Core Viewpoint - The recent escalation of tariffs and countermeasures has put unprecedented pressure on import and export companies, but it also presents new opportunities for domestic brands as the focus shifts towards local consumption [1][2]. Group 1: Impact of Tariffs on International Brands - The introduction of tariffs has significantly affected international brands like Nike, which has seen its production costs in Vietnam, Indonesia, and China rise by over 30% [14][17]. - Nike's production in Vietnam has increased from 12% in 2019 to 51% currently, indicating a heavy reliance on this region for manufacturing [8]. - Adidas has experienced a decline in revenue in China, dropping from 45.46 billion yuan in 2018 to 30.97 billion yuan in 2024, with its market share decreasing from 20.74% to 13.08% [18]. Group 2: Opportunities for Domestic Brands - The shrinking market share of international brands due to tariffs creates opportunities for