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HSBC lifts Xtep Int'l (01368) to HK$3.7
HSBC Global Research lifted its target price for
Xtep International Holdings (01368) to HK$3.7 from HK$2.8, and maintained its "buy"
rating.
  The research house said 2017 was a year of transition for Xtep. Apart from the 
disruption from the restructuring of the kids wear business, as the company continued its
shift towards more functional products offerings, aged inventory in the channel built up.
  On 8 December 2017, Xtep announced that it plans to spend no more than RMB150m on
repurchasing channel inventory that was produced prior to 2015. Management reckons this is
the final step of transformation after the brand image has been transformed and store
upgrades are done. 
  In the longer term, HSBC believes Xtep will remain a very relevant player in the space.
In China: Anatomy of the Consumer (3 November 2017), Xtep was ranked first among the top 
three favourite domestic brands, even surpassing Anta and Li Ning that have higher market
shares according to Euromonitor. As such, with channel situation improving, HSBC expects a
recovery ahead in FY2018-19.

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