ANTA SPORTS (Stock Code: 2020)

Business Summary:

ANTA brand was established in 1991 while ANTA Sports Products Limited, a leading sport wear company in China, was listed on HKEX since 2007. She has became a constituent stock under Hang Seng Index from Dec 2020, with market cap of over 280 billion. Currently, ANTA sports is China's biggest sportswear retailer by market value. For many years, ANTA Sports has been principally engaging in the design, development, manufacturing and marketing of ANTA sportswear series to provide the mass market in China with professional sporting products including footwear, apparel and accessories.

In recent years, the company has started moving full steam ahead with the strategy of “Single-focus, Multi-brand, and Omni-channels” to deepen her footprint in the sportswear market. The group embraces a vibrant brand portfolio, including ANTA, FILA, DESCENTE, SPRANDI, KINGKOW and KOLON SPORT.

The enterprise acquired Amer Sports Corporation in 2019, a Finnish sportswear group that has internationally recognized brands.

Business Summary and Prospect:

For the six months ended 30 June 2020,  the profit attributable to equity shareholders (without the effect of share of loss of a joint venture) decreased 20.1% year-on-year from RMB 2.974 billion to RMB 2.377 billion. With the effect of share of loss of a joint venture, profit decreased by 28.6% to RMB 1.7 billion.

Revenue decreased by 1.0% to RMB 14.669 billion.  Basic earnings per share decreased by 28.8% to RMB 61.63 cents.  Gross profit grew 0.4% to RMB 8,302 million. Gross profit margin increased further 0.7% to a record high of 56.8%.  Return on average total shareholder's equity dropped by 11.7% point to 16.1%.  An interim dividend of HK 21 cents (2018: HK 31 cents) per ordinary share was issued.

As of 30 June, 2020, the group operated ANTA 10,197 stores, (including ANTA KIDS standalone stores) in China and foreign countries. Number of FILA stores (including FILA KIDS standalone stores) in China, Hong Kong, Macao and Singapore reached 1,930. The number of Kolon Sport stores in China and Hong Kong reached 155 ; while the number of  Descente stores in China reached 145.

Risk:

Firstly, Anta ranks the second highest P/E  (ratio: 47) of major sportswear company, just next to Li Ning (ratio:67). Anta ranks the highest P/B (ratio: 12.6); nearly one-fold to three-fold when compared with other competitors. Secondly, other international brands competitors such as Nike & Adidas may occupy a faster pace of market share. Lastly, higher-than-expected cost for material sourcing, production cost & network expansion may occur; especially during the present coronavirus disease situation.

Technical Analysis:

The stock prices hit historic high of $114.3 on 19 November, 2020. The price has dropped by 9% to recent-low of $103.6.  It is suggested to buy at the price around $103. The target price for medium term is $120. Cut-loss price will be $95.0.

References

www.hkex.com.hk

www.etnet.com.hk

www.afe-solutions.com

I, Gary Tam, am a licensed person under the Securities and Futures Commission. Until the date this commentary was published, neither I and/or my affiliates are the beneficiary of the securities mentioned herein or are entitled to any financial interests in relation thereto.