Conclusion: we conducted more channel checks. Nike’s upcoming results mayreveal more innovation, which should be more important than the earningsitself for our ODM coverage.。    Nike’s F1Q18(Jun, Jul and Aug) earnings due 9/27morning HKT。    Please kindly see below report by DB Nike analyst Paul Trussell (dated 2017Sep-13):    http://pull.db-gmresearch.com/p/604-6B68/20715252/0900b8c08d87c244.pdf。    ODM faced pressure in calendar 2Q17…。    n Recall major US exporters (Feng Tay, Eclat…etc.) indicated continuedshipment delay and weak monthly sales growth during calendar 1H17.These likely point to a weak sporting goods retail environment in the USduring summer 2017.。    Legacy products (e.g. Feng Tay’s Lebron James 14, Eclat’s legacyleggings…etc.) likely faced pressure during the past summer.。    However, innovation will be a major driver for ODMs’ calendar 2H17and 2018Earnings。    Our channel checks suggest a surge in demand for innovative products,this should boost ODMs’ 2H17and 2018growth.。    Lebron James 15: likely received very positive feedback from focus groupresearch. Thanks to its new upper (improved version of the first generationFlyknit) and the new cushion system.。    Vapor Max: saw significant order upward revision in the past two months,suggesting strong retail performance.。    New fabric: including Nike’s new jacquard jacket collection for 17autumnas well as a series of leggings and sports bra.。    Valuation and risks。    We value the sporting goods sector using DCF, as we expect investors tofocus on the sector’s long-term value creation. For WACC, we follow DB’sview on RFR and ERP while assigning a beta between 0.9to 1.3and terminalgrowth of 1-2%.。

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