• Buy Entry – 8.5 Target – 10.5 Stop Loss – 7.5
  • Xtep International Holdings Limited is principally engaged in the design, development, manufacturing, sales, marketing and brand management of sportswear, including footwear, apparel and accessories. Its products are mainly sold under the self-owned brand of Xtep. 
  • The sportswear sector has definitely been one of the best performing sectors YTD as demand surged due to more people choosing to exercise during the pandemic and also due to the boycott movement against foreign brands. The Tokyo Olympics is the first international sports event since the COVID pandemic began early last year. The pent-up demand for watching and participating in the event will be much higher. As the location is in Japan, more spectators in China will be able to watch live games during Asian hours. Hence, interest is expected to translate into more consumption of domestic brands’ sportswear. 
  • Based on the peers’ comparison, we think the company still has upside potential to catch up with the market leaders such as Anta Sports and Li Ning. 
  • Updated market consensus of the estimated growth of EPS in FY21 and FY22 are 31.3% and 21.7% respectively, which translates to 28.2x and 23.2x forward PE. The current PE is 37.1x. Bloomberg consensus average 12-month target price is HK$6.14.