in 2026.

The bank maintained Li Ning's “outperforming the market” rating, with a target price of HK$20. Following the reduction in guidelines, Lyon expects sales to increase 2% year over year this year. The bank maintained Yuyuan's “outperforming the market” rating. The target price was lowered from HK$16 to HK$15, the sales forecast for 2026 to 2028 was lowered by 3% to 4%, and the net profit forecast was lowered by 11% to 42%, but it maintained a positive view of the medium term market share expansion. The bank believes that Bosideng (03998) is consistent with the mainland sportswear sector, maintaining a “outperforming the market” rating and a target price of HK$5.6. The bank expects revenue growth of 6.5% for the 2027 fiscal year ending the end of March 2027, increase net profit by 7.2%, and increase net profit margin by 10 basis points to 14.7%.