Orient Securities has released a research report stating that current market confidence in the technology sector leading national economic development is continuously strengthening, with the extreme divergence in market performance between new and old industries also reflecting the deepening of this narrative logic.

The sustained growth capability and stability brought by persistent technological innovation among leading domestic sportswear brands are currently being overlooked or undervalued by the capital markets, due to their positioning as traditional industries and the performance volatility caused by short-term consumer environment constraints.

The report suggests focusing on brands with a significant value-for-money advantage under the K-shaped divergence scenario. The main viewpoints of Orient Securities are as follows.

Re-evaluating Traditional Industries from a New Perspective: Re-examining the Sportswear Sector Through a Technological Lens

The current capital markets show increasing confidence in the technology sector's role in leading national economic development, with the extreme divergence in market trends between new and old industries also embodying the deepening of this narrative.

However, the firm believes the relationship between the technology industry and traditional industries is not binary or oppositional.

Traditional industries will continue to play a crucial role in the national economy, especially those empowered by technology, which still hold significant vitality and development opportunities for the future.

As a representative traditional industry, the sportswear sector, due to its inherent industry and product characteristics, has a more urgent need for technological innovation.

Sportswear companies, led by industry leaders, have been at the forefront of technological innovation and have received positive feedback.

From the current standpoint, the firm believes research on traditional industries should also moderately step outside the original framework.

It has selected the sportswear track to attempt a different analysis and evaluation from the perspective of technological content.

How to Assess the Technology "Concentration" of Sportswear Companies?

Technological strength has become one of the most important core competitive advantages for sportswear enterprises.

To better screen for promising target companies, the firm has designed an evaluation system to measure the technological content of sportswear companies from six dimensions, based on the characteristics of the sportswear industry.

This evaluation system attempts, from a technological attribute standpoint, to qualitatively assess a company's overall technological level—its technology "concentration"—across six dimensions: "R&D investment intensity, patent and technological barriers, digital and AI capabilities, product technological integration and premium pricing, intelligent manufacturing capability, and ESG governance level."

Simultaneously, the qualitative analysis results will be cross-referenced and analyzed against the company's actual financial performance in recent years.

Assessment Practice of Technology "Concentration" for Three Leading Domestic Sportswear Brands Shows Their Overall Technological Content is Not Fully Recognized by the Market

Using the six-dimensional evaluation system it constructed, the firm conducted a comprehensive assessment of the technological strength of leading Chinese sportswear and footwear companies Anta Sports, Li Ning, and Xtep International.

All three companies have performed excellently in areas such as technological R&D investment and product conversion.

Cross-referencing with recent financial indicators clearly shows the positive driving effect of technology empowerment on business operations.

These three companies are already industry leaders domestically, with overall good product performance.

However, compared to overseas giants, there is room for further improvement in terms of brand premium, which the firm believes is a common issue among domestic sportswear companies.

The overall assessment of the three companies reveals certain differences across the different dimensions of technology concentration.

Among them, Anta Sports leads the industry in comprehensive technology "concentration," with a more outstanding overall performance.

Investment Recommendations

Translating to investment opportunities, the firm still primarily recommends Anta Sports, which has the highest technology concentration, a strong multi-brand and international operation strategy.

This is followed by Li Ning, which has a relatively leading brand premium, strong technology conversion capability, and is expected to show higher earnings elasticity during the future consumption recovery, and Xtep International, which is deeply focused on the running segment, has a significantly higher R&D expense ratio than its peers, and is seeing its second growth curve gaining momentum.

It also suggests focusing on brands with a significant value-for-money advantage under the K-shaped divergence scenario.

Risk Warnings

The pace of domestic consumption recovery falling below expectations could adversely affect the short-term operations of related brands.

Changes in consumption trends within the sportswear field pose certain challenges to the operations of related brand companies.

The inherent subjectivity and limitations of the constructed six-dimensional technological attribute evaluation system itself.