Citi Research initiated a 30-day positive catalyst watch on Anta Sports Products Ltd. and Li Ning Co., expecting the Chinese sportswear makers to capture market share from Nike Inc. after the US giant said it will terminate most online distribution with Chinese retailers from January 2027. Citi reiterated buy ratings on both stocks with price targets of HKD108.8 for Anta and HKD22.8 for Li Ning.
Citi Research opened a 30-day positive catalyst watch on Anta Sports and Li Ning, citing Nike's plan to exit online distribution in China.
"The key catalyst is the potential for Nike's market share in China to be captured by Anta and Li Ning," Citi analysts wrote in a note, adding the shift is expected to support positive market sentiment.
Nike will terminate most of its online distribution business with Chinese retailers starting January 2027 and shift to a direct-to-consumer strategy, according to Topsports International Holdings Ltd.'s exchange filing and Nike's website. Citi reiterated buy ratings on Anta with a price target of HKD108.8 and on Li Ning with a target of HKD22.8. The broker ranked Anta as its top pick among Chinese sportswear stocks, followed by Li Ning and Topsports.
The move could cost Nike between $500 million and $1 billion in sales, BNP Paribas analyst Laurent Vasilescu estimated, calling the strategy a "strategic misstep." Topsports, which generates 22 percent of its revenue from online Nike sales, saw its shares plunge 24 percent, wiping about HK$3 billion from its market capitalization. Pou Sheng International Holdings Ltd., another major Nike retail partner, fell 10 percent.
Nike's Greater China sales declined 17 percent on a constant-currency basis in the fourth quarter, deepening from a 10 percent drop in the prior period, as domestic rivals Anta and Li Ning gained ground. The US sportswear giant plans to centralize digital sales through official storefronts on Tmall, JD.com and Douyin to rebuild consumer trust and reduce price competition, according to Cathy Sparks, Nike's vice president and general manager for Greater China.
Citi included both Anta and Li Ning among its 10 preferred large-cap Chinese consumer stocks with attractive valuations. The broker maintained its buy ratings on both companies.
The structural shift in China's sportswear distribution creates a clear opportunity for domestic brands to accelerate market share gains. Investors will watch Anta and Li Ning's upcoming quarterly results for evidence of accelerated revenue growth as Nike's online pullback takes effect in early 2027.
This article is for informational purposes only and does not constitute investment advice.
