Topsports International: Downgrade to Neutral on Nike‘s termination of online business in China

Research evidence excerpt

Topsports International: Downgrade to Neutral on Nike‘s termination of online business in China

27E 0.20 0.17 -14 0.20

to mid-30s in FY25. Meanwhile, the physical store network has contracted every year.

02/28E 0.22 0.13 -41 0.22

We estimate the termination also covers Topsports' Douyin livestream accounts at the

02/29E 0.25 0.15 -41 0.25

store level. Without this digital-to-physical conversion mechanism, we estimate some

offline stores will face incremental same-store sales pressure. Samuel Wang

Analyst

Positive read-across to Nike's competitors in China samuel-za.wang@ubs.com

+86-105-832 8777

As a market leader with a 16% retail value share in China in 2025 per Euromonitor, we

believe Nike's efforts to reduce discounting and reset the online channel in China will Christine Peng, CFA

likely help alleviate price competition, especially in the online channel. We see adidas Analyst

christine-y.peng@ubs.com

(covered by our EU analyst Robert Krankowski) as the primary beneficiary, followed by Li

+852-2971 7571

Ning, Anta and Xtep. Robert believes this event could enable adidas to further broaden

its product offering, creating an additional growth driver. This is supported by UBS Robert Krankowski

Evidence Lab's China online trackers, where both apparel and footwear products have, Analyst

robert.krankowski@ubs.com

on average, grown by 20% YoY per month over the past 24 months, outperforming

+44-20-7568 1152

most major brands.

Valuation: Price target cut to HK$1.37 (from HK$3.13); downgrade to Neutral

We lower our DCF-based price target to HK$1.37 (previously HK$3.13), as we cut our

FY27-29 net profit forecasts by 14-41%. Our price target implies 8.8x FY28E PE on a -

7% net profit CAGR for FY27-29E; slightly higher than the 7.9x comps median due to a

higher dividend yield.