Summary of Anta Sports Conference Call Company Overview - **Company**: Anta Sports Products Ltd - **Industry**: Sportswear - **Market Share**: 23% in 2024 according to Euromonitor [11][17] Key Takeaways 1. **Sales and Inventory Trends**: - 2Q 2025 continued the solid trend from 1Q 2025 with healthy inventory levels (Anta/Fila at approximately 5 months) [1] - Anticipation of deeper discounts in May due to upcoming events on June 18 [1] 2. **2025 Guidance**: - Retail sell-through guidance maintained for Anta/Fila/other brands at high single digits (HSD), mid single digits (MSD), and over 30% respectively [1] - Operating profit margin (OPM) guidance for 2025 remains at 20-25% for Anta, around 25% for Fila, and 25-30% for other brands [1] 3. **Operational Adjustments**: - Normalization of inventory impairment reversal expected to impact 1H OPM (approximately RMB 300 million reversal) [1] - Anticipated normalization of government grants (RMB 732 million in 1H24) and lower interest income due to reduced interest rates [1] 4. **Store Optimization**: - Ongoing optimization of Super Anta with a target of 100 stores by 2025, up from the current 60-70 [1] - Introduction of refreshed product offerings (approximately 90% exclusive products) and thematic displays [1] 5. **Fila Brand Reforms**: - New management leading Fila reforms, including refreshed product offerings and new branding initiatives [1][6] - Expected launch of enhanced professional elements in products by early 2026 [6] 6. **Investment in Maia Active**: - Increased investments in Maia Active focusing on refined product offerings and supply chain enhancements [1] 7. **Acquisition Plans**: - Acquisition of Jack Wolfskin expected to complete in June, focusing on retaining core assets for business transition [1] 8. **Earnings Forecast**: - Earnings for 2025-2027 adjusted upwards by 1-2% [1] - New DCF-based price target for December 2025 set at HK$142, implying a 23x 12-month forward P/E [1][12] Financial Highlights - **Revenue Growth**: Expected revenue growth of 13.6% for FY24, with projections of RMB 70,826 million [10] - **Margins**: Gross margin projected to improve from 62.2% in FY24 to 63.2% in FY27 [10] - **Earnings Per Share (EPS)**: Adjusted EPS expected to decline by 13.5% in FY25 before recovering in subsequent years [10] Risks and Opportunities - **Downside Risks**: - Slower-than-expected performance from Fila [20] - Increased competition and challenges in integrating acquired businesses [20] - Potential downturn in the retail environment and rising raw material costs [20] - **Upside Opportunities**: - Better-than-expected consumer sentiment and Fila performance [21] - Potential synergies from acquired brands and earlier profitability improvements in emerging brands [21] Conclusion Anta Sports is positioned as a leading player in the Chinese sportswear market with a robust multi-brand strategy and significant growth potential. The company is focusing on operational improvements, brand reforms, and strategic acquisitions to enhance its market position and drive future growth.

Core Viewpoint - Anta Sports has successfully completed the acquisition of Jack Wolfskin, enhancing its portfolio in the outdoor apparel market [1] Group 1: Acquisition Details - The acquisition of Jack Wolfskin is expected to strengthen Anta's position in the global outdoor sportswear market [1] - This move aligns with Anta's strategy to diversify its brand offerings and expand its market reach [1] Group 2: Market Implications - The integration of Jack Wolfskin is anticipated to provide synergies in product development and marketing strategies [1] - The acquisition may lead to increased competition in the outdoor apparel segment, impacting other players in the industry [1]

Investment Rating - The report maintains an "Overweight" rating for Anta Sports [1] Core Insights - Anta Sports has continued the stable trend observed in the first quarter of this year, supported by healthy inventory levels and optimistic sales and performance [1] - The target price for Anta Sports has been raised from HKD 140 to HKD 142 [1] - The retail sales guidance for Anta Sports remains unchanged, with expected growth rates of high single digits for Anta, mid single digits for Fila, and over 30% for other brands [1] - The operating profit margin guidance is maintained, with expected margins of 20% to 25% for Anta, approximately 25% for Fila, and 25% to 30% for other brands [1] - Due to increased investment in MaiaActive and the planned acquisition of JackWolfskin to be completed in June, the earnings forecast for Anta Sports for 2025 to 2027 has been raised by 1% to 2% [1]

