After more than two years of waiting, the policy spring breeze arrived as expected. A few days ago, the State General Administration of Sports released the "14th five-year Plan" on its official website (hereinafter referred to as "the Plan"). The Plan is composed of 15 parts and is divided into three sections. it has made comprehensive arrangements for the reform and development of sports during the 14th five-year Plan, centering on the construction of a powerful sports country, and striving to promote high-quality development in key areas of sports during the 14th five-year Plan.
The "Plan" covers topics such as national fitness, youth sports, preparation for the Beijing Winter Olympic Games and the development of ice and snow sports, and defines the working ideas and key tasks in these areas.
If the sports are strong, China will be strong, and if the national luck is prosperous, the sports will be prosperous. Sports carries the dream of national prosperity and national rejuvenation, which is not only the due meaning of national prosperity, but also an important part of the people's healthy and happy life. Zhitong Financial APP believes that under the guidance of the long-term goal of building a sports power in 2035, and with the continuous implementation of the "Plan" by the central and local governments, the sports industry is expected to usher in long-term high-quality development, while the relevant targets in the secondary market are also expected to benefit from the policy dividend.
As far as the segmented track in the Hong Kong stock market is concerned, there are corresponding targets for event operation, sports brand agency and distribution, or brand OEM direction. However, due to the different business and texture of individual stocks, the performance and stock prices also show a very different trend. Looking to the future, are these targets expected to usher in longer-term investment opportunities under the policy spring breeze?
Zhimei Sports (01661): event Operation Unit waiting for the inflection Point of performance
As the first comprehensive sports industry group to be listed in Hong Kong, Zhimei Sports entered the capital market as early as 2013. According to public information, the company has formed the layout of the whole industry, such as event operation, sports marketing, event broadcasting, venue operation, sports technology and so on.
Despite the halo, the performance and share price of Zhimei Sports are hardly optimistic. In terms of performance, the company's performance reached an all-time peak in 2014, with revenue of 804.3 million yuan (RMB, the same below) and net profit of 278 million yuan. In 2015, Zhimei sports performance encountered Waterloo, after that, although the performance has been repeated, but the overall downward trend has not been reversed. By 2020, the company's income was less than 10 million yuan, and its net profit continued the loss trend of the previous year.
After entering 2021, the epidemic repeatedly superimposed major safety accidents in the cross-country race held in Gansu in May, which made the impact on the road running industry and race operators even worse. According to the financial results previously released by Zhimei Sports, the company's revenue in the first half of the year was 1.238 million yuan, an increase of 18.81% over the same period last year, and its net profit was-21.308 million yuan, still not getting rid of losses. Performance can not hide the decline, the stock price is also a step down. At the close of trading on October 26th, Zhimei Sports was only HK $0.187.
"the past cannot be remonstrated, but those who come can still be traced." judging from the performance of history, the present may already be the darkest moment of Zhimei sports. In the first half of this year, occasional cases of the epidemic caused the organizing committee to postpone the event again and again. There were several sporadic events held in April and May, and major security incidents occurred, and the events in various places were suspended one after another. However, "misfortune depends on misfortune, misfortune lies in misfortune". The safety accident of Gansu Marathon may force the domestic marathon industry to become more standardized, and with the continuous increase of vaccine vaccination rate, the sports industry is expected to flourish again under policy support. in the meantime, Zhimei sports may have a valuable opportunity to turn against the wind.
Zhitong Financial APP learned that on the one hand, Zhimei Sports is constantly practicing its internal skills to improve various plans for the organization and operation of events; on the other hand, the company is also looking for more development opportunities, including sports, sports extension and even big health and big consumption areas. In terms of progress, the company has reached comprehensive cooperation with local governments on sports and cultural activities in southern Xinjiang, through mass sports activities (such as city games, basketball and football leagues), youth sports training and material selection (youth training bases, the establishment of traditional sports schools, training camps) and the operation of sports and cultural venues for a long time. Riding on the east wind of "planning", perhaps we can expect the performance of Zhimei Sports, which actively arranges the sports industry, to usher in an inflection point in the future.
Trend in China (03818): sports Brand agents whose performance is picking up
If Zhimei Sports is still in the darkest hour, then the trend in China is already in a new upward channel in which performance has picked up and share prices have bottomed out. As committed to becoming the best multi-brand sportswear enterprise in China, China Trends currently has three major sports brands: Kappa, Kappa Kids and Phenix.
Like Zhimei Sports, the trend of China has also landed on the capital market early. After listing in 2007, the trend of China reached the peak of revenue in 2010, when the company achieved an income of 4.262 billion yuan and a net profit of 1.464 billion yuan. Looking back at the company's operating history, the peak of revenue trends in China at that time had something to do with the company's acquisition of the top international ski brand Phenix in 2008. However, since 2011, the company's performance has failed to continue the previous upward trend, with revenue falling to less than 1.5 billion yuan at one point, while net profit was just over 100 million yuan in the lowest year.
It is worth mentioning that, according to the company's previously disclosed results for fiscal year 2021, thanks to the company's continued reform of sales channels, strengthening retail localization, and vigorously promoting digital and omni-channel layout, the company's overall sales volume increased steadily in fiscal year 2021, and net profit ushered in a significant expansion.
From the perspective of revenue structure, more than 90% of the revenue of the trend in China in fiscal year 2021 comes from the Kappa brand, and the revenue growth rate of the business during the period is 28.4%, which is basically in line with the overall revenue growth rate of the company. In other words, the performance of the Kappa brand determines the performance trend of China. Further subdivided, during the period, the company's Kappa brand self-owned channels and non-proprietary channels both increased volume, and the corresponding sales growth reached 25.3% and 30.7% respectively.
