Investment Rating - The industry investment rating is "Outperform" (maintained) [1] Core Viewpoints - The report highlights the rapid growth of the Swiss brand On, which has increased its revenue from 270 million Swiss francs in 2019 to 2.32 billion Swiss francs by 2024, achieving a compound annual growth rate (CAGR) of 54% [2][19] - The brand's market share in the U.S. has significantly increased from 0.2% in 2019 to 1.7% in 2024, indicating strong competitive positioning [25] - On's sales channels are balanced between wholesale and direct-to-consumer (DTC), with 59% of sales from wholesale and 41% from DTC as of 2024 [37] Summary by Sections Company Overview - On was founded in 2010 by former triathlon world champion Olivier Bernhard and has innovatively integrated rubber hose prototypes into running shoe designs, launching products with CloudTec® cushioning technology [2][10] - The brand has expanded globally, entering the U.S. and Japan in 2013 and China in 2018, with a strong focus on the Asia-Pacific region, which is expected to grow by 84% from 2021 to 2024 [19][25] Financial Performance - Revenue growth from 2019 to 2024 is attributed to the brand's global expansion strategy, with the Americas contributing 1.48 billion Swiss francs in 2024, accounting for 64% of total revenue [25] - The gross margin has improved from 54% in 2019 to 61% in 2024, while operating profit margins (OPM) are expected to stabilize between 7% and 10% from 2022 to 2024 [19][11] Product Strategy - On's product line is heavily focused on footwear, which accounted for over 95% of revenue in 2024, with plans to expand its apparel segment significantly in the coming years [62] - The brand's innovative technologies, such as CloudTec® and LightSpray™, are central to its product development, enhancing performance and sustainability [65][64] Marketing and Brand Positioning - On has engaged high-profile athletes, including Roger Federer, to enhance brand visibility and credibility, while also leveraging social media and community engagement in China [3][19] - The brand's marketing strategy includes a focus on professional athletes and community-driven initiatives to penetrate the core consumer base in emerging markets [3][19] Channel Strategy - The company has established a robust wholesale network with 10,500 retail partners globally, while also developing its DTC channels through e-commerce and owned retail stores [29][36] - In China, On has opened multiple retail locations, including a flagship store in Chengdu, aiming to increase its market share significantly [46][47]

Investment Rating - The investment rating for the company is "Outperform the Market" [6] Core Views - The report emphasizes that Anta Sports has a well-structured brand matrix that aligns with industry trends, enabling gradual growth [2] - The company is positioned to benefit from the diversification of the Chinese sports market and the potential for global expansion, which could lead to significant long-term growth opportunities [4][9] Industry Trends - The Chinese sports market is diversifying, with the sports footwear and apparel market reaching approximately 400 billion yuan, and a pre-pandemic compound annual growth rate (CAGR) of 17% [1][18] - The penetration rate of the sports market is expected to rise from 7.3% in 2010 to 15.3% by 2024, indicating a strong growth trajectory [1][18] - The industry has experienced three growth cycles, with the current phase focusing on professional and outdoor sports [1][21] Company Overview - Anta Sports is projected to achieve revenues of 70.8 billion yuan in 2024, with a gross margin of 62% [2] - The company operates a multi-brand strategy with three main brand groups: professional, outdoor, and fashion, which are all growing in synergy [2] - Recent acquisitions, such as MAIA ACTIVE and Wolf Claw, have expanded the brand matrix and enhanced global competitiveness [2] Competitive Strengths - Anta Sports is capitalizing on the trend of integrating sports with leisure and social activities, with each brand catering to specific consumer needs [3] - The main brand focuses on affordable professional sports products, while high-end brands like FILA leverage design and celebrity endorsements to capture market share [3] Growth Potential - The brand matrix is expected to stimulate incremental demand, with global operations likely to yield significant growth opportunities [4] - The report forecasts that the company's net profit will grow from over 1 billion yuan this year to more than 2 billion yuan in three years, driven by strong brand performance [5][9] Financial Forecast - The company is expected to achieve a net profit of 13.48 billion yuan in 2025, with a comparable profit growth of 13.0% [9][10] - Revenue projections for the next three years indicate a steady increase, with expected revenues of 80.83 billion yuan in 2025 [10]

Core Insights - The Paris Olympics is creating a significant opportunity for sports brands to enhance their global presence, with Anta and Adidas being the most prominent brands in China [2][3][4] - Anta has surpassed Adidas and Nike in revenue within China, securing its position as the leading sportswear brand in the country, while globally, Nike and Adidas still dominate [4][11] - The Olympics serves as a major platform for brands to increase visibility, with a consensus that spending $100 million on sponsorship can boost brand awareness by 3%, compared to just 1% in other marketing channels [7][9] Anta's Globalization Strategy - Anta aims to become a global brand, not just a Chinese equivalent of Nike, and has initiated a global strategy with the launch of its first basketball shoe globally [11][12] - The company has made several acquisitions, including FILA and Amer Sports, to facilitate its global expansion, although FILA has faced declining growth in recent years [13][14][15] - Amer Sports, acquired in 2019, is seen as a key asset for Anta's globalization, with brands like Arc'teryx and Salomon under its umbrella showing strong performance [15][18] Performance and Challenges - FILA's growth has been inconsistent, with a decline in revenue growth rates from 2019 to 2023, attributed to market saturation and lack of innovation [14][19] - In contrast, Amer Sports has shown promising growth, with a 13% increase in revenue in the first quarter of the year, indicating a potential turnaround for Anta's global strategy [18][19] - Despite the successes, both Amer Sports and Arc'teryx face challenges in gaining traction in international markets, particularly in North America and Europe, where competition is fierce [21][22] Market Positioning - Anta's strategy includes a focus on direct-to-consumer (DTC) sales to enhance brand control and consumer experience, which has shown positive results domestically [22][23] - The company recognizes the need for localized product innovation and systematic channel management to succeed in global markets, moving beyond mere acquisitions [23]