Group 1 - Morgan Stanley raised the target price for Anta Sports (02020.HK) from HKD 140 to HKD 142, maintaining an "Overweight" rating [1] - The company has shown a stable trend in Q2, continuing from Q1, with healthy inventory levels and optimistic sales and performance outlook [1] - Retail sales guidance for the year remains unchanged, with Anta, Fila, and other brands expected to achieve high single-digit, mid-single-digit, and over 30% growth, respectively [1] Group 2 - Operating profit margin guidance is maintained, with expected margins for Anta, Fila, and other brands at 20%-25%, approximately 25%, and 25%-30%, respectively [1] - However, the first half of the year may see operating profit margins impacted by inventory impairment reversals, normalization of government subsidies, and declining interest rates [1]

Investment Rating - The report assigns a "Buy" rating to Anta Sports, with a target price raised from HKD 115.7 to HKD 122.3 [1] Core Insights - UBS has increased its net profit forecasts for Anta Sports for the years 2025 to 2027 due to better-than-expected earnings contributions from AmerSports [1] - The management indicated that several factors will influence the overall profit margin of the group this year, including strong sales from Descente and Kolon, reduced inventory provisions, and better-than-expected performance from AmerSports [2] - The management also stated that the restructuring of the FILA brand is ongoing, with guidance suggesting that its growth rate will exceed economic growth, maintaining an annual operating profit margin target of 25% [2] Summary by Sections - **Store Performance**: By the end of 2024, SuperAnta and Anta Champion stores are expected to have 45 and 80 locations respectively. In the first five months of 2025, sales from Champion stores doubled, with average monthly sales reaching RMB 550,000. The operating profit margin of Champion stores is reported to be better than the group average [1] - **Sales Strategy**: The SuperAnta stores typically achieve monthly sales two to three times higher than regular stores, with 80% of products being newly developed. The business model aims to sell core products through larger store formats, reducing product costs and providing competitively priced products [1] - **New Store Impact**: Although these new store formats only account for 1% to 2% of the total number of stores, they are expected to help attract new customers [1]

Investment Rating - The report maintains a "Buy" rating on Anta Sports Products with a 12-month price target of HK$117, indicating an upside potential of 29.8% from the current price of HK$90.15 [17][20]. Core Insights - The report highlights a positive outlook for Anta, driven by strong sales momentum in the outdoor segment and a robust multi-brand strategy that is expected to enhance market share and profit growth [3][8]. - Amer Sports reported a significant revenue growth of 23% year-over-year, outperforming consensus estimates, with a notable 43% growth in Greater China, which is seen as a positive indicator for Anta's performance [2][8]. - The report suggests that the strong results from Amer Sports could alleviate investor concerns regarding tariff impacts on Anta's profit and loss [3][7]. Summary by Sections Financial Performance - Amer Sports achieved an adjusted EBITDA of $299 million in 1Q25, exceeding consensus estimates of $228 million, with an adjusted gross margin expansion of approximately 330 basis points year-over-year to 58.0% [2]. - Anta is expected to benefit from Amer's contribution, with an estimated RMB 983 million associate income projected for 2025, accounting for about 7% of Anta's net income in China [7]. Market Trends - The report notes that the premium outdoor segment in China remains healthy, which is favorable for Anta's outdoor brands such as Descente and Kolon [8]. - Smaller sportswear brands are outpacing larger brands in sales growth, indicating a shift in consumer preferences that could benefit Anta [12]. Strategic Initiatives - Amer Sports plans to optimize its retail footprint in China, focusing on store productivity rather than aggressive expansion, which is expected to lead to revenue growth in the coming years [11]. - The management of Amer Sports has reiterated its commitment to expanding its compact shop format in China, which has shown higher sales per square foot compared to industry averages [11].

Group 1 - The Hong Kong stock market's sportswear sector is experiencing a strong performance, with Anta Sports rising over 6%, and Bosideng International increasing by more than 4%, while Li Ning and Xtep International also saw gains [1] - The overall positive trend in the sportswear sector indicates growing investor confidence and potential for further growth in this industry [1] Group 2 - A-share accounts can now facilitate T+0 trading for Hong Kong stocks without the need for the Hong Kong Stock Connect, potentially increasing accessibility for investors [2] - This development may lead to increased trading volume and liquidity in the Hong Kong stock market, particularly for stocks in the sportswear sector [2]

