20171023-招商证券_香港_-安踏体育-02020.HK-Solidifying_its_position_as_a_leader_in_China_s_sportswear_7页_904kb

ANTA Sports Products (2020 HK) Summary

Core Content

ANTA Sports Products (2020 HK) is a leading sportswear and retail conglomerate in China. The company has demonstrated strong performance in its financials and strategic expansion, reinforcing its position in the market.

Main Points

• Sales Performance (3Q17):

  • ANTA brand sales grew by mid-teens YoY.
  • Non-ANTA brands showed robust growth of 40%–50% YoY.
  • E-commerce sales (ANTA brand) remained strong at about 50% YoY growth.
  • The lower growth in 3Q17 compared to 2Q17 was due to a lower base and the Mid-autumn holiday falling in 3Q last year rather than 4Q this year.

• Strategic Acquisitions and Partnerships:

  • Acquired KingKow (kidswear brand) for 100% ownership.
  • Completed a 50/50 joint venture (JV) with Kolon, gaining exclusive rights to Kolon Sports IP in the Greater China region.
  • Anta aims to improve KingKow's performance by enhancing management and expanding its presence in Mainland China.

• Valuation:

  • New target price (TP) of HK$36.17, an increase of 10% from the previous TP of HK$32.8.
  • The TP is based on a 22x FY18E target P/E, higher than the previous 21x.
  • Anta's valuation is in line with international peers, despite its smaller scale compared to Nike and Adidas.

• Growth Prospects:

  • Anta is expected to deliver 19% 3-year EPS CAGR, higher than the 12% of international peers.
  • The company is anticipated to provide above sector average growth due to its strong management, financial health, and strategic brand expansion.

Key Financials

Brand Portfolio

• Brands: ANTA, ANTA KIDS, FILA, FILA KIDS, DESCENTE, KOLON SPORTS, SPRANDI, KINGKOW, NBA.
• ANTA's Revenue Share: 71.1% in 2015, decreasing to 41.8% in 2019.
• Growth by Brands (YoY):
  • ANTA: 5.0%–1.6%
  • ANTA Kids: 60.0%–24.2%
  • FILA: 50.0%–26.8%
  • E-commerce (ANTA brand): 132.0%–40.0%

Valuation Comparison

Strategic Implications

• Multi-brand Strategy: Anta continues to expand its brand portfolio, aiming to solidify its leadership in the sportswear and retail sectors.
• Kolon JV: The 50/50 joint venture with Kolon provides Anta with exclusive rights in the Greater China region and aims to reduce operating costs by converting stores to self-operated.
• KingKow Acquisition: Anta aims to leverage KingKow's design and quality to improve its performance in the children's wear segment.

Market Performance

• Price Performance (2020 HK):
  • 1-month: -0.3%
  • 6-month: +46.8%
  • 12-month: +56.2%
• Hang Seng Index (HSI):
  • 1-month: +1.3%
  • 6-month: +18.4%
  • 12-month: +21.9%

Key Data

• 52-week range (HK$): 20.35–35.0
• Market Cap (HK$ mn): 88,051
• Avg. Daily Volume (mn): 5.75
• BVPS (RMB): 3.70
• Shareholding Structure:
  • Ding Shizhong: 61.99%
  • Free float: 34%

Conclusion

ANTA Sports Products (2020 HK) is well-positioned to maintain and grow its leadership in the sportswear market through strategic acquisitions and a multi-brand approach. Despite a slight slowdown in 3Q17, the company's growth outlook remains positive, supported by strong e-commerce performance, successful brand expansion, and a solid financial foundation. The valuation is in line with international peers, and the company is expected to deliver above average growth.