Two Strong Forest Products, Sports And Fashion.

Sports apparel has excellent track and has unlimited market potential in China. 1) China's sports apparel market is growing rapidly and is far ahead. In the 18 years, China's sportswear market exceeded US $40 billion, an increase of nearly 20% compared with the same period last year, and its growth rate has been accelerating since 14 years ago. Over the past ten years, the scale of China's sports apparel market has increased by nearly 10% annually, far ahead of other countries. 2) sportswear is still an excellent fashion track in the future. The composite growth rate of China's sports apparel industry is expected to exceed 10% in the next five years. At the same time, in the developed countries, China's per capita sports costumes cost only 2/3 of the world's per capita, and the market ceiling is still far away.

Nike and Adidas two are strong, and the two giants are neck and neck. 1) the market concentration of sportswear continues to improve, and Nike and Adidas are in the leading position. In the 18 years, the global sportswear CR5 was about 35%, while Nike and Adidas accounted for 27%. 2) Nike: technology is the first and innovation driven. Nike always occupies the top of the industry. In the past 17 years, the implementation of the "three double" strategy has accelerated the pace of innovation, strengthened consumer interaction, and increased the speed of performance growth again. 2) Adidas: fashion leader, with strong growth momentum. After 16 years of fashion strategy, the net profit compound growth rate was nearly 35%, and the performance increased obviously. In the 18 year, the global market share reached 11.2%, and the gap between Nike and China continued to shrink. China accounted for 19.5% of the total market share.

Local sports apparel leader develops steadily. Although the market share of Nike and Adidas is ahead, the local quality enterprises still have larger space to grow. 1) Anta: the rising giant continues to accelerate growth. A) net profit of 18 years increased by 33% over the same period, and the growth rate continued to increase; b) the domestic market remained the top three, and the local brand ranked first; c) the results of multi brand strategy were remarkable, and the future could erupt more frequently. 2) Lining: the momentum of recovery is strong. A) 18 year income increased by 18% year-on-year, net profit increased by 39% over the same period; b) channel structure adjustment, store efficiency optimization was obvious; c) overweight sports fashion style, fashion week burst money to enhance brand image.

In the field of subdivision, intensive cultivation is expected to open a new path. Under the attack of many sports clothing, new brands are expected to rise from niche. 1) lululemon: focuses on market segmentation to create the best products. A) revenue in fiscal 19 increased by 24% compared to the same period last year, and net profit increased by 87% over the same period last year; b) positioning in the field of professional subdivision, differentiated competition, and breaking through; c) seized the trend of the industry and positioned the customers accurately. 2) Under Armour: is radically expanding, and the myth of high growth is no longer a myth. A, who has been calling the signboard with tights, has been popular for a long time with its high technology performance. It once exceeded Adidas to become the second largest sport brand in the US market; b) radical expansion led to internal management disorder, and 17 or 18 years of losses for two consecutive years fell to the altar.

Sports fashion leads the trend and becomes the favorite of the industry. Sports and fashion category has become the most popular category in sports apparel, the fastest growing, the major sports brands are beginning to create fashion products line. 1) Fila: Phoenix Nirvana, singing all the way. Repositioning the fashion trend, the explosive growth after adjustment, the 18 year income increased by 90% year-on-year, 19Q1 terminal water year-on-year growth of nearly 70%, sustained high growth. 2) Skech: "entertainment marketing + professional sports" drainage, China's market is advancing by leaps and bounds. In the 18 year, China's retail sales reached 14 billion 100 million yuan, an increase of 36% compared with the same period last year. The sports apparel market accounted for 5.8% and jumped to fourth, with remarkable results.

Outdoor sportswear is expected to benefit from the Winter Olympic bonus and become the next draught. 1) the outdoor products industry is still in the initial stage of development, and with the adjustment coming to an end, it is expected to usher in a new round of growth. Anta, a sports giant, has distributed the Descente (professional ice and snow clothes) and the original bird (high-end outdoor) into the outdoor area, demonstrating that the industry is still full of opportunities. 2) the Winter Olympic Games dividends continue to catalyze, ice and snow sports bear the brunt of leading outdoor sports heat. The 1980 Olympic Winter Games in the United States will greatly promote the development of ice and snow sports. The Winter Olympic Games in Beijing in 2022 are expected to significantly promote the rapid growth of China's ice and snow and outdoor industries.

