China'S Sports Brand Is On The Road To Recovery. Inventory Remains The "Killer" Of Performance.

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The mid term performance of China's local sports brands listed on the market has been announced in recent years. The Chinese sporting goods industry, which has been in the doldrums for a long time, seems to see the dawn of the bottom of the market (the dawning store), and drives the stock price of the related stocks to rise, but in the future, inventory elimination will still be the key to the 2014.

After three years of channel consolidation, inventory sales and brand restructuring, from the first half of the year's turnover, the overall signs of recovery have been reported, and the main brands of the newspaper have been registered growth, of which Anta has increased by 22.4%, the largest decline from last year.

It is considered that the inventory problem is still an important factor affecting the profit and loss of China's local sports brands.

This year's order growth is positive, which indicates that the inventory problem has been alleviated. However, the market performance is still quite different in different brands' pition period and strategy.

Goldman Sachs reported that the same store sales of sports retailers began to grow rapidly in the second quarter.

Taking Anta as an example, its same store sales grew year by year, and its orders in the past few seasons were also better than those in the same industry, indicating that the next few quarters will continue to recover.

Goldman Sachs also upgraded Anta's rating from "neutral" to "buying". The target price was raised from HK $12.4 to HK $18.9. At 14:23 local time, Anta rose 1.46% to HK $14.56, and has risen more than 50% so far this year, which is better than the 8% of the total market.

Another relatively small brand is 360 degrees, and its share price has also risen strongly after the announcement of a net profit increase of 28.3%.

Following yesterday's gain of more than 10%, the stock price rose by 6.82% to HK $2.35 on Wednesday afternoon, with a cumulative increase of nearly 20% in two days.

By the former gymnastic Prince Lining (Lining store) created the same name brand Lining, the medium-term net loss expanded to 586 million yuan, and the earlier issued profit alarm.

Jin Zhenjun, executive vice president, said at the performance press conference that the whole pformation process is expected to take place in the past 3-4 years. The inventory problem has been basically solved in the past two years, and the new product performance and growth trend has lasted for one year.

But Haitong international points out that Lining's actual channel to the inventory level or less than expected, more than 10% of the distributors still have inventory problems, the pformation still needs more time.

Haitong international Lining rating from "buy" to "hold", the target price fell to HK $4.40, originally HK $6.70.

At 14:10 local time, Lining fell 2.46% to HK $4.36 and has fallen 28.76% so far this year.

Analysts believe that Lining's short-term performance and financial indicators still have great pressure to reverse the situation of net liabilities will be an important task.

However, the Swiss bank is optimistic about Lining, saying that its orders will predict growth in the third quarter of this year and will gradually recover in the future.

UBS maintained its "buy" rating with a target price of HK $7.70 unchanged.

After the inventory problem has been alleviated, the development strategies of each brand have different emphasis.

Lining is gradually withdrawing from the non core sports apparel category and the profit free market, and reinventing the brand and reshaping the business mode, focusing on the five core sports categories (basketball, running, badminton, training and sports life).

While Anta pays close attention to overseas markets under favorable circumstances, it also plans to sell commodities on e-commerce platforms, allowing offline distributors to operate online stores.

"We will continue to focus on the Chinese market, and the overseas strategy has not yet started. It is difficult for the brand to go out. The future concerns not the brand going out, but the enterprise going out."

Ding Shizhong, chairman and chief executive of Anta, revealed that he would consider expanding the overseas market by means of mergers and acquisitions.

Although the industry is gradually gaining momentum, analysts also point out that there is still uncertainty about the competition from overseas brands, the outlook for China's consumption boom, and the marketing strategy and brand positioning of the company.

Morgan said that changes in major sponsors' agreements could be a risk for China's sporting goods industry.

This year Anta took Lining 23 years to cooperate with China National Gymnastic Team's brand sponsorship to enhance its brand value, while Lining could lose more opportunities for cooperation.

China's domestic sporting goods industry's inventory level and price reduction activities have gradually improved, but the overall lack of product differentiation and fierce competition among industries, there are still uncertainties in the industry.

The two largest foreign brands Adidas (Adidas) and Nike last year accounted for more than 13% of the market share. For Chinese brands, the sporting goods market is still fiercely competitive.