Qingmei / China Sports

China Sports Wear: Li Ning the biggest China sportswear seller warned that competition within the sports wear sector in China has intensified with discount promotional efforts increasing across the industry and increasing pressures to reduce the high inventories in the channels at the retail level remaining strong. Trade fair results for 4Q11 indicates that apparel orders would decline by a significant 20% while footwear products by 10-15%, way below past years of strong and consistent growth of 15-20%. In line with Li Ning’s latest profit warning, Nike said that they are seeing their order growth rate in China slowing down meaningfully. Orders for the next 6 mths is expected to be flattish versus previous expectations of 10-15% growth. S-Chips with exposure to the apparel and sportswear sectors in China include Qingmei and China Sports. Lim & Tan securities recommends avoiding them despite their 1-2x historical PEs