20211019-招银国际-安踏体育_二百_-02020.HK-Reset_expectations_and_long-term_target_remains_intact_8页_1mb

CMB International Securities | Equity Research | Company Update Summary

Core Content

• Company: Anta Sports (2020 HK)
• Action: Maintain BUY
• Target Price (TP): HK$156.06 (Previous TP: HK$210.85)
• Up/Downside: +23.1%
• Current Price: HK$126.80

Main Points

• Retail Sales Performance:

  • Anta's 3Q21 retail sales growth was in-line with CMBI's estimate of 10%, but slower than 2Q21's 35%-40%.
  • The growth was attributed to the successful ramp-up of shopping mall stores and DTC transformation, despite the impact of the resurgence of COVID-19 and warmer weather in Sep 2021.
  • Anta's retail sales growth guidance for FY21E was maintained at 20%+ while FILA's was revised down to 20%-25% from 30%+.
  • FILA's retail sales growth in 3Q21 was mid-single-digit, missing CMBI's estimate, due to temporary mall closures and a worsening macro environment.
  • Despite the slowdown, FILA's structural positives and long-term sales targets (~RMB 40-50bn) remain intact.
  • Both Anta and FILA are expected to achieve 20%+ and 10%+ growth respectively in FY22E.

• Valuation:

  • Current valuation of 28x FY22E P/E is considered attractive, compared to the 5-year average of 20x and international peers' average of 26x.
  • The 35x FY22E P/E is used to revise the TP down to HK$156.06 from HK$210.85, due to sector de-rating.
  • The NP forecasts for FY21E, FY22E, and FY23E were cut by 3%, 5%, and 4%, respectively, to reflect slower growth but a slightly better operating margin.

• Cost and Challenges:

  • Raw material cost pressure (especially cotton prices up 30%-40% YoY) is manageable due to ample inventory and cost-sharing with suppliers.
  • Electricity shortage impact is limited as Anta is a leading company in many provinces.

• Sector Overview:

  • The China sportswear sector faces challenges with the domestic fashion mania subsiding, but Anta and FILA remain competitive.
  • The long-term retail sales targets for Anta (~RMB 60-80bn) and FILA (~RMB 40-50bn) are still intact.
  • Anta's 3Q21 sales growth was better than FILA, with a 20%-25% growth rate, while FILA's growth was 10%+ due to colder weather.

Key Financials

Earnings Summary

• Revenue:
  • FY21E: RMB 47,018 mn
  • FY22E: RMB 57,140 mn
  • FY23E: RMB 67,517 mn
• Gross profit:
  • FY21E: RMB 29,210 mn
  • FY22E: RMB 35,881 mn
  • FY23E: RMB 42,799 mn
• EBIT:
  • FY21E: RMB 12,154 mn
  • FY22E: RMB 15,069 mn
  • FY23E: RMB 18,163 mn
• Net profit att.:
  • FY21E: RMB 7,961 mn
  • FY22E: RMB 10,324 mn
  • FY23E: RMB 12,642 mn
• Diluted EPS (RMB):
  • FY21E: 2.854
  • FY22E: 3.701
  • FY23E: 4.532
• Gross margin:
  • FY21E: 62.1%
  • FY22E: 62.8%
  • FY23E: 63.4%
• EBIT margin:
  • FY21E: 25.9%
  • FY22E: 26.4%
  • FY23E: 26.9%
• Net profit margin:
  • FY21E: 16.9%
  • FY22E: 18.1%
  • FY23E: 18.7%

Earnings Revision

• Revenue:
  • New: RMB 47,018 mn
  • Old: RMB 49,061 mn
  • Diff: -4.2%
• Gross profit:
  • New: RMB 29,210 mn
  • Old: RMB 30,490 mn
  • Diff: -4.2%
• EBIT:
  • New: RMB 12,154 mn
  • Old: RMB 12,550 mn
  • Diff: -3.1%
• Net profit att.:
  • New: RMB 7,961 mn
  • Old: RMB 8,221 mn
  • Diff: -3.2%
• Diluted EPS:
  • New: 2.854
  • Old: 2.947
  • Diff: -3.2%

Valuation Comparison

Conclusion

• Anta Sports is maintaining its BUY rating with a revised target price of HK$156.06, reflecting a more conservative P/E multiple.
• Despite a slower 3Q21 growth for both Anta and FILA, the long-term growth targets remain intact.
• The current valuation is seen as attractive with a P/E of 28x for FY22E.
• The company is well-positioned to manage cost pressures and is expected to maintain or improve its operating margins.
• The financial outlook remains positive, with a 35% NP CAGR during FY20-23E, and the long-term structural positives are expected to continue.