DOCSLIB.ORG

Emerging Chinese Affluence Jumpstarts Sports Spending October 12, 2016

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Emerging Chinese Affluence Jumpstarts Sports Spending October 12, 2016 BLOG Emerging Chinese Affluence Jumpstarts Sports Spending October 12, 2016 One of the most common errors we can make as contrarian value investors is the tendency to become, well, contrary or overly pessimistic. In particular, macro-economic driven pessimism can tend to blind investors to underlying positive structural trends. We strive to maintain a semi-optimistic or “glass half full” mindset and recognize that the most obvious risks tend to be self-correcting, fully reflected in asset prices and actually an opportunity. Headlines constantly scream about unrelenting deflation and slowing economic growth, especially in relation to all things Chinese. This negativity is overshadowing the powerful developments in the Chinese consumer sector and in particular, fitness and sports-related spending. Despite the slowdown in overall economic activity in China, growth in the number of “affluent” households has accelerated since 2008. And the number of affluent Chinese households is expected to continue to grow strongly, more than doubling over the next decade. Researchers at Gavekal and Macquarie Research show that this dynamic shifts consumption from necessities to niceties such as travel, recreation, restaurants, luxury goods and services. Spending on athletics, sports and related gear is a major beneficiary of this income cohort’s expansion (Exhibit 1). China is also starting from a very low base of participation in exercise and sports. U.S. per capita spending in this category is more than 16 times that of the average Chinese citizen. In fact, our Sino friends allocate very little to athletic activities compared to other nations. This has not gone unnoticed by government officials. As part of Premier Li Keqiang’s deregulation push, he has made it much easier to get approval for large sporting events. Consequently, the number of marathons held in China is growing at an annualized rate of 62%. President Xi Jinping, a big soccer fan, has pledged to increase the number of fields from 10,000 to 70,000 by 2020. And as the 2022 Winter Olympics in Beijing approaches, the government is explicitly targeting a near doubling of sports- related spending as a percentage of total GDP. From an investment standpoint, the leading domestic athletics and footwear firms - Anta, Li Ning, 361 Degrees, Xtep and Peak - are all trading at significant discounts compared to large global brands such as Nike and Adidas. While the two athletic giants are enjoying strong growth in China, they appear to be already pricing in much of this long-term opportunity. Fundamentally we find both Anta and 361 best positioned for long-term growth. Both companies understand the mistakes of the past cycle and are focused on spending to build brand awareness and not just opening thousands of new locations. Clearly the competition from the established leaders will remain tough but so far these two companies continue to prosper. BLOG Exhibit 1: Sports-Related Spending Rises With Affluence *Sports nutrition products used to build muscle and boost energy, such as protein bars and powders. Does not include mass market sports drinks or low-protein bars. Source: Gavekal Data/Macrobond, Euromonitor. BLOG About the Author Paul Ehrlichman Managing Director, Head of Global Value, Portfolio Manager • 34 years of investment industry experience • Joined a predecessor firm in 2008 • BS in Finance and Quantitative Analysis from La Salle University Past performance is no guarantee of future results. Copyright © 2017 ClearBridge Investments. All opinions and data included in this commentary are as of October 11, 2016 and are subject to change. The opinions and views expressed herein are of Paul Ehrlichman and may differ from other managers, or the firm as a whole, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. This information should not be used as the sole basis to make any investment decision. The statistics have been obtained from sources believed to be reliable, but the accuracy and completeness of this information cannot be guaranteed. Neither ClearBridge Investments nor its information providers are responsible for any damages or losses arising from any use of this information. ClearBridge Investments 620 Eighth Avenue, New York, NY 10018 | 800 691 6960 | ClearBridge.com .
