It is predicted that the garment industry in China will achieve moderate growth in 2022. From 202 1 to 1 1, the cumulative retail sales of textiles in China increased by 14.9% year-on-year. Looking forward to 2022, we think that the zero social growth in China may remain weak for some time, and the COVID-19 epidemic may continue to occur frequently, but the China government may adopt appropriate policies to deal with the economic weakness. On the whole, we expect that the number of middle and low-grade units in China garment industry will increase year-on-year in 2022.

The sporting goods market will maintain steady growth for a long time. Health, self-esteem and quality of life are becoming the core demands of consumers in China. From the experience of developed countries, these demands will support the long-term stable growth of domestic sporting goods industry. According to Euromonitor data, from 202/kloc-0 to 2026, the size of the sporting goods market in China is expected to achieve a compound annual growth rate of 12.3%.

We maintain the rating of "outperforming the market" in the clothing industry. As we expect that the economic growth rate of China will be slightly weakened in 2022, we believe that the high growth rate and high growth certainty of the sporting goods industry in China will still be attractive to the market. Our preferred stock in the industry is Li Ning (0233 1 HK), and the company has shown strong competitiveness in terms of product strength and operational efficiency. We predict that Li Ning's earnings per share will record a compound annual growth rate of 43.4% from 2020 to 2023. We give Li a target price of HK$ 106.00 and give him a "buy" investment rating.