Super Foam Powerhouse to Fight for Adidas Orders; Initiate with Hold

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Super Foam Powerhouse to Fight for Adidas Orders; Initiate with Hold

China (PRC) | Sporting Goods

Huali EquityJuneResearch16, 2026

INITIATING COVERAGESuper Foam Powerhouse to Fight for Adidas

RATING HOLDOrders; Initiate with Hold

PRICE Rmb31.99^

Huali's new midsole technologies (in-house high-performance foam) are

expected to drive market share gain. Its investment in dedicated factories PRICE TARGET | % TO PT Rmb33.00 | +3%

for Adidas positions it to replace Ching Luh as a major Adidas supplier. 52W HIGH-LOW Rmb64.36 - Rmb32.55

We prefer Huali to Yue Yuen for its better business model, client mix, FLOAT (%) | ADV MM (USD) 13.1% | 79.62

and technological advancements. However, risks include demand-supply MARKET CAP RMB37.3B | $5.5B

imbalance, raw material shortages, and US Section 301 tariff on Vietnam. TICKER 300979 CH ^Prior trading day's closing price unless otherwise

Initiate with Hold. noted.

From cost leader to super foam powerhouse. Huali is one of the top 2 sports shoemakers FY (Dec) CHANGE TO JEFe JEF vs CONS

in the world (by capacity in 2026E). In the next five years, we expect Huali to enjoy higher 2026 2027 2026 2027

earnings growth, thanks to super foam. New foam materials (e.g. A-TPU, dual-density single REV NA NA -1% -4%

mold) remain the key driver of running, outdoor, and training footwear innovation. We believe

EPS NA NA +1% +1%

Huali's investment in in-house super foam technology will translate into market share gains.

Adidas and other potential super foam clients are key growth drivers. We expect Huali to fill 2026 (RMB) Q1 Q2 Q3 Q4 FY

the void left by Ching Luh exiting the Adidas supply chain. We estimate the Adidas business EPS -- -- -- -- 2.84

to account for 10% of Huali's sales in 2028E (vs. 1% in 2025). In our view, Huali is likely to PREV