Load more

Recommended publications
  • 361 Degrees International Limited 361度國際有限公司
    Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. 361 Degrees International Limited 361 度 國 際 有 限 公 司 (Incorporated in the Cayman Islands with limited liability) (Stock Code: 1361) 2017 ANNUAL RESULTS ANNOUNCEMENT The board (the “Board”) of directors (the “Directors”) of 361 Degrees International Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (together, the “Group”) for the year ended 31 December 2017. This announcement, containing the full text of the 2017 Annual Report of the Company, complies with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited in relation to information to accompany preliminary announcements of annual results. – 1 – 361 DEGREES INTERNATIONAL LIMITED 361 DEGREES INTERNATIONAL LIMITED INCORPORATED IN THE CAYMAN ISLANDS WITH LIMITED LIABILITY THIS ANNUAL REPORT IS PRINTED ON ENVIRONMENTALLY FRIENDLY PAPER ANNUAL REPORT 2017 361 DEGREES INTERNATIONAL LIMITED Stock Code: 1361 ANNUAL REPORT 2017 02 Company Information 03 Financial Highlights 04 Five-Year Financial Summary 06 Chairman’s Statement 08 Management Discussion and Analysis 27 Report of the Directors 36 Corporate
    [Show full text]
  • Company Report Hong Kong Equity Research
    Monday, November 16, 2015 China Merchants Securities (HK) Co., Ltd. Company Report Hong Kong Equity Research 361 Degrees (1361 HK) Eugene MAK Lewis WONG 852-3189 6343 852-3189 6160 Attractive risk/return driven by strong sportswear sector [email protected] [email protected] ■ 361 Degrees (361) has been relatively overlooked despite the current sportswear sector upcycle due to company specific risks. WHAT’S NEW ■ We view the realization of the risks to be unlikely and hence 361 Assume coverage to be undervalued, making it a potential laggard play ■ Attractive risk/reward given 9x FY16E P/E vs 13x sector average BUY and earnings growth outlook. Assume coverage with BUY rating Previous N/A Riding the sportswear upcycle wave Price HK$2.99 We expect a FY15E/16E/17E earnings growth of 20%/11%/14% YoY with 12-month Target Price HK$3.61 (+21%) upcoming share price catalysts from i) FY15 annual results and ii) double (Potential upside) digit sales fair value YoY growth figures to be maintained for its upcoming 3Q/4Q16 sales fairs. Earnings growth will be driven by FY5E/16E/17E Previous N/A revenue growth of 11%/14%/13% YoY as China’s sportswear sector Price Performance continues to turnaround from increased consumer demand (from (%) increased demand in sports performance products as health awareness 60 1361 HSI Index grows and participation in sports by the Chinese increases). As one of the leading Chinese sportswear brands, we expect 361 to continue to 40 benefit from this sector upcycle which can be seen through successive 20 improvements in 361’s SSSG (1Q14’s 2% to 3Q15’s 8%) and sales fair figures while channel inventory remains healthy at 4x inventory-to- 0 monthly sales.
    [Show full text]
  • Company: NIKE, Inc (NKE) Nielsen Fields, CFA Action: Long W/ a May-2022 Price Target of ~$90 [email protected] IRR: 12% Over 5 Years April 25, 2017
    Company: NIKE, Inc (NKE) Nielsen Fields, CFA Action: Long w/ a May-2022 Price Target of ~$90 [email protected] IRR: 12% over 5 Years April 25, 2017 Executive Summary NIKE, Inc is a BUY given that I expect business value to compound annually in the low teens through early 2022. Shares at ~$56 allow the long-term investor to pay slightly below fair value for the world leader in athletic footwear and apparel, and at just 25% of the footwear and 5% of the apparel global market, NIKE’s competitive advantages in local economies of scale – on a product by product and geographic basis – in advertising and sponsorship will allow the company to grow earnings at a low double digit rate. My base case valuation has NIKE valued at ~$90 in five years – $65 today at an 8% discount rate – representinG an 11% annualized return includinG dividends. Not setting the world on fire however the risk/reward is attractive given you do not lose much in my bear case of $43 yet would double your money in my bull case of $120; a case still more conservative than what management outlined at their 2015 analyst day. 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A SUMMARY INFORMATION (Figures in millions, FYE 5/31) Key Items: NKE Summary Financials: Current Price $55.9 Revenue 18,627 19,176 19,014 20,117 23,331 25,313 27,799 30,601 32,376 Shares Out 1,654 Growth 14.1% 2.9% (0.8%) 5.8% 16.0% 8.5% 9.8% 10.1% 5.8% Market Cap $92,388 Gross Profit 8,387 8,604 8,800 9,202 10,148 11,034 12,446 14,067 14,971 - Cash (6,160.0) Gross Margin 45.0% 44.9%
    [Show full text]
  • Appendix D - Securities Held by Funds October 18, 2017 Annual Report of Activities Pursuant to Act 44 of 2010 October 18, 2017
