Li Ning is world's top sportswear firm after stock surge

HONG KONG • The hottest sportswear brand in the world right now - at least in the stock market - is a Chinese firm founded by former Olympic gymnast Li Ning.

The eponymous firm has more than tripled in Hong Kong trading this year, making it the top performer in the MSCI Asia Pacific Index and the best gainer among apparel firms globally.

The firm is benefiting from the growing popularity of sports fashion in China, according to Morgan Stanley, which raised its rating on the stock to "overweight" last week and lifted its share price target by 33 per cent.

Li Ning is also expected to benefit from patriotic spending amid China's spat with the NBA, UOB Kay Hian said, boosting its recommendation to "buy".

It is not the first time the Chinese company, which was listed in 2004, has scaled such heights. The shares traded at similar levels in 2007 and again in 2010, before plummeting and remaining in the doldrums for years amid strategic missteps.

This time round, gains began in earnest towards the end of last year as investors looked for consumer companies seen as immune to China's slowdown and the trade war. Rival Anta Sports Products has also surged, climbing 87 per cent this year.

While Li Ning shares are starting to look expensive at 35 times projected 12 month earnings, compared with 30 times for Nike and 25 times for Adidas, analysts are bullish, with 28 "buys", six "neutral" and zero "sell" recommendations.

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A version of this article appeared in the print edition of The Straits Times on October 15, 2019, with the headline 'Li Ning is world's top sportswear firm after stock surge'. Print Edition | Subscribe