Cutting Topsports/Pou Sheng estimates to reflect the termination of Nike online sales from CY2027

研报英文原文证据摘录

Cutting Topsports/Pou Sheng estimates to reflect the termination of Nike online sales from CY2027

Goldman Sachs China sportswear

the impact still came larger than what the market expected, based on our conversation

with investors. We see downside risks to both Topsports and Pou Sheng’s earnings in

CY27-28 given the 22%/15% sales exposure; but the magnitude of the profit impact is

different. According to both mgmts, Topsports mentioned earlier that the online margin

is higher than group level, while Pou Sheng indicated that online sales are

margin-dilutive given the substantial discount.

Thus, we revise down Topsports’ FY2/27-29E sales and net income by 6-21% and 8-35%

respectively; and cut Pou Sheng’s FY27-28E sales and net income by 14% and 7-9%

respectively. The assumptions reflect the removal of the Nike online sales from both

companies, higher GPM given online sales carries lower margin so reduced online mix

will drive blended GPM, and company’s continued cost optimization. We believe both

companies will continue to explore business opportunities and potential support with

Nike though the clarity is uncertain. In the meantime, both companies have been

aggressively expanding the emerging brands to drive better sales as consumer

preference becomes more diverged; the event could push both companies to push

further on expanding brand portfolio.

On valuation, we maintain Buy on Pou Sheng for manageable earnings impact and

undemanding valuation, and Neutral on Topsports on already significant correction

(share price down ~24% today, and down~44% since the news out on Jun 19) and

attractive dividend yield of 13% on our estimates. TP for Pou Sheng is maintained at

HK$0.49 (7x 2026E P/E unchanged) and that for Topsports is cut to HK$1.2 on 8X