Key Takeaways:
BOCI downgraded the sportswear sector to Neutral from Overweight, flagging weaker earnings visibility for 2026 and trimming forecasts for companies in Nike’s supply chain.
"The downgrade is due to a potential impact from high oil prices on demand; and possible increases in manufacturing costs," BOCI said in a research report.
The bank’s analysts noted that the earnings recovery for sportswear giant NIKE Inc. appears more challenging than previously expected. Within its coverage, BOCI now favors LI NING (02331.HK), whose performance is showing signs of a rebound. In contrast, it remains more conservative on SHENZHOU INTL (02313.HK) and TOPSPORTS (06110.HK).
The ratings change suggests earnings for sportswear companies will face significant headwinds in the short term, at least before interim results in August. The downgrade could increase pressure on stocks across the sector, particularly those reliant on the North American market and exposed to manufacturing cost inflation.
The move by BOCI signals growing caution on consumer discretionary spending amid macroeconomic pressures. Investors will be closely watching upcoming earnings reports from Nike and its suppliers to gauge the accuracy of the bank's more pessimistic outlook.
This article is for informational purposes only and does not constitute investment advice.
