CLSA's latest research indicates that intensifying macroeconomic and geopolitical headwinds in the second quarter, coupled with a softening retail environment, have contributed to slower sales for Chinese sportswear brands. This reflects tepid consumer demand and heightened competitive risks stemming from international brands offloading inventory. However, with disciplined execution, organic profitability—which excludes one-off items—has remained largely stable.

Original equipment manufacturers (OEMs) in Greater China are facing multiple headwinds that are pressuring gross margins. Within the sector, the firm highlights LI NING (02331) alongside high-yield OEMs Shenzhou International (02313) and Yue Yuen Industrial (00551) as candidates for gradual short-term improvement.

The broker has reaffirmed its "Outperform" rating on LI NING with a target price of HK$20. Following the company's guidance revision, CLSA projects a 2% year-on-year increase in sales for this year.