Termination of online sales of Nike products; cut estimates, PO to HK$1.60

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Termination of online sales of Nike products; cut estimates, PO to HK$1.60

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Topsports International Holding Ltd.

Termination of online sales of Nike

products; cut estimates, PO to HK$1.60

Reiterate Rating: NEUTRAL | PO: 1.60 HKD | Price: 1.45 HKD

Termination effective from 1 Jan, 2027 22 July 2026

Topsports announced that Nike has decided to terminate Topsport’s online sales of Nike Equity

products in China, effective from 1 Jan, 2027. The business accounted for 22% of

Topsports’ FY26 (Feb-2026)’s revenue. Pou Sheng also made a similar announcement,

Key Changeswith 15% if its sales being impacted. We cut FY27/28 estimates by 13%/35%, with the

full-year impact to kick in from FY28. Given online is a relatively more profitable channel (CNY) Previous Current

than offline, coupled with operating deleverage, we expect bottom line to see a heavier Price Obj. HK$2.50 HK$1.60

impact than topline. We also reduce PO by 37% to HK$1.6, following earnings cut and 2027E Rev (m) 24,452.5 22,692.7

apply a lower target multiple (8x, down from 10x to reflect dependency risk on principal 2028E Rev (m) 25,327.9 19,205.3

brands) and roll over valuation anchor to FY28 as it will be a normalized year post impact 2029E Rev (m) 26,320.5 20,200.3

from Nike online termination. But, we reiterate Neutral, given share-price reaction to the 2027E EPS 0.19 0.16

news has already been priced in with valuation support (10x ‘28 P/E, 10% dividend yield). 2028E EPS 0.20 0.13

2029E EPS 0.22 0.15

Offline traffic stayed soft; non-Nike online growth solid

Regarding Chinese sportswear brands’ 2Q trading updates, offline traffic weakness is an Lucy Yu >>

Research Analyst

industry wide issue, without much improvement going into July. Discounting rates were Merrill Lynch (Singapore)