    Report of Activities Pursuant to Act 44 of 2010 Appendix D - Securities Held by Funds October 18, 2017 Annual Report of Activities Pursuant to Act 44 of 2010 October 18, 2017 Appendix D: Securities Held by Funds The Four Funds hold thousands of publicly and privately traded securities. Act 44 directs the Four Funds to publish “a list of all publicly traded securities held by the public fund.” For consistency in presenting the data, a list of all holdings of the Four Funds is obtained from Pennsylvania Treasury Department. The list includes privately held securities. Some privately held securities lacked certain data fields to facilitate removal from the list. To avoid incomplete removal of privately held securities or erroneous removal of publicly traded securities from the list, the Four Funds have chosen to report all publicly and privately traded securities. The list below presents the securities held by the Four Funds as of June 30, 2017. 1345 AVENUE OF THE A 1 A3 144A AAREAL BANK AG ABRY MEZZANINE PARTNERS LP 1721 N FRONT STREET HOLDINGS AARON'S INC ABRY PARTNERS V LP 1-800-FLOWERS.COM INC AASET 2017-1 TRUST 1A C 144A ABRY PARTNERS VI L P 198 INVERNESS DRIVE WEST ABACUS PROPERTY GROUP ABRY PARTNERS VII L P 1MDB GLOBAL INVESTMENTS L ABAXIS INC ABRY PARTNERS VIII LP REGS ABB CONCISE 6/16 TL ABRY SENIOR EQUITY II LP 1ST SOURCE CORP ABB LTD ABS CAPITAL PARTNERS II LP 200 INVERNESS DRIVE WEST ABBOTT LABORATORIES ABS CAPITAL PARTNERS IV LP 21ST CENTURY FOX AMERICA INC ABBOTT LABORATORIES ABS CAPITAL PARTNERS V LP 21ST CENTURY ONCOLOGY 4/15
    [Show full text]
  • Play the Asian Games
    September 27, 2010 361°(1361 HK) HK$10.00 COMPANY INSIGHTS Target price Up/downside +39% Play the Asian Games Current price HK$7.18 Prestige sponsorship of the Asian Games and the launch of kids’ specialty shops to build brand equity and drive sales… 361° ad linking brand to the Asian Games and the Games Town Gymnasium Matthew Marsden Analyst We initiate coverage on 361° at BUY with at target price of HK$10.00. [email protected] +852 3411 3710 This stock has been on a tear, gaining 99% since listing in June 2009, but we see a series of positive catalysts that will drive the shares even higher: Summer Wang [email protected] Our research shows that the 361° brand is genuinely differentiated, +852 3411 3723 enabling the company to maintain growth in an increasingly competitive sports market. Prestige sponsorship of the Asian Games, to be held this Technical analysis contributed by: November in China for the first time in 20 years, should build brand Seung Min You and Sang Cheol Im [email protected] equity and drive sales. Samsung Securities Korea* 361°‘s launch of specialty kids‘ stores will provide a new leg of growth and gives upside risk to our forecasts; we view this as a ―free option.‖ SAMSUNG vs THE STREET We anticipate that the 1QFY11 (year ends June 30) trading update—to be Stock market fashion in released in late October—will continue to show healthy same-store-sales apparel stock‘s valuation? growth as retail consultant S1MONE helps 361° redesign stores to No.
    [Show full text]
  • China Sporting Goods Industry Report, 2009
    The Vertical Portal for China Business Intelligence. China Sporting Goods Industry Report, 2009 Nov/2009 Property right statement: Copyright of charts, tables and sentences in this report belongs to ResearchInChina (Beijing Waterwood). For charts or tables marketed as from other sources, original publishers own the copyright. The quoted data in this report are collected from public sources. If there is any problem related to property right, please do not hesitate to contact ResearchInChina. China Sporting Goods Industry Report, 2009 2. Development of China Sporting Goods Industry 2.1 Status Quo The competition in China sporting goods industry is fierce. The well-known sporting goods brands include Adidas, Nike, Li Ning, Anta, Peak, etc., some of them are from Mainland China, while some from abroad. They compete in brand loyalty, design, product variety, quality and price. 2.2 Profitability of Brands Gross Profit Margin of Sports Brands in China, 2009 Note: the data of 361 Degrees indicates the data within nine months before March 31, 2009. Source: ResearchInChina; Annual Reports of 361 Degrees, Li Ning, Anta, Xtep, Peak, Kappa - 2 - China Sporting Goods Industry Report, 2009 Sports products are entertainment products, with large profit margins. The gross profit margin of six major sports brands in China is above 30% apiece. According to the comparison in the above figure, the gross profit margin of Kappa which is subject to China Dongxiang was 62.2%, much higher than that of Li Ning, Anta, and other brands. Net Profit Margin of Sports Brands in China, H1 2009 Note: the data of 361 Degrees indicates the data within nine months before March 31, 2009.
