20250414-招银国际-安踏体育-02020.HK-Acquisition_of_Jack_Wolfskin_finally_announced_10页_1mb

Anta Sports (2020 HK) Summary

Core Content

Anta Sports (2020 HK) has announced the acquisition of the Jack Wolfskin brand, which is a leading outdoor apparel, footwear, and equipment brand. The acquisition is valued at approximately USD 290 million (about RMB 2.35 billion) in cash. The company's financial performance in 1Q25 was slightly better than expected, with retail sales growth inline with estimates and guidance, and inventory improvements.

Despite a weak macroeconomic environment and adverse weather conditions in April 2025, the company remains cautiously optimistic about the trend in 2Q25E. Anta's performance across various brands, particularly FILA, showed better-than-expected retail sales growth, attributed to successful product design reforms and a widened price range. Other brands, such as Descente and Kolon, also reported exceptionally strong retail sales growth, surpassing the FY25E guidance.

Main Points

• 1Q25 Performance:

  • Anta's retail sales growth was inline with CMBI estimates and FY25E guidance.
  • Inventory to sales ratio improved to 4.5–5.0 months, a slight improvement from 5 months in 4Q24.
  • Online discounts increased slightly, while offline discounts remained relatively stable.

• FILA Performance:

  • FILA reported better-than-expected retail sales growth, with notable performance in the kids and fusion segments.
  • Inventory to sales ratio remained at 5 months, similar to 4Q24 but up from 1Q24.
  • Online discounts increased by 1–2 percentage points to 40% off, while offline discounts remained at 26% off.

• Other Brands:

  • Other brands showed exceptionally strong performance in 1Q25, with retail sales growth ranging from 65% to 70%.
  • This growth was significantly higher than the FY25E guidance of 30%+.

• Overall Performance:

  • The Anta group's retail sales growth in 1Q25 was at mid-teens, better than the company's target and ahead of CMBI estimates.
  • Profit margins are expected to be better than anticipated due to improved performance.

Key Information

• Earnings Summary:

  • Revenue is expected to grow at a mid-teens rate in 1Q25, with FY25E net profit forecast revised down by 1–2% to account for the acquisition.
  • The stock is currently trading at 17x FY25E P/E, which is considered attractive compared to its 5-year average of 25x.

• Target Price:

  • Maintained as BUY, with a revised target price of HK$119.08, based on a 24x FY25E P/E.
  • The previous target price was HK$120.46, and the current price is HK$83.85.

• Valuation Metrics:

  • FY25E P/S is at 0.8x, lower than Anta group's 2.8x and the global sports industry average of 1.5x.
  • FY25E EV/EBITDA is at 21.3x, slightly higher than Anta group's 9.6x and industry average of 10.5x.

• Acquisition Impact:

  • Anta could benefit from rebranding, product upgrades, efficiency improvements, and expansion in China.
  • Jack Wolfskin is a strong brand with high-quality technology and good brand awareness in Europe, and could supplement Anta's mid-priced outdoor segment.

• US-China Tariffs:

  • While Anta has limited direct sales to the US, it could be indirectly affected through Amer Sports.
  • A 1% increase in import tariffs is estimated to drag Amer Sports' GP margin by about -0.08%.

Recent Reports

• Li Ning (2331 HK): Conservative guidance but expected.
• Xtep (1368 HK): Building a more all-round company in the long run.
• Topsports (6110 HK): Improved in 2H25E with more catalysts in FY26E.
• 361 Degrees (1361 HK): Cautiously optimistic after a strong 2025 CNY.
• JNBY Design (3306 HK): Sales trend is muted, but yield is still attractive.

Market Data

• Market Cap: HK$226,674.1 million
• Average 3 Months Turnover: HK$1,142.2 million
• 52-Week High/Low: HK$106.30 / HK$65.90
• Total Issued Shares: 2,703.3 million

Shareholding Structure

• Mr. Ding Shi Zhong & Family: 52.2%
• The Vanguard Group: 1.7%

Share Performance

• 1-Month: -14.3% (Absolute), -2.5% (Relative)
• 3-Months: +7.4% (Absolute), -2.1% (Relative)
• 6-Months: -16.2% (Absolute), -14.9% (Relative)

Operating Numbers

• Anta's sales across various segments and brands showed consistent growth, with notable improvements in the kids and online segments.
• FILA's performance was particularly strong in the kids and fusion categories due to product design reforms.

Assumptions

• Sales growth for various segments and brands is expected to remain steady, with a focus on maintaining and improving margins.
• The company's operating margin is projected to remain stable, with a focus on cost management and product innovation.

Valuation Table

Summary

Anta Sports (2020 HK) is maintaining its BUY rating, with a revised target price of HK$119.08 based on a 24x FY25E P/E. The acquisition of Jack Wolfskin is viewed as a strategic move to enhance the company's presence in the mid-priced outdoor segment and support its global expansion. The company's performance in 1Q25 was positive, with retail sales growth inline with expectations and improved inventory management. Despite some slowdown in March-April 2025, the outlook for 2Q25E remains cautiously optimistic. The stock is currently trading at 17x P/E, which is considered attractive. The company is expected to benefit from the acquisition through rebranding, product upgrades, and expansion opportunities.