Investment Rating - The report maintains a "Buy" rating for Anta Sports [4][5][13] Core Viewpoints - Anta Sports is focusing on enhancing its product lines, particularly the Kyrie series, while also introducing the PG7 technology aimed at the general public for running shoes [1][2] - The company is expected to benefit from the growing sports and outdoor market, with projected revenues of RMB 78.6 billion, RMB 88.3 billion, and RMB 101.1 billion for the years 2025 to 2027 [4] - The report highlights the innovative features of the PG7 technology, including a G value of 7.8 for shock absorption and a design tailored for East Asian foot shapes, which has led to global sales of over 3 million pairs by March 2025 [2][3] Summary by Sections Product Development - Anta has launched the Kyrie 2, featuring high-quality leather, nitrogen technology insoles, and a lightweight exoskeleton material for enhanced performance [1] - The PG7 technology, designed for the general public, emphasizes shock absorption and comfort, with a price point around RMB 300, making it accessible [2][3] Financial Projections - The report forecasts net profits of RMB 13.5 billion, RMB 15.7 billion, and RMB 17.9 billion for the years 2025 to 2027, with EPS expected to be RMB 4.82, RMB 5.60, and RMB 6.39 respectively [4] - The PE ratios are projected to be 18, 15, and 13 for the same period [4] Market Position - Anta Sports is positioned as a leading player in the non-essential consumer goods sector, particularly in textiles and apparel, benefiting from a robust brand matrix [4][5]

Summary of Anta Sports Conference Call Company Overview - **Company**: Anta Sports - **Date**: May 9, 2025 Key Points Industry and Market Performance - Anta Sports maintains stable discount levels at retail, with manageable inventory, expecting sales growth driven by the 618 shopping festival, while remaining cautious about the domestic economic situation's impact on future months [2][4] - The company reported good revenue growth in Q1 2025, with a positive outlook for Q2 despite slight early July fatigue, supported by strong performance during the May Day holiday [4] Brand Acquisition and Strategy - The acquisition of the Jack Wolfskin brand is expected to be completed between Q2 and Q3 of 2025, with a focus on integrating operations over the next six months to a year, prioritizing the Chinese market and adopting a Direct-to-Consumer (DTC) model [2][5][6] - Anta anticipates significant improvement potential for Jack Wolfskin in both the Chinese and German markets, with a transition period expected in 2025-2026 [2][7] FILA Brand Performance - FILA has shown stable performance, with expectations for continued growth under the new leadership of Jiang Yan, focusing on core products and reducing SKU counts to create best-sellers [2][8][9] Future Product and Channel Strategy - Anta plans to continue its investor strategy in 2025, with new products expected to launch in Q1 2026, emphasizing multi-scenario consumption and maintaining VIP customer loyalty [2][9] - The company is optimizing its online channel strategy to increase the online sales proportion of its main brand [3][14] Store Expansion and Innovation - Anta is expanding its store formats, with plans to increase the number of Champion stores from 80 to 120 and Super Anta stores from 50 to 100 by the end of 2025 [11] - The Super Anta stores are designed to attract high-end consumers, while the regular Anta stores will gradually decrease in number [13] Stock Buyback and Market Confidence - Anta Group plans to repurchase HKD 10 billion worth of shares, having completed HKD 2 billion so far, indicating confidence in market prospects [3][18] Pricing and Sales Strategy - The pricing strategy for FILA remains stable, with adjustments made to certain series to attract more customers, particularly in children's apparel [10] - Anta is focusing on reducing return rates during major sales events by optimizing promotional strategies and prioritizing low-return products [15][16] Urban Market Dynamics - Profitability varies by city tier, with second and third-tier cities showing the highest profitability, while first-tier cities face lower single-store profitability due to high rent [21] - Anta plans to close 100 to 200 outdated stores in lower-tier cities due to reduced foot traffic [21] Sales Performance During Holidays - During the May Day holiday, high-end small brands performed well, while Anta and FILA met expectations overall [22]

Group 1 - Anta Sports announced an adjustment to the conversion price of its €1.5 billion zero-coupon guaranteed convertible bonds due in 2029, changing the conversion price from HKD 104.02 to HKD 102.62 [1] - The adjustment will take effect on May 14, 2025, immediately following the dividend record date [1] - Following the adjustment, if all bonds are converted, they will convert into 119,188,755 shares, representing approximately 4.25% of the issued shares as of the announcement date and about 4.07% of the issued shares after the conversion [1]