The Mainland's Five Major Sports Brands Are Facing A Sharp Drop In Orders. It Is Difficult To Attract Investors.

In 2008, with the help of Beijing Olympic Games, the sporting goods industry ushered in a period of rapid growth. In particular, Lining, the leader of the Olympic Games, was on the rise when the "gymnastic Prince" himself lit the Olympic torch. The price rose steadily in most of the year in 2009 and reached 31.95 yuan in the middle of 2010, which pushed the new record high. Other peers could not afford to make much difference. In the same period, the stock price rose at least 80%, among which Anta (2020) was the most powerful, or more than 3 times. Whole Sports goods Plate can be "dog to dog", whether it is short-term speculators or investors holding long lines, all at that time earned "full wallet", becoming the biggest beneficiary of Beijing Olympic effect.

Orders fall and inventory is too high.

However, this time the London Olympic Games coincided with the worsening of the European debt crisis. The US economy is weak and weak. Even in the difficult period of slowing economic growth in mainland China, sports goods companies are struggling in the face of "declining orders and high inventory". As of last Friday, 5 of the sporting goods shares listed in Hong Kong fell sharply in the past year, with Anta as the most frequent and 54% decline, followed by China's trend (3818) and PEAK sports (1968) down 49% and 43% respectively.

　 Five sporting goods stocks have large water plugging.

Most investors are looking down on the sporting goods sector. They believe that even if they are injected into the "doping" of the Olympic Games, it is difficult for the sector to thrive. UmangPabaru, head of Nelson's Greater China business development department, said that mainland consumers' attention to London Olympic Games can not be compared with the Beijing Olympics, not only because of the time difference between London and Beijing, but also because "Beijing Olympic Games are held at home, and participation is different from London Olympic Games".

Kuang Minbin, President of Asia Pacific operations of Kai Chi securities, also said that the sports sector is still in a downturn period when accepting an interview with Wen Wei Po in Hongkong. It is clear that investors are totally "not interested" in it and do not have to maintain an excessive vision. He said, first of all, because the Olympic venues in London, for the mainland sporting goods companies in the mainland market, this event is too "far away", even if it wants to stir fry, at most there is only two or three days of effect, I believe that the overall performance of the plate will still "lose the big market" during the Olympic Games.

Prospects are difficult to attract investors.

Second, the long-term prospects of the sports sector are also doubtful. Kuang Minbin pointed out that although the mainland market is huge, but the competition is becoming increasingly fierce, these sporting goods companies have been developing and expanding too fast in recent years, and their inventories have risen sharply. He estimated that after that, the stock price of the board would not continue to plummet, but it will continue to run at the bottom for a long time. The industry needs to rebrand and relocate its brand and speed up its business restructuring. If these measures are effective, share prices are expected to slow down gradually.

Mainland's top five brand orders drop sharply

In 2008, Beijing Olympic Games brought a wave of sports craze, which made the mainland sporting goods company's industry and stock price record high. However, it also exposed a series of problems, such as too large stock, too fast expansion, too many shops and high homogeneity of products. The five major sporting goods companies listed in Hongkong this year were weaker than last year's performance, and three of them expect annual profits to be affected.

Lining, Anta, PEAK, one after another.

Lining, who took the lead in issuing surplus police earlier, and revealed that his 2012 annual order meeting data showed that the total orders would be recorded in a high double-digit percentage decline, and the promotion costs in the next few years will increase significantly. The net profit of the 2012 half year to the end of this year will be larger than that of the whole year. Among them, the order amount of shoes products resulted in a low double-digit decline year by year. Clothing products The annual decline is more than 20%.

The Anta announcement also revealed that the orders for orders for the fourth quarter ended in April decreased by a double-digit percentage decline, and the total order volume (calculated at wholesale value) of the year-round order increased by a high percentage decline. The announcement also states that the fierce competition in the mainland market has "had an impact on the profitability of the group's retailers in the past few quarters". PEAK sports also issued a profit police. It is expected that the net profit in the six months ended June 30, 2012 and the year ended December 31st will decrease significantly compared with the same period in December 31st.

Relatively speaking, XTEP International (1368) performed well. The number of orders increased in the fourth quarter of April in Xiamen, but it was no longer comparable with the 24% increase in the same period last year. 31st Degree International (1361) data also barely maintain "decent", announced that in 2012 winter orders, the total number of adult products orders (wholesale price) increased by about 2%, but compared with the 27% increase in 2011, also recorded a serious regression.

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　 Clean up inventory and face challenges

Analysts and the industry generally believe that from the recent order figures, the five brands are not optimistic this year or even before the first half of 2013. JP Morgan analyst Yang Lei expects that in the next 6-12 months, the industry will still face serious challenges in cleaning up inventory. According to the similar experience of international brands, it usually takes 12-18 months for the inventory to return to normal levels. Haitong Securities analyst Wang Jingwen also believes that at present, the mainland brand inventory war has not been eased. "The ratio of inventory to sales ratio (inventory and sales ratio) should be 3-4 months, while Lining is still 9 months, which is to clear the inventory a year ago."

　 Foreign enemies dominate the small and medium-sized brands.

With international brands such as Nike and Adidas flooding into the two or three tier cities of the mainland, local small and medium-sized brands are beginning to face a dilemma. Analysts generally believe that the whole industry is about to stage a series of fierce competition to stay strong and weak. It is expected that the small and second tier brands will face greater challenges and will eventually be reduced from the current 20 to 5-6.

Foreign brands rush to two or three line cities

Reuters quoted Li Hongxian, an analyst at Beijing's Shang Pu consultancy, pointing out that local brand income 60%-70% comes from two or three tier cities, and its products are in the middle price range. But in recent years, the consumption capacity of the two or three tier cities in the mainland has also been improving. Nike and Adidas have seen business opportunities, set up more storefronts and developed medium priced products to rob customers, making local brands more difficult to digest inventory. "Because the price is almost the same, international brands must be more attractive." She believes that the mainland market will enter the period of accelerating the survival of the fittest, and the brand concentration of the future will be higher and higher.

Local brands should be strong, weak, strong and welcome.

Zhou Xiucheng, a researcher at the Hong Kong rich group, also said that the increase in consumer purchasing power caused local brands to suffer from the "attack". The share of the market is losing day by day, while the share of foreign brands is increasing. He also believes that local brands will usher in an integration tide. The first step is to integrate distribution networks, including slowing down the opening of new stores, closing inefficient branches, etc. next, the integration of brands, and small and medium-sized brands may become targets of acquisitions. "Listed companies generally have better financial capabilities, and if they are complementary in the overall efficiency, product mix or geographical location, they will consider acquiring smaller networks or brands".

Ding Shuibo, President of XTEP International (1368) recently admitted that the trend of the industry is "big fish eat small fish, and long-term development must be like this." But he believes that within three years there will probably be no larger brands being merged.

Guotai Junan reported that the valuation of sporting goods companies was suppressed due to industry integration and uncertain prospects. Although the industry's growth prospects are still good in the long run, both the price earnings ratio and the market rate, the mainland's interbank valuations are all lower than those of overseas famous brands such as Nike and Adidas. The report predicts that mainland sporting goods companies are experiencing "the most difficult period", but the industry consolidation is expected to be completed by the end of this year.