Morgan Stanley: The market is overlooking the positive signals from NIKE, Inc. Class B (NKE.US) on SHENZHOU INTL (02313), giving a target price of HKD 72.

Morgan Stanley released a research report saying that the performance of NIKE, Inc. Class B (NKE.US) in the second quarter of the 2026 fiscal year dragged down SHENZHOU INTL (02313). The bank believes that the market tends to view SHENZHOU INTL as a representative of the sportswear sector in mainland China, but more than 75% of its sales come from markets outside of China, which should benefit more from the resilience of other markets. With the recent decline in SHENZHOU INTL's stock price, it provides a good opportunity to increase holdings; the bank now has a target price of HK$72 and a "buy" rating. The bank believes that the market may have overlooked the positive signals from NIKE, Inc. Class B's performance on SHENZHOU INTL. First, sales of NIKE, Inc. Class B clothing (calculated at a fixed exchange rate) increased by 4% year-on-year in the quarter, although lower than the 7% in the previous quarter, but this is due to a high base. Secondly, clothing sales of NIKE, Inc. Class B in North America and Europe recorded positive growth during the period, which is beneficial for SHENZHOU INTL as about 40% of its sales come from these two regions. Furthermore, clothing sales in the Greater China region for NIKE, Inc. Class B only decreased by 6% year-on-year in the period, less than the 20% drop in footwear sales; and sales in this region now only account for 11% of NIKE, Inc. Class B, so the impact on SHENZHOU INTL is limited.