Investment suggestions: sportswear and Racecourse is excellent, and the leading industry enjoys the fast growing bonus of the industry. The emerging brands are expected to create more professional and powerful market share through the intensive work in the field of subdivision. The increasing popularity of sports and fashion has become an important category to promote rapid growth. The Winter Olympic bonus is expected to boost the outdoor industry and return to rapid growth. Recommended targets: 1) local sports apparel leader: Anta sports (Fila continued high growth, multi brand strategy results are significant, the future multi point outbreak can be expected, 19 years PE 25 times), Lining (strong recovery, profitability continued to improve, 19 years PE 31 times); 2) high-end sports fashion: bieben Le finen (high quality track Racecourse to create moat, the same store performance leading industry continues to exceed expectations, 19 years P E only 20 times); 3) ice and snow outdoors high quality enterprises: Pathfinder (asset impairment loss is fully calculated, store efficiency is expected to increase simultaneously, 19 years will usher in performance inflection point, 19 years PE 28 times).

Investment case

Conclusions and investment proposals 1, investment suggestions: sports apparel Racecourse is excellent, leading industry enjoys the fast growing bonus of the industry. The emerging brands are expected to create more professional and powerful market share through the intensive work in the field of subdivision. The increasing popularity of sports and fashion has become an important category to promote rapid growth. The Winter Olympic bonus is expected to boost the outdoor industry and return to rapid growth. 2, recommended target: 1) local sports apparel leader: Anta sports (Fila continued high growth, multi brand strategy results are significant, the future multi point outbreak can be expected, 19 years PE 25 times), Lining (strong recovery, profitability continued to improve, 19 years PE 31 times); 2) high-end sports Fashion: biefin (high quality track Racecourse to build moat, the same store performance leading industry continues to exceed expectations, 19 PE is only 20 times a year); 3) quality enterprises of ice and snow and outdoor products: Pathfinder (asset impairment loss is fully calculated, store efficiency is expected to improve simultaneously, 19 years will usher in a turning point of performance, and 19 years PE is 28 times).

Reason and logic

1, although the market share of Nike and Adidas is ahead, local quality enterprises still have larger space to grow. Anta's multi brand strategy has achieved remarkable results. Lining raised the trend of sports and fashion, and the momentum of recovery was obvious. Domestic leading enterprises have maintained rapid growth. 2, under the attack of many sports clothing, new brands are expected to rise from niche. Lululemon started with women's Yoga wear, seized the trend of the industry, and accurately positioned the customers. Under Armour launched the signboard through tights, which once exceeded Adidas to become the second largest sports brand in the US market. Both prove that emerging brands have their own place in this huge sports apparel market. 3, sports and fashion category has become the most popular category of sports apparel, the fastest growing, all major sports brands are beginning to create fashion products line. In recent years, the high growth of Fila, the outbreak of Cage and the acceleration of Adidas growth and the revival of Lining have played a crucial role in sports and fashion products. 4, the outdoor products industry is still in the initial stage of development, with the end of the adjustment, it is expected to usher in a new round of growth. At the same time, the Winter Olympic Games dividends continue to catalyze, ice and snow sports bear the brunt of leading outdoor sports heat. Different from the public's understanding 1, the market may think that sports fashion is only a short time trend, and can not become a driving force for the growth of business performance. But we think that the industry leaders, such as Nike and Adidas, all approve of this trend. At the same time, the fashion style products are constantly increasing in the product line. Sports fashion is not just a gimmick, but a real feedback from consumers. Respecting the industry trend and respecting the enterprises chosen by consumers can develop steadily and their performance will continue to improve. In the past two years, Fila and Cage have also shown that sports and fashion products will greatly promote growth. 2, the market may think that the outdoor industry is close to dusk, and for many years of slow growth, there will be no investment opportunities in the future. However, we found that the 1980 Winter Olympics in the United States greatly promoted the development of ice and snow sports. The Winter Olympic Games in Beijing in 2022 are expected to significantly promote the rapid growth of China's ice and snow and outdoor industries. At the same time, the outdoor products industry is still in the initial stage of development. With the end of the adjustment, it is expected to usher in a new round of growth, and the quality enterprises in the industry will usher in a rapid growth again.