Group 1 - Anta Sports Products Co., Ltd. plans to expand its presence in Southeast Asia by increasing the number of its stores to 1,000 within three years [1]

Core Insights - The sports footwear industry is essential for daily life, with designs tailored for various sports and everyday use, emphasizing cushioning and shock absorption [1] Group 1: Business Models in the Sports Footwear Industry - The industry has developed two main business models: 1. Separation of brand operation and manufacturing, where brands like Nike and Adidas focus on brand value and marketing while outsourcing production to specialized manufacturers [1] 2. Integrated brand operation and manufacturing, where companies like Guirenniao and Wanlima handle both branding and production, although some outsourcing occurs [1] Group 2: Market Size and Forecast - The global sports footwear market is projected to grow from 570.5 billion in 2020 to 935.6 billion in 2023, with a compound annual growth rate (CAGR) of 2.4% from 2019 to 2023, and expected to exceed 1,400 billion by 2028 [2] - The global sports footwear manufacturing market is expected to grow from 134 billion in 2019 to 186.9 billion in 2023, with a CAGR of 8.7%, and is projected to surpass 280 billion by 2028 [5] - The Chinese sports footwear manufacturing market is anticipated to grow from 23.4 billion in 2019 to 47.8 billion in 2023, with a CAGR of 19.6%, and is expected to exceed 70 billion by 2028 [5] Group 3: Industry Trends - There is a deepening partnership between leading sports brands and specialized manufacturers, with brands relying on quality manufacturers for production while manufacturers depend on brand orders for growth [8] - The automation level in sports footwear production is increasing due to rising labor costs, enhancing efficiency and quality while reducing costs [9][10] Group 4: Competitive Landscape - The sports footwear manufacturing industry is highly concentrated in Asia, with Taiwanese manufacturers gaining a competitive edge during the industry shift, leveraging technology and production quality [11] - Chinese brands like Anta, Li Ning, and Peak are emerging strongly, supported by a mature supply chain and deepening collaborations with international brands [11]

Core Insights - Anta Sports (02020) announced its goal to implement a thousand-store plan for the Anta brand in Southeast Asia over the next three years during the third Asian Vision Forum held in Singapore [1] - The company's Southeast Asia business revenue is expected to nearly double year-on-year by the first half of 2025, demonstrating the effectiveness of its high-value products, localization, and digital strategies [1] - Anta's "brand + retail" business model has successfully expanded overseas, validated by the operations of other brands like Fila and Descente in Southeast Asia, showcasing the success of its "single platform, multi-brand, all-channel" strategy [1] Business Strategy - Anta has established its Southeast Asia headquarters in Singapore, using it as a strategic hub to strengthen its market position and gradually expand into South Asia, Australia, and New Zealand [1] - The company operates multiple brands under the Amer Sports Group through a "single platform, multi-brand, all-channel" model, creating a seamless online and offline sales ecosystem for each brand [1] - Anta adheres to a strategy of "global thinking, local execution," actively exploring replicable overseas expansion models and development paths [1] Financial Performance - By the first half of 2025, Anta's Southeast Asia revenue is projected to nearly double year-on-year, with the addition of new offline business in the U.S. and the Middle East contributing to an overall overseas revenue growth of over 150% [1] - The global market share outside of China for Anta and Amer Sports Group is nearly 30% [1]

Core Insights - Anta Sports announced its goal to implement a thousand-store plan for the Anta brand in Southeast Asia over the next three years [1] - The company's Southeast Asia business revenue is expected to nearly double year-on-year by the first half of 2025, driven by high-value products, localization, and digital strategies [1] - Anta's strategy of "single platform, multiple brands, and all-channel" has successfully expanded into Southeast Asia, validated through operations of other brands like Fila and Descente [1] Group 1 - Anta Sports participated in the third Asian Vision Forum in Singapore to share its globalization strategy and progress in the Southeast Asian market [1] - The company has established its Southeast Asia headquarters in Singapore to strengthen its market position and expand into South Asia, Australia, and New Zealand [1] - Anta's overseas business revenue has increased by over 150% year-on-year, supported by new offline operations in the US and the Middle East [1] Group 2 - The company emphasizes a strategy of "global thinking and local execution" in Southeast Asia, exploring replicable models for overseas expansion [1] - Anta and Amer Sports have nearly 30% of their global market share outside of China [1]

