Investment Rating - The report indicates a positive outlook for the sports apparel industry, with expectations for continued operational improvement in the second half of 2025 [1][15]. Core Insights - Leading companies in the sports apparel sector demonstrated strong operational resilience in Q2 2025, with Anta Sports and FILA showing steady revenue growth despite market fluctuations [1][11]. - The report highlights the successful multi-brand strategy of Anta Sports, with significant contributions from new brands like Descente and MAIA, while Li Ning is undergoing channel and product adjustments [1][15]. - The overall health of inventory levels is maintained, with a healthy inventory-to-sales ratio of 4-5 months, and companies are optimistic about improving operational data in H2 2025 [1][15]. Summary by Sections Sports Apparel Sector - In Q2 2025, leading companies like Anta Sports and FILA maintained steady revenue growth, while Li Ning experienced low single-digit growth excluding its young brand [1][11]. - Anta's multi-brand matrix continues to perform well, with significant growth from new brands and a focus on professional sports segments [1][15]. - The report notes that companies are leveraging multi-brand operations and event marketing to drive growth, with running shoes seeing higher revenue growth compared to other categories [1][15]. Performance of Ruoyuchen - Ruoyuchen's H1 2025 performance is highlighted, with expected net profit growth of 61.81% to 100.33% year-on-year, driven by its proprietary brand strategy and effective brand management [2][16]. - The launch of the new health product VitaOcean is anticipated to open new growth avenues for the company [2][16]. Industry Data Tracking - June retail sales for apparel showed a year-on-year growth of 1.9%, but a month-on-month decline due to factors like the early 618 shopping festival and adverse weather conditions affecting foot traffic [3][18]. - The report tracks stable raw material prices, with cotton and other materials showing minor fluctuations, indicating a stable supply chain environment [3][23]. Investment Recommendations - The report recommends several companies based on their market positioning and growth potential, including Anta Sports, Li Ning, and Ruoyuchen, highlighting their strategies to adapt to market changes and consumer trends [3][35]. - In the beauty and personal care sector, companies like Juzhibio and Jinbo Biological are recommended for their strong data resilience and upcoming product launches [3][35]. - The gold and jewelry sector is also highlighted, with recommendations for brands like Laopu Gold due to the favorable market conditions driven by rising gold prices [3][35].

Summary of Conference Call Notes Industry Overview - The industry is expected to maintain a mid-single-digit growth rate over the next three years, driven by increased sports participation due to the national fitness initiative, rising consumer demands for comfort and functionality, and higher penetration rates of sports apparel and footwear [1] - Current sports participation rate in China is below mature markets, with the U.S. at 79%, Japan at 56%, and South Korea at 62%. China's participation rate is currently below 50%, having increased by 19 percentage points over the past six years, indicating significant room for growth [1] - Per capita spending on sports footwear and apparel in China is $39, which is 3 to 11 times lower than that of mature markets [1] Competitive Landscape - The sports footwear and apparel industry maintains a high concentration but is continuously evolving, allowing opportunities for smaller brands to emerge during shifts in sports trends [3] - Nike and Adidas hold the top two market shares in China at 16% and 9%, respectively, while domestic brands like Anta and Li Ning are gaining ground [4] - Anta's market share has surpassed Adidas, reaching 11%, while Li Ning holds 9% [4] - The outdoor segment is experiencing high demand, with niche brands like Hoka and Salomon gaining market share [5] Brand Performance - Domestic brands are now on par with international brands in terms of functionality, with Li Ning being a pioneer in establishing a systematic product approach [6] - Anta has developed a strong product matrix in outdoor and trail running shoes, leveraging its group’s technology reserves [7] - 361 Degrees and Xtep are focusing on niche markets, with Xtep successfully positioning itself as a marathon specialist [7] Market Dynamics - Domestic brands are focusing on lower-tier markets for growth, as international brands like Adidas also seek to expand into these segments [8] - The need for differentiation in product offerings and channel strategies is crucial for brands entering lower-tier markets [9] Company-Specific Insights - Anta's sales and discount rates have remained stable, with a projected revenue growth of 13% in 2024 and a high single-digit growth in 2025 [10] - Profit forecasts for Anta are cautious, with expected profits of approximately 3 billion in 2024 and 2.82 billion in 2025, reflecting a slight decline [13] - 361 Degrees is expected to see revenue growth of 10% to 15% in 2025, with a profit increase of 15% [14] - Xtep is projected to benefit from divesting underperforming businesses, leading to a positive impact on profits [14] Conclusion - The long-term outlook for the sports footwear and apparel industry remains positive, with domestic brands poised to capture more market share [17] - Anta is highlighted as a leading multi-brand sports goods group with global ambitions, while international brands like Adidas and Nike are also expected to benefit from strategic changes in their operations [16]