China Sporting Goods:CCTV consumer TV show accused Nike of false marketing
We value the sporting goods sector using DCF methodology, as we expectinvestors to focus on the sector’s long-term value creation. For WACC, wefollow Deutsche Bank’s view on RFR and ERP while assigning a beta of 0.9 to1.3 and terminal growth of 1-2%. Downside risks: weaker cyclical recovery,weaker innovation, sports segmentation ad e-commerce failing to drive growthfor the sector. Upside risks: faster destocking by wholesalers, and strongerperformance by new brands.