Group 1 - The "pain culture" consumption trend is gaining momentum, with brands like Converse, LEE, Dickies, and Li Ning increasing their focus on pain bags to attract young consumers [1][2] - Pain bags differ from regular bags primarily due to a transparent compartment designed for displaying merchandise, rooted in Japanese "pain bag culture" where fans showcase their favorite badges [1][2] - The market for pain bags is becoming concentrated, with over ten sports brands, including Adidas and Anta, participating, and prices generally range from 100 to 200 yuan, with some single items selling over a thousand units [1][2] Group 2 - New products are being launched in the pain bag market, such as Converse's white backpack with a large transparent compartment and Skechers' concert-specific pain bag [2] - The influence of "pain culture" is extending beyond bags, with brands exploring DIY options in footwear and clothing, enhancing the emotional connection with consumers [2] - Industry experts note that the Z generation seeks emotional value over mere functionality, suggesting brands should adopt interactive systems and customization options to meet these demands [2]

Group 1 - Anta Group announced a target to achieve a thousand-store plan for the Anta brand in Southeast Asia over the next three years [1] - By the first half of 2025, Anta's Southeast Asia business revenue is expected to nearly double year-on-year [1] - Anta Group has established its Southeast Asia headquarters in Singapore and plans to gradually expand into South Asia, Australia, and New Zealand [1]

Summary of Anta Sports Conference Call Company Overview - **Company**: Anta Sports - **Date**: September 10, 2025 Industry Insights - **Market Size**: The Chinese sports footwear and apparel market is approximately 400 billion RMB, with a compound annual growth rate (CAGR) of 17% over the five years prior to the pandemic. Post-pandemic growth has slowed, with a projected growth rate of 6% in 2024, but the penetration rate continues to rise, indicating strong growth potential in the sports apparel sector [2][6][29]. - **Brand Concentration**: The Chinese sports footwear and apparel market has a high brand concentration, with numerous comprehensive sports brands. As consumer engagement in sports deepens, niche brands are expected to see greater growth opportunities [2][11]. Financial Performance - **Revenue**: Anta Group's total revenue for 2024 exceeded 100 billion RMB, with the main brand accounting for less than half of this revenue. The operating profit margin for Anta is approximately 20%, while Fila accounts for nearly 40% of revenue with a profit margin of about 25% [2][12][14]. - **Growth Strategy**: Anta's diversified brand operation strategy allows it to expand into the entire footwear and apparel market, which is valued at 2.4 trillion RMB, creating a market expansion opportunity of about five times [2][12][23]. Globalization Strategy - **International Expansion**: Anta's globalization strategy is crucial for enhancing valuation and long-term growth potential. The overseas sports market is significantly larger than China's, with higher per capita consumption. Successful international expansion could lead to substantial increases in both valuation and profitability, referred to as a "Davis Double" [2][5][26][29]. - **Store Presence**: Anta currently operates over 240 stores internationally, including in Southeast Asia, the Middle East, and Europe, and has established strategic partnerships with leading distributors in these regions [2][26][27]. Competitive Landscape - **Valuation Comparison**: International sports brands generally have higher price-to-earnings (PE) ratios compared to domestic brands, reflecting their cross-regional growth potential. Anta's current valuation is around 15 times, which is considered low given its growth prospects [3][28][29]. - **Market Trends**: The market is witnessing a shift towards functional specialization in daily leisure needs and a trend towards social demand in the mid to high-end footwear and apparel market, which is valued at approximately 500 billion RMB [16][20]. Brand Strategy and Positioning - **Brand Operations**: Anta's strategy involves operating multiple brands to cater to different consumer segments, extending beyond just sports footwear and apparel. This approach has allowed Anta to capture a larger market share and enhance its brand presence [23][30]. - **Product Design Success**: Anta has successfully launched products like the PG7 running shoes, which combine professional technology with affordability, enhancing its competitive edge in the market [17][30]. Future Opportunities - **Market Growth Potential**: The increasing depth and frequency of consumer participation in sports in China will provide significant growth opportunities for niche sports footwear and apparel segments [15][24]. - **Social Media Engagement**: Anta's brands have shown a significant increase in social media engagement and search interest, indicating a positive trend that could translate into sales growth [25][30]. Conclusion Anta Sports is positioned for substantial growth through its globalization strategy, diversified brand operations, and strong market presence. The company is well-placed to capitalize on emerging trends in consumer behavior and market dynamics, potentially leading to significant valuation increases in the coming years [32].

