Guosheng: Footwear and clothing to see steady growth in 2025, high long-term investment value.

Guosheng released a research report stating that as of the end of 2025, the inventory turnover ratio of various sports brand channels was basically around 4-5 months, and the quality of channel inventory was healthy. Since 2026, with the company's promotion of Chinese New Year holiday marketing and new product launches, the bank judged that the overall performance in Q1 remained stable and showed a growth trend. They recommend LI NING (02331) as a brand that is expected to enhance its brand power during the Olympic cycle, ANTA SPORTS (02020) as a high-quality target with excellent operational capabilities in the sports footwear and apparel sector, and keeping an eye on XTEP INT'L (01368) and 361 DEGREES (01361). Guosheng's main points are as follows: Review of 2025: Solid fundamental growth, continuous optimization of inventory management In 2025, ANTA SPORTS revenue/net profit attributable to owners increased by 13.3%/13.9% to 80.22 billion yuan/13.59 billion yuan excluding one-time gains in 2024, LI NING revenue increased by 3.2% to 29.60 billion yuan, XTEP INT'L revenue/net profit increased by 4.2%/10.8% to 14.15 billion yuan/1.37 billion yuan, 361 DEGREES revenue/net profit increased by 10.6%/14.0% to 11.15 billion yuan/1.31 billion yuan, the sector as a whole performed steadily. From the inventory perspective, the bank judges that the inventory turnover ratio of various sports brand channels was basically around 4-5 months as of the end of 2025, and the quality of channel inventory was healthy. From a valuation perspective, the overall valuation level of the sector is still at the central position of the past 2-3 years. The corresponding 2026 PEs for ANTA SPORTS/LI NING/XTEP INT'L/361 DEGREES are 12x/17x/9x/8x, and with the continuous stimulation of national policies and the recovery of consumer confidence, there is still room for valuation growth in the sector. Operational trend analysis: Companies in the sector focus on improving product quality, enhancing channel operations, and promoting marketing to capture consumers' minds. 1) Product end: Each brand focuses on running products, utilizing cutting-edge technology platforms to drive product iteration. LI NING launched the midsole technology "Super Capsule" in 2025, and XTEP released the 160X 7.0 series to help athletes break national records. In addition to running products, brand companies continue to improve outdoor product matrices to broaden growth momentum. 2) Channel end: On the basis of stable store numbers (as of the end of 2025, ANTA/Fila/LI NING/XTEP/361 DEGREES had 9855/2040/7609/7845/9011 stores), each brand promotes differentiation in business format innovation and efficiency enhancement in single-store operations. ANTA's flagship store at the Arena achieved an average monthly store efficiency of over 3 million yuan, 361 DEGREES has established 127 super stores nationwide, LI NING is exploring a new store model, and XTEP INT'L is strengthening its outlet channel layout. 3) Marketing end: Companies focus on deepening event resources at the core category of sports, as well as brand-level event marketing. LI NING's sponsorship of the Chinese Olympic Committee is expected to continue to enhance the brand's influence, ANTA provides professional equipment for the national team as a brand endorsement, while 361 DEGREES continues its partnership with the Asian Games, laying the foundation for overseas business expansion, and XTEP INT'L continues to focus on the running track to strengthen its competitive moat. Outlook for 2026: Sector demand resilience remains, target companies improve quality and efficiency The core logic lies in the gradual recovery of consumer confidence and the gradual manifestation of the stimulus effect of policies; with the expansion of the sports population, consumers' preference for functional apparel is expected to continue. Considering base factors and the pace of consumption recovery, the bank expects the growth rate in 2026 to show a trend of low in the beginning and high later. In terms of performance, excluding one-time gains, the bank expects ANTA SPORTS to achieve a 3% increase in net profit attributable to owners to 14.053 billion yuan in 2026, XTEP INT'L to decrease by 8.1% to 1.26 billion yuan, and 361 DEGREES to increase by 11.1% to 1.46 billion yuan in 2026. Risk warning: Fluctuations in consumer environment, slower-than-expected store expansion, and slower-than-expected development of e-commerce business.