Goldman Sachs cuts Topsports and Pou Sheng earnings forecasts to reflect the impact of Nike's online sales termination

Overview

This report assesses the impact of Nike's decision to terminate online platform sales of Nike products through Topsports and Pou Sheng in mainland China from January 1, 2027. Goldman Sachs believes that although the event is not entirely new, the formal announcement and magnitude of the impact exceeded some market expectations and will create downward pressure on both companies' CY2027-2028 earnings in the near term.

Core views

The core view is that Topsports will be more severely affected because the relevant online business represents a higher proportion of revenue and has a higher margin than the group level; Pou Sheng will see a clear revenue impact, but the company said that the business contributes little to group earnings because of heavier online discounting and lower margins. From a brand perspective, Nike remains one of China's largest sports brands, with an estimated 16% market share in 2025. Its channel adjustment could create opportunities for brands such as Anta and Li Ning, although potential inventory clearance and a worsening promotional environment represent common industry risks.

Analysis framework

Goldman Sachs assesses the impact through revenue exposure, online business margins, gross margin mix effects, cost optimization, and valuation multiple adjustments. It changes the valuation basis for Topsports from 10x FY2/27E P/E to 8x FY2/28E P/E to reflect earnings uncertainty from the Nike impact; Pou Sheng continues to be valued at 7x 2026E P/E.

Methodology notes

• equity_valuationP/E target multiple valuation

  P/E valuation

  Topsports' target price is based on 8x FY2/28E P/E; Pou Sheng's target price is based on 7x 2026E P/E.

• earnings_revisionRevenue and net income estimate revision

  Earnings forecast revision

  Nike online sales are excluded from CY2027 onward, with revenue and net profit forecasts revised based on online business gross margins, cost optimization, and brand portfolio adjustments.

• broker_frameworkGS Factor Profile

  Goldman Sachs factor profile

  Goldman Sachs discloses that its factor profile compares stocks with the market and peers across growth, financial returns, valuation multiples, and composite dimensions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Topsports Intl Holdings (6110.HK)

  Nike China distributor directly negatively affected

  Strengths

  The share price has corrected significantly; estimated dividend yield is approximately 13%; it will continue cooperating with Nike on offline sales.

  Weaknesses

  The affected business accounts for approximately 22% of FY2/2026 revenue, and its online margins are higher than the group level, resulting in a substantial earnings downgrade.

  Comparison

  Compared with Pou Sheng, Topsports has higher earnings sensitivity, and its target price has been cut more significantly.

  Risks

  Industry growth below expectations, deeper discounting, and stronger-than-expected negative operating leverage; upside risks include improving brand momentum, margin expansion, and efficiency gains.

• Pou Sheng International Holdings (3813.HK)

  Nike China distributor directly affected

  Strengths

  The company stated that the affected online business contributes little to earnings; valuation is undemanding; Goldman Sachs maintains its Buy rating.

  Weaknesses

  The affected business still accounts for approximately 15% of FY2025 revenue, and CY2027-2028 revenue forecasts have been cut.

  Comparison

  Compared with Topsports, Pou Sheng faces a revenue shock, but the profit impact is more manageable.

  Risks

  Slower-than-expected recovery in Nike/adidas growth in China, rising discounting and inventory pressure, and operating deleverage.

• Anta Sports Products

  Potential beneficiary among Chinese sports brands

  Strengths

  Nike's channel reform could weaken Nike's near-term sales and create share opportunities for domestic brands; Goldman Sachs maintains its Buy rating.

  Weaknesses

  It still faces intensifying industry promotions and margin pressure.

  Comparison

  Compared with distributors directly harmed by Nike's channel adjustment, brand owners may benefit relatively more.

  Risks

  More aggressive promotions triggered by Nike inventory clearance could weigh on gross margins across the industry.

• Li Ning Co. (2331.HK)

  Potential beneficiary among Chinese sports brands

  Strengths

  Nike's channel reform could create competitive share opportunities; Goldman Sachs maintains its Buy rating.

  Weaknesses

  Industry demand and the discounting environment remain constraints.

  Comparison

  Similar to Anta, as a domestic brand it may benefit from Nike's short-term sales disruption.

  Risks

  A worsening promotional environment, inventory pressure, and slower industry growth.

Key data

• Topsports affected revenue exposureApproximately 22%The affected Nike online business as a proportion of Topsports' FY2/2026 group revenue.
• Pou Sheng affected revenue exposureApproximately 15%The affected Nike online business as a proportion of Pou Sheng's FY2025 group revenue.
• Topsports forecast cutSales cut by 6%-21%, net profit cut by 8%-35%Covering FY2/27-29E.
• Pou Sheng forecast cutSales cut by 14%, net profit cut by 7%-9%Covering FY27-28E.
• Topsports target priceHK$1.20Cut from HK$2.20, based on 8x FY2/28E P/E.
• Pou Sheng target priceHK$0.49Unchanged, based on 7x 2026E P/E.
• Topsports share price performanceDown approximately 24% on the day and approximately 44% since the news leaked on June 19Goldman Sachs therefore believes that some of the negative impact has already been reflected.
• Nike China market shareApproximately 16%The report states that Nike remained China's largest sports brand in 2025.

Impact & implications

For Topsports and Pou Sheng, the termination of Nike online sales will directly reduce the revenue base and alter the profit structure; for the industry, domestic brands may gain share opportunities, but sportswear sector gross margins could come under pressure if Nike's online inventory management triggers more aggressive promotions. From an investment perspective, Goldman Sachs favors Pou Sheng because its earnings impact is manageable and its valuation is undemanding, remains Neutral on Topsports, and continues to favor Anta and Li Ning.

Risks

• The impact of Nike's channel reform on China's sales and distribution system could last longer or be greater than expected.
• Nike's online inventory management could worsen the promotional environment and depress gross margins for sportswear brands and distributors.
• The effectiveness of Topsports and Pou Sheng's expansion into emerging brand portfolios remains uncertain.
• Industry growth below expectations, deeper discounting, and worsening operating leverage could further weigh on earnings.
• The clarity of subsequent cooperation with Nike, support policies, and the stability of offline business remains limited.

What to watch

• The actual revenue shortfall after Nike terminates online sales on January 1, 2027.
• Whether offline Nike cooperation remains stable for Topsports and Pou Sheng.
• Whether the two companies' expansion of emerging brands can offset the Nike online business shortfall.
• Progress in Nike's inventory clearance, discounting strategy, and improvement in full-price sales in China.
• Whether domestic brands such as Anta and Li Ning achieve actual share gains.