Citigroup's report predicts that the negative impact of Nike's channel inventory reset in the fourth quarter of this year on Chinese brands will be greater than Adidas' similar practice in China in 2022 and 2023, based on Nike's significantly higher market share, Nike China's main retailers' decision to destock, and China's more uncertain macro situation.

The bank expects that industry promotional activities during the Mid-Autumn Festival, National Day, and "Double Eleven" will intensify, and points out that Chinese brands have a higher exposure to direct sales. The increase in industry product discounts will affect the fourth quarter sales growth, profitability, and cash flow of major brands. The bank does not expect industry profits to improve before the first quarter of next year.

Citigroup has decided to downgrade its investment rating on Topsports (06110.HK) and Li Ning (02331.HK) from "buy" to "neutral", while maintaining a "neutral" investment rating on Anta.

The following table shows Citigroup's latest investment ratings and target prices for sporting goods stocks:

Stock│Investment Rating│Target Price(HKD).

Anta (02020.HK)│Neutral│75 yuan->70.8 yuan

Li Ning (02331.HK)│Buy->Neutral│19.63 yuan->14.36 yuan

Topsports (06110.HK)│Buy->Neutral│4.88 yuan->2.55 yuan