    [Show full text]
  • Prospectus Brochure of the Bond 361 Degrees International Limited
    http://www.oblible.com IMPORTANT NOTICE THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE PERSONS OUTSIDE OF THE U.S. IMPORTANT: You must read the following before continuing. The following applies to the offering memorandum following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the offering memorandum. In accessing the offering memorandum, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THE FOLLOWING OFFERING MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS FORBIDDEN. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.
    [Show full text]
  • 361 Degrees (1361 HK)
    Thu, 11 Aug 2016 Equity Research Sporting goods/ China 361 Degrees (1361 HK) Walter Woo +852 2135 0248 1Q17 wholesales discount reduced [email protected] We estimate 1H16E net profit to grow by 13% yoy to RMB300mn Reduced wholesales discount to 63% drive GPM to 42.7% in FY17E and expect moderate trade fair sales growth onwards Revise down/up FY16E/17E earnings by 5.2%/4.1% to RMB549mn/ Company Update RMB670mn Maintain BUY with TP raised to HK$3.8 based on 10x FY 17 PE BUY We estimate 361 Degrees 1H16E net profit to grow by 13% yoy to UNCHANGED RMB300mn. We expect 361 Degrees 1H16 net profit to grow at 13% yoy to Close price: HK$2.50 RMB300mn driven by 15.6% yoy sales growth (footwear+22.5%, and apparel+ Target Price: HK$3.80 (+52%) 9.5%) and flat margins at 41.1% in 1H16E. And we expect 2H16E net profit to be Prior TP: HK$3.60 RMB249mn mainly due to skewed A&P expenses for Olympics and higher than expected finance costs in 2H16E. Ke y Data Wholesales discount for 1Q17 trade fair improved from 65% to 63% for the HKEx code 1361 first time since 1Q14, positive on margins from FY17E onwards. The 12 Months High (HK$) 3.23 wholesale discount for 361 Degrees had reduced from 65% to 63% for the first 12 Month Low (HK$) 2.01 time in 2.5 years during the latest 1Q17 trade fair (last time was an increase from 3M Avg Dail Vol.
    [Show full text]
  • City on the Rise Together Traditional and Hi-Tech Industries Boost the Growth of a Coastal City by Lu Yan
    CONTENT FROM BEIJING REVIEW CONTENT FROM BEIJING REVIEW XINHUA City on the Rise Together traditional and hi-tech industries boost the growth of a coastal city By Lu Yan n October 15, 2017, in the city of The city’s shoe industry began in the Olbia on the Italian island of Sardinia, small satellite town of Chendai. As China’s OLaurent Petrynka, president of the reform and opening up got underway, the International School Sport Federation, stood country’s markets began to come to life, in front of a hushed audience as he opened and commercial opportunities mushroomed the envelope containing the winner of the in Jinjiang. This port city along the ancient bid to host the Gymnasiade 2020, an inter- maritime Silk Road has a long tradition of national sporting event for young athletes. international cultural exchanges and trade. He pulled a card out of the envelope. It read In Chendai, shoe manufacturing and “Jinjiang 2020.” retail boomed as entrepreneurs realized Jinjiang, a coastal city in southeast that shoes represented a lucrative combi- China’s Fujian Province, will become the nation of huge demand and relatively low second Chinese city to host the event after production costs. Many took the plunge, the 11th edition in Shanghai in 1998, its embarking on the mass manufacturing of successful bid apt recognition of the city’s footwear. Later, as these businesses began development in the past few decades. to expand, some entrepreneurs realized that “I’m very excited and proud of my home- to differentiate their products from others town,” said Ding Shizhong, who, as chairman on the market and stay ahead of their rivals DONG NING and CEO of Jinjiang-based Anta Sports, had a they would need to build a brand.