Core Insights - The importance of the "14th Five-Year Plan": The upcoming "14th Five-Year Plan" is expected to significantly impact China's economic and social development over the next five years, shifting focus from production to a balance between production and consumption due to the current issue of insufficient effective demand [1] - Strengthening consumption policies: Starting in 2024, consumption policies will be significantly enhanced, including the allocation of special government bond funds to support consumption upgrades. Continued funding is expected in 2025 and 2026 [1] - Potential of service consumption: China's service consumption still lags behind developed economies, indicating a substantial opportunity for growth in this sector to stimulate consumer interest and optimize the consumption environment [1] - Rise of technology consumption: With a rapid technological development and an engineering talent surplus, products like robotic vacuum cleaners and drones are gaining market attention, likely creating new consumer demand [1] - Optimization of the overall consumption mechanism: Measures such as consumption tax reform will encourage local governments to transition from production-oriented to service-oriented, promoting the internationalization of quality consumption companies and enhancing residents' consumption capacity [1] Investment Recommendations - Food and Beverage: Recommended companies include Dongpeng Beverage and Lihigh Food, with a focus on Youran Dairy and Bairun Co [2] - Service Sector: Recommended companies include Guming, Mixue Group, and Bubugao, with a focus on Zhongsheng Holdings [2] - Light Industry: Companies to watch include Hengfeng Paper and Xilinmen [3] - Trendy Toys: Recommended companies include Pop Mart and Blokus [4] - Home Appliances: Recommended companies include Midea Group, Haier Smart Home, TCL Electronics H, Roborock, and Ecovacs, with a focus on Yingshi Innovation [5] - Agriculture: Recommended companies include Zhongchong Co, Petty Co, Muyuan Foods, and Haida Group [11] - Textile and Apparel: Recommended companies include Anta Sports, Xtep International, 361 Degrees, and Hailan Home, with a focus on Li Ning and Sanfu Outdoor [11] Report Content Analysis - Expanding consumption share: The report emphasizes that expanding consumption share is essential for achieving Chinese-style modernization, as China's consumption rate is significantly lower than that of developed countries [9] - Shift in fiscal spending: During the "14th Five-Year Plan" period, fiscal spending will shift from material investments to human capital investments, increasing support for education, healthcare, and housing [9] - Promotion of common prosperity: The report highlights the need for income distribution reform and the promotion of the Zhejiang common prosperity model to achieve balanced development [9] - Consumption tax reform: The report suggests that consumption tax reform will help local governments transition from production-oriented to service-oriented, enhancing the consumption environment [9] - Transition from traditional to new consumption: The report analyzes the maturation of traditional consumption markets and the rise of new consumption, which is characterized by a focus on quality and personal satisfaction [9] - Stimulating interest in service consumption: The report indicates that the shift from physical to service consumption is crucial for expanding domestic demand, with growing demand for events and performances benefiting local consumption [9]

Market Overview - The textile and apparel sector has shown resilience in mid-term performance, with the sports segment leading apparel consumption [1][12] - In August, the A-share textile and apparel sector slightly underperformed the broader market, but has shown stable performance since September, with brand apparel outperforming textile manufacturing [1][12] Brand Apparel Insights - Retail sales of clothing in July grew by 1.8% year-on-year, with a slight deceleration compared to the previous month [1] - E-commerce growth in July rebounded significantly, with outdoor sports leading the way; growth rates for various segments included sports apparel at +11%, outdoor apparel at +26%, and home textiles at +10% [1] - Notable brand performances included Decathlon with +63%, Puma with +41%, and Lululemon with +39% in sports apparel; outdoor brands like Kailas and Arc'teryx also showed strong growth [1] Textile Manufacturing Insights - In August, Vietnam's textile exports fell by 4.5% year-on-year, while China's textile exports improved slightly with a growth rate of 1.4% [2] - The export performance of apparel and footwear from China was poor, with declines of 10.1% and 17.1% respectively [2] - The price of cotton showed slight fluctuations in August, with a small decline noted in September [2] Sector Performance Summary - For the first half of 2025, textile manufacturing revenue grew by 7.8% year-on-year, while the apparel and home textile sector faced a decline of 6.4% [3] - The gross margin for the textile manufacturing sector remained stable at 19.4%, while the apparel and home textile sector's gross margin increased slightly to 46.1% [3] - Key players in the apparel sector, such as Anta and Xtep, maintained steady growth in revenue and profit, while non-sports apparel faced significant challenges [3] Investment Recommendations - Focus on undervalued leaders with strong fundamentals in brand apparel, particularly in the sports segment, with recommendations for Anta Sports, Xtep International, and Li Ning [6] - In textile manufacturing, recommend companies with significant rebound potential and strong fundamentals, such as Shenzhou International and Huayi Group [6]