Considering that a number of international sports events will be held from 2021 to 2022, with the industry trend of Super Sports year, China Trends Group is expected to keep up its efforts and improve its performance. At the level of policy catalysis, the release of the "Plan" and the establishment of a sports power in 2035 outline the future development path of the sports industry, and the trend of China, which has multi-brand sportswear, may benefit deeply.
Topsports International Holdings Limited (06110) and Baosheng International (03813): the right time for the change of retailer's business model
The outline of the Plan points out the future development direction of the domestic sports industry. With the expansion of the scale of China's sports industry, it will obviously bring more passenger flow to the downstream sporting goods retailers. In this process, the relevant enterprises are expected to usher in a new wave of dividends.
Zhitong Financial APP noted that Topsports International Holdings Limited and Baosheng International are both large domestic sporting goods retailers. The former, the sports subsidiary of Belle International, has developed into the largest sporting goods retailer in China. According to the company's official website, Topsports International Holdings Limited has been involved in the management of sports products since the 1990s and currently has the distribution rights of 11 international sports, trends and outdoor brands, including Nike, Adidas and Puma. In contrast, Baosheng International, as an earlier listed enterprise, the company's channel brand YYsports sports distribution Nike, Adidas, SKECHERS, Puma, CONVERSE and other international well-known sports brands.
In terms of the performance of the two companies, both have bright spots. For Topsports International Holdings Limited, the company's income and net profit for the whole fiscal year 2021 were 36.01 billion yuan and 2.77 billion yuan, respectively, a growth rate of 6.88% and 20.26%. For Baosheng International, the company's income in the first half of this year was 13.07 billion yuan and net profit was 665 million yuan, an increase of about 11.36% and 5063.65%.
The high performance of the two enterprises "hand in hand" is an important background that the domestic sports shoes and clothing market continues to have a high demeanor and high growth rate in the post-epidemic era, especially the head brand has a significant competitive advantage. According to public data, the overall size of the domestic sports shoes and clothing industry is expected to reach 360.3 billion yuan in 2021, with a year-on-year growth rate of 10.43%, and the industry's compound annual growth rate is expected to reach 9.83% from 2021 to 2023. It is one of the fastest compound growth segments in the clothing sector.
In the context of high expectations of the industry, head retailers have played a "combination of punches" to compete for the market. First, let's take a look at Topsports International Holdings Limited. The company has optimized its store structure by actively increasing the proportion of large stores. By the end of February this year, the total number of stores in the company had dropped from 8395 in the previous year to 8006. However, the number of large stores of more than 300square meters has increased by more than 100,750, accounting for 9.4 percent of the total. At the same time, Topsports International Holdings Limited is committed to digital transformation to help his stores break through the shackles of traditional retail and open up long-term growth space for improving store efficiency.
In contrast, Baosheng International, the progress of the company's online channels is particularly eye-catching. It is understood that in the first half of the year, Baosheng International made great efforts to develop the pan-micro store ecosystem, through the designated key opinion staff (KOS) and interesting content (ExP) to establish a comprehensive relationship with members, in order to improve the level of service to consumers. According to the financial report, pan-micro store ecosystem sales accounted for 5.4% of direct sales in the first half of the year, up from 1.9% in 2020, and this field may continue to bring performance increments for the company in the future.
Shenzhou International Group (02313) and Yue Yuan Group (00551): the performance is still robust under the pressure of the epidemic.
Looking back at the sportswear contract manufacturing enterprises from the downstream retailers, it is not difficult to see that this is a subdivided track with high frequency. Take Shenzhou International Group as an example, the company's last annual overcast needs to be traced back to 2014. Behind the bullish share price is the support of the strong fundamentals of the company.
As the largest vertically integrated knitting manufacturer in China, the company provides contract manufacturing services for a number of international sports brands, including Nike, Adidas, Puma and so on. In the first half of 2021, the company achieved revenue of 11.369 billion yuan and net profit of 2.2263 billion yuan, an increase of 11.09% and-11.39% respectively over the same period last year.
Zhitong Financial APP believes that there are objective reasons for the company's performance income not to increase profits in the first half of the year. During the period, the epidemic hit the Southeast Asian supply chain, and the company's performance was disturbed by the suspension of production in Cambodia for more than one month due to epidemic prevention. With the epidemic in Southeast Asia under better control, the company will resume the recruitment of completed factories, and production capacity is expected to increase in the second half of the year and 2022, when the company's performance growth is expected to accelerate again.
Similar to Shenzhou International Group, Yue Yuen's production capacity was also disturbed by the epidemic in the first half of the year. According to Q2 data, the company's shipments in Vietnam and Indonesia fell by 18% and 7%, respectively. But even under the interference of external factors, Yue Yuen's performance is still resilient. During the period, Yue Yuen achieved revenue of US $4.807 billion, an increase of 17.7% over the same period last year, and net profit turned from a loss to a profit of US $170 million.
Of course, the impact of the short-term epidemic is difficult to put an end to, but thanks to the continued high prosperity of the sportswear track, the full orders of the head contract manufacturers Shenzhou International Group and Yue Yuan are expected to maintain. At the same time, with the marginal impact of the epidemic weakening, the growth prospects of the relevant targets are secure, and the sustainability of performance growth is still high.
Generally speaking, the goal of building a sports power in 2035 has pointed out the direction for the long-term development of China's sports industry, and this "plan" will also provide a path guide for the development and growth of the sports industry. A new tuyere has arrived. Although the performance and stock prices of relevant companies still fluctuate from time to time due to repeated factors such as the epidemic, but then with the gradual realization of favorable policy expectations and the weakening of the marginal impact of the epidemic, the related targets of the industrial chain are expected to usher in a revaluation.