    [Show full text]
  • 『Shoes Approved by World Athletics
    Ｎｏ 1 『Shoes Approved by World Athletics - as at 09 April 2021』 ＷＡシューズリストより【 No spikes Type 】抜粋作成。必ず再確認をお願いします。 Track up to 800m* Track from Shoe Company Model *not including 800m 800m ≤ 20mm ≤ 25mm 361 Degrees Flame NO NO Adidas Adizero Discus Hammer YES YES Adidas Adizero Adios 4 NO YES Adidas Adizero Adios 5 NO YES Adidas Adizero Sub 2 NO YES Adidas Adizero Takumi Sen 5 NO YES Adidas Adizero Takumi Sen 6 NO YES Adidas Adizero Pro NO NO Adidas Adizero Adios Pro NO NO Adidas Adizero Shot Put NO NO Adidas Adizero Boston 8 NO NO Altra Running Vanish Prime NO NO Atreyu The Artist / SKU: 2-ART NO NO Asics Sortie Magic LT NO YES Asics Sortie Magic LT 2 Tenka NO YES Asics Sortie Magic LT 2 NO YES Asics Sortie Magic RP 5 NO YES Asics Sortie Magic RP 5 Tenka NO YES Asics Sortiejapan Seiha 2 NO YES Asics Sortiejapan NO YES Asics Marathon EO Japan NO YES Asics Marathon EO Seiha RP NO YES Asics Marathon EO Seiha NO YES Asics MetaRacer (Tokyo) NO NO Asics Tarthherzeal 6 (MOLD -TJR266) NO NO Asics Magicspeed NO NO Asics Hyperspeed NO NO Asics DS-Trainer 25 NO NO Asics Evoride NO NO Asics Gel-Featherglide 5 NO NO Asics Tartheredge 2 NO NO Asics Tarther RP NO NO Asics Tarther Japan NO NO Asics Skysensor Japan NO NO Asics Freaks Japan NO NO Asics Lyteracer 2 NO NO Asics Magic Speed NO NO Asics Metaspeed Sky NO NO Asics Metaspeed Edge NO NO Brooks Hyperion Elite 2 NO NO Brooks Hyperion Elite 3 NO NO Descente V-Lite NO YES Descente Delta TRI OP YES YES Descente Genten-EL YES YES Descente Genten-EL+ YES YES Descente Genten RC YES YES Ｎｏ 2 Track up to 800m*
    [Show full text]
  • World Athletics Shoe Compliance List
    Shoes Approved by World Athletics - as at 30 April 2021 1. This list is primarily a list concerning new shoes that athletes propose to wear in international competitions which have been assessed by World Athletics to date. 2. The assessment and whether a shoe is approved or not is determined by several different factors as set out in Technical Rule 5.13 and the Shoe Sole Thickness Table to Rule 5.13.3. 3. This table has been presented to align with the Shoe Sole Thickness Table, and note that some athletes may choose to wear shoes manufactured for a specific event in other events. 4. The list is not a complete list of every shoe that has ever been worn by an athlete. If a shoe is not on the list, it can be because a manufacturer has failed to submit the shoe, it has not been approved or is an old model / shoe. Any shoe worn before 1 January 2016 is deemed to meet the technical requirements of Rule 5 of the Technical Rules and does not need to be approved unless requested, this deemed approval does not prejudice any rights of World Athletics or Referees to request a shoe be handed over for further examination or any other rights set out in the Rules and Regulations. 5. An old model / shoe is required to comply with Rule 5.13 and, as with any other rule, an athlete must comply with it. Athletes may be asked to complete a declaration concerning their old model / shoe prior to an event and, after the athlete has competed, the old shoe may be taken in by the Referee for further investigation by World Athletics.
    [Show full text]
  • Peak Sport (1968.HK) BUY 13 Feb 2015 Sportswear 4Q14 Operational Results Still Promising
    Company Update Date Industry Peak Sport (1968.HK) BUY 13 Feb 2015 Sportswear 4Q14 Operational Results Still Promising China operation is still in good shape Company Update Company Closing Price Target Price It was the 5th straight season that Peak Sport (“Peak” thereafter) had delivered mid-teens yoy growth in wholesale order value. As HK$2.18 HK$2.60 we had expected, strong sales of Peak’s professional gear such as Key Data basketball shoes and running shoes (see figure 6) again was the Outstanding Shares 2,098 mn boost to the latest sales fair performance. The retail channel re- mained efficient with retailers reporting SSSG for the 6th consec- Market Cap. HK$ 4,574 mn utive quarter. Meanwhile, 15+ distributors were added in 2014 to 3-mth Avg Daily Volume 1.4 mn further boost the efficiency of the distribution channel. 12-mth High / Low HK$2.45/ HK$1.52 14PE 13.2x Overseas expansion plan on track PB 0.9x Peak is on track with the execution of its overseas expansion plan. Div. Yield 7.3% It sponsored 2014 FIBA Basketball World Cup which was held in ROE 6.0% Aug & Sep 2014, and its marketing activities during the tourna- ROA 4.7% ment were well received by target customer groups (see figure 7). Net Debt / Equity net cash Since 4Q14, the company has been selling its basketball shoes on Eastbay, Foot Locker’s largest digital direct-to-customers arm Major Shareholder which targets elite high school and club athletes in the US (see Xu’ s family 68.4% figure 8).
    [Show full text]