Financial Performance - Revenue for the six months ended June 30, 2025, reached RMB 38,544 million, representing a 14.3% increase compared to RMB 33,735 million in 2024[20] - Operating profit increased by 17.0% to RMB 10,131 million in 2025 from RMB 8,660 million in 2024[20] - Shareholders' profit attributable rose to RMB 7,031 million, a 14.5% increase from RMB 6,142 million in 2024[11] - The company achieved record revenue in the first half of 2025, exceeding market expectations and maintaining a 12-year consecutive growth streak[27] - Anta Sports' revenue increased by 14.3% year-on-year to RMB 38.54 billion in the current fiscal period[45] - The operating profit margin rose by 0.6% to 26.3%, demonstrating strong execution capabilities[45] - The overall gross profit margin decreased by 0.7 percentage points to 63.4% due to increased contributions from lower-margin e-commerce and footwear products[45] - The company reported a total comprehensive income of RMB 6,668 million, compared to RMB 9,475 million in the previous year, reflecting a decrease of 30%[179] - The company reported a total comprehensive income of RMB 5,592 million for the six months ended June 30, 2025, compared to RMB 8,774 million for the same period in 2024, a decrease of 36.8%[186] Revenue Breakdown - The number of offline stores exceeded 13,000 globally, with e-commerce contributing 34.8% to total revenue, up from 33.8% in the first half of 2024[18] - Footwear revenue reached RMB 16,390 million, accounting for 42.5% of total revenue, with a growth of 12.0% from RMB 14,635 million in 2024[114] - Apparel revenue grew by 15.5% to RMB 20,886 million, representing 54.2% of total revenue, up from RMB 18,082 million in 2024[114] - Accessories revenue increased by 24.6% to RMB 1,268 million, making up 3.3% of total revenue, compared to RMB 1,018 million in 2024[114] - Anta's segment revenue grew by 5.4% to RMB 16.95 billion, with an operating profit margin increase of 1.5% to 23.3%[48] - FILA's segment revenue achieved an 8.6% year-on-year growth to RMB 14.18 billion, although the operating profit margin decreased by 0.9% to 27.7%[49] - Other brands saw a significant revenue surge of 61.1% to RMB 7.41 billion, with an operating profit margin increase of 3.3% to 33.2%[50] Strategic Initiatives - The company aims to enhance its multi-brand strategy to capture both mass and premium sports goods markets[3] - The strategic focus remains on a multi-brand approach, enhancing brand differentiation and complementarity as a core growth engine[33] - The company emphasizes investment in existing businesses, particularly in innovation, digitalization, and retail transformation to improve profitability[35] - The company aims to become a leading global multi-brand sports goods group, focusing on high-quality development and globalization[31] - The company is expanding its presence in Southeast Asia and has successfully established retail networks in the UAE, Saudi Arabia, Qatar, Egypt, and Kenya[58] - The company aims to have 7,000 to 7,100 Anta stores and 2,100 to 2,200 FILA stores by the end of 2025[63] Acquisitions and Investments - The acquisition of JACK WOLFSKIN was completed, focusing on outdoor market positioning and a three to five-year revitalization plan[33] - The company completed the acquisition of German outdoor brand JACK WOLFSKIN in May 2025, enhancing its global presence and operational efficiency[52] - The company holds a 40% stake in MUSINSA China, aiming to integrate fashion and sports industries to attract younger consumers[33] - The company issued EUR 1.5 billion zero-coupon convertible bonds due December 2029, with a listing on the Singapore Stock Exchange[160] - The net proceeds from the convertible bond issuance amounted to approximately EUR 1.487 billion after deducting commissions and expenses[161] Market and Economic Conditions - The consumer confidence index showed a recovery compared to the second half of 2024, but remained below long-term averages, indicating cautious consumer spending[43] - The global economic growth forecast for 2025 is 2.3%, with developed countries experiencing significant slowdowns[42] - The company faces risks from economic fluctuations that may impact consumer demand, particularly in the sports footwear and apparel industry[95] - The competitive landscape in the domestic sports footwear and apparel industry is intensifying, with a shift towards competition based on new technologies and high-value-added products[99] Operational Efficiency - The average inventory turnover days increased to 136 days in 2025 from 114 days in 2024[21] - Employee costs increased by 15.6% to RMB 6,043 million, reflecting continued investment in human resources and talent development[127] - The effective tax rate for the period was 28.4%, up from 26.8% in the first half of 2024[140] - The company recorded net financing income of RMB 596 million, down from RMB 710 million in the previous year[179] Future Outlook - The company plans to continue expanding its market presence and investing in new product development to drive future growth[179] - The company plans to accelerate the development of sustainable products and materials, aiming for a balance between economic benefits and social responsibility[61] - The company is focusing on integrating AI technology across its operations to enhance decision-making and consumer experience[55]