China Sportswear Sector Faces Q3 Headwinds, ANTA Named Top Pick by BOC International

China's sportswear industry is expected to face significant challenges in the third quarter due to a weakening macroeconomic environment and ongoing pressure from Nike's channel reforms, according to a research note from BOC International. The bank has maintained a cautious, "Neutral" rating on the sector but highlighted ANTA Sports as its preferred stock.

Sector-Wide Headwinds

BOC International analysts believe that pricing pressure on the industry, stemming from Nike's distributors, could persist for longer than initially anticipated. The report notes that price disruptions from smaller and medium-sized e-commerce channels may be difficult to fully contain, impacting competitors across the board.

Investor sentiment towards the Chinese sportswear market could also face near-term pressure. Nike is scheduled to release its first-quarter fiscal 2027 results early next month, and a weak performance in its China business could negatively influence perceptions of the entire sector, the bank stated.

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ANTA Remains a Bright Spot

Despite the broader industry caution, BOC International identified ANTA Sports (02020.HK) as its top pick. The bank cited the company's "comprehensive competitive advantages" as a key reason for its favorable view.

A potential transaction involving Puma could serve as a major catalyst for ANTA's stock in the latter half of the year. According to the report, the successful completion of a deal to acquire Puma shares could be an important driver for the company in the fourth quarter.