What's new
　　Belle is a leading footwear/sportswear retailer whichtops China's women's footwear market with a 4.9%share. Given that Pou Sheng is haunted by the issue of incorrectsales records related to defective corporate governance,investors should pay more attention to the channel and inventoryrisk of the retail distributors of overseas sports brands.
　　Comments
　　3QFY17 （September——November 2016） operational datain line: Footwear SSSG -13.4% while sportswear businessshowed growth of 4.6%. As of end-November, Belle owned20,630 retail stores in mainland China （net +30 in 3Q），consisting of 13,145 footwear outlets （-239） and 7,485sportswear & apparel outlets （+269）。
　　Beneficiary of Adidas' & Nike's outstandingperformance: sportswear SSSG was better than that offootwear, with China's most popular brands enjoying sustainablegrowth in 3Q16 – Nike's Greater China sales growth （its 2QFY17:
　　September——November 2016） +17% vs. Adidas' +25.3%.
　　Trends to watch: 1） Belle will attach more importance to digitalreinvention and transformation; and, 2） the channel optimizationprocess of its footwear sector will continue.
　　Valuation and recommendation
　　We maintain FY2017/18e EPS at Rmb0.37/0.38（+7.4%/2.6% YoY）。 Belle is currently trading at 11.4x/10.3xFY2017/18e P/E. Sports brand giants could boost its top linegrowth, and the transformation may bring changes to itsperformance. Maintain HOLD and cut TP by 13% toHK$5.32 （12x FY2018e P/E） on valuation shift and consideringthe apparel sector's weak overall performance, 15.3% upside.
　　Risks
　　Further slowdown of footwear market; overstocking of thesportswear industry.