CLSA has released a research report indicating that macroeconomic and geopolitical headwinds intensified during the second quarter, alongside a weakening retail environment, which led to slower sales for Chinese sportswear brands. This reflects subdued demand and heightened competitive risks stemming from international brands' inventory clearance efforts. However, with disciplined execution, organic profitability—excluding one-time items—has been broadly maintained. Original equipment manufacturers (OEMs) in Greater China are facing multiple headwinds that are pressuring gross margins.
Within the sector, the firm's top pick is ANTA Sports (02020), which has been assigned an "Outperform" rating with a target price of HK$110. The firm is also monitoring Li Ning (02331) and high-dividend OEMs Shenzhou International (02313) and Yue Yuen Industrial (00551) for gradual near-term improvements. In the Chinese sportswear segment, sales trends remain volatile, but the quality of growth is improving, as all covered companies posted gross margin gains in the first half, benefiting from discount control, favorable brand and product mix, and channel structure adjustments.
ANTA's operating margin expanded by 0.7 percentage points year-over-year to 27%, while Xtep's operating margin contracted during the same period. On the OEM front, the firm believes the worst is over, noting that Yue Yuen's volumes may have bottomed after a weak July, and Shenzhou's second-half performance is expected to surpass its first-half results. Dividend yields for Shenzhou and Yue Yuen are projected at approximately 5.6% and 7.5%, respectively, for 2026.
The firm maintains an "Outperform" rating on Li Ning with a target price of HK$20. Following the guidance revision, CLSA forecasts a 2% year-over-year sales growth for the company in 2025. Additionally, the firm keeps an "Outperform" rating on Yue Yuen, trimming the target price from HK$16 to HK$15. It has lowered sales forecasts for 2026 to 2028 by 3% to 4% and net profit projections by 11% to 42%, while retaining a positive outlook on mid-term market share expansion.
CLSA views Bosideng (03998) as aligned with the mainland sportswear sector, maintaining an "Outperform" rating and a target price of HK$5.6. The firm expects the company to achieve revenue growth of 6.5% and net profit growth of 7.2% for the fiscal year ending March 2027, with net margin expanding by 10 basis points to 14.7%.