Mainland sporting goods stocks were popular this morning, with Anta (02020.HK) rising by 7.7% to HKD 82.1, and Li Ning (02331.HK) up by 8.9% to HKD 16.82. Morgan Stanley's report on the Chinese consumer industry stated that the bank's Chinese economists have turned more positive on the macroeconomic outlook, and have also re-examined their views on mainland sportswear, beauty, and IP products. The bank pointed out that in a "bull market" scenario for the macroeconomy, mainland sporting goods stocks could outperform the broader market.

Regarding whether it is time to buy mainland sporting goods stocks on dips, the bank believes that most sportswear brands rely on macroeconomic performance. If China enters a period of deflation and improved consumer confidence, sportswear could be one of the best-performing industries. The bank believes that the effects of stimulus policies will take time to materialize, but the likelihood of further budget cuts in 2024 has decreased. Considering both macroeconomic upside and downside factors, it sees Anta as a better balanced choice due to more downside protection (a HKD 10 billion share buyback plan expected to boost profits by around 20% in 2024) and its business benefiting from macroeconomic improvements. Anta's current price is equivalent to a forecasted 15x PE ratio for next year, more than 25% lower than global industry valuation.

In a macroeconomic "bull market" scenario, Morgan Stanley expects Li Ning to potentially outperform in the sector. The stock's current price is equivalent to a forecasted 11x PE ratio for 2025, and an expected improvement in net profit margin by 2025 could bring surprises.