Why was Peak delisted from Hong Kong Exchange?

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A few days ago, Peak, a famous Chinese sports equipment brand, was delisted from the Hong Kong Exchange, which was a notable event in the development of the Chinese sports industry. It indicates that the trend is for national sports brands to become international and that the Chinese sports industry is prospering.

Peak, Li Ning and Anta are all well-known sports equipment brands in China. Peak’s headquarters is in Quanzhou, Fujian Province. Its market is international and not limited to China.

In 2005, while Peak was little-known across the world, but it signed a cooperation contract with Houston Rockets for the first time. Then in 2007, Peak replaced Li Ning as NBA’s official market partners.

In 2013, Peak became the third largest partner with NBA players behind Nike and Adidas. It signed cooperation contracts with 15 players at that time. As well as this, it established Strategic Partnerships with Miami Heat, Houston Rockets and two other teams. It also worked with the Federation Internationale De Basketball Amateur (FIBA), and the Stankovic Intercontinental Basketball Champions Cup.

It has opened 200 stores in more than 70 overseas countries and regions. In the eyes of Peak, internationalization should begin with the brand, then capital investment and finally the market. The Hsu family agreed that if the brand was not internationalized, it would be caught in the vicious competition of homogenization.

Peak became the official partner of NBA in 2007 and was listed in Hong Kong in 2009. 

However, the stock price was not satisfactory after Peak was listed in Hong Kong. Xu Zhihua, CEO of Peak, spoke to a reporter from the Economic Observer, “As a leading domestic sports equipment company, the downturn in our stock price will affect the company’s reputation and thus have a negative influence on the company's business development. The company's investment value has long been underestimated. It is hard for our company to take advantage of capital.”

Peak is currently focused on the basketball market and has its own R & D team. Peak’s market share of basketball shoes has ranked first for eight consecutive years in China. It has signed contracts with 11 players, ranking third in the world. In terms of outlets, Peak owns about 6,000 stores. It also opened online stores in Jingdong, Tianmao and other online platforms. Peak occupies the highest overseas market share among local sports brands. In 2015, Peak Group's international turnover reached 6.7 billion yuan, accounting for 21.6% of total turnover.

However, this data did not impress overseas investors. After Peak was listed in Hong Kong, its share price hovered around 2 HK dollars and was even below 1HK dollar for a long time. Its market value dropped to 3 billion HK dollars, while its P/E Ratio was 300%. On the other hand, Chinese mainland domestic capital was surging to sports stock on the A share market, especially after the State Council issued the NO.46 document. The domestic sports industry has quickly become a gold mine in the eyes of the domestic investors.

Xu Jingnan, Chairman of Peak, stated, “We found that the international community lacked confidence in Chinese brands. In their eyes, we are far from being called an international brand. A brand represents a set of values and a culture. If someone buys your products, it means that they accept your values and culture. However, it needs time. Moreover, Hong Kong's capital market is not conducive to us. After careful consideration, we found that it was difficult for us to create an international brand or make gains in Hong Kong. So we decided to return to the China mainland market. Returning to the A share market, we can make full use of the Chinese capital market and Chinese talents to create an international brand.

So, we have seen the news in last week - Peak was officially delisted from Hong Kong.

After delisted from Hong Kong, where will Peak develop with mainland Chinese capital?

Xu Jingnan, the chairman of Peak, said, “After our return, we have two goals: one is to extend the industrial chain. In fact, it is not so much a transformation but an extension. The other is to upgrade the product line. We all know that we are producing basketball equipment. We rank second in the world and first in China. On the basis of producing basketball shoes, we will continue to extend our product line.

He also said that China's sports industry had a bright future. When the economy develops to a certain stage, it is inevitable for us to pursue health and love sports.

Not surprisingly, in Peak's press release, it said that it has received support from substantial domestic capital investments.

Therefore, we look forward to seeing what Peak will achieve after returning to the domestic capital market during this sports industry boom.

Proofread by Sean O Diobhilin

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