China Sportswear

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China Sportswear

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19 Jul 2026 18:16:53 ET │ 14 pages

Revised Sector Pecking Order: Anta > Li Ning > Topsports

CITI'S TAKE

Post 2Q print, we expect Anta to have higher 2H26E earning certainty

than industry peers, given its multi-brand portfolio, relatively low 2026E

sales target, and pragmatic biz recalibration (including recent Anta biz

leadership change). Despite Li Ning’s tentative maintaining of 2026E Xiaopo Wei, CFAAC

guidance, the market has priced in its 2026E guidance cut upon 1H26 +852-2501-2472

results. In our view, sequentially improved China retail sales in June vs. xiaopo.wei@citi.com

May may result in more positive sentiment on China consumer sector (see

Vincent Young Citi’s July 15 note) amid investors’ recent sector rotations after

government’s new pro-consumption policy (see Citi’s July 13 note). Anta +852-2501-2738

vincent.young@citi.com and Li Ning are also among Citi’s preferred 10 big-cap China consumer

stocks with attractive valuations (see Citi’s July 2 note). Furthermore, we

expect uncertain 2H retail environment to negatively impact retailers

(Topsports) more than brands (Anta/Li Ning). Our revised sector relative

pecking order: Anta (Buy) > Li Ning (Buy) > Topsports (Buy).

Industry landscape in 2H26E — In 2H26E, we expect various market challenges,

which include mounting industry competition and retail discounting in 3Q, negative

impact of extreme weather (floods and typhoon) on July sales, and a possible warm

winter in 4Q. The market has lowered earnings expectations on sportswear names

since May. On another front, any future change of Nike China’s online strategy

(which still remains uncertain) might result in an industry landscape shift in favor of

Chinese brands -- see Citi’s June 29 note on Three scenarios of Nike China’s future