A Better Year Ahead for Chinese Sportswear Firms; Our Top Pick Remains Shenzhou International

2023 will be a better year for Chinese sportswear manufacturers and retailers, and we see some attractive buying opportunities. These firms have struggled with many issues in 2022, including sporadic lockdowns in China, excess inventories, a more promotional environment, logistical challenges, and tough comparisons against 2021. But as China scraps its zero-COVID-19 policy, stores will reopen, and easing income pressure and an improving consumer mood will also lead people to spend more on discretionary items. This means consumption demand for sportswear will increase, and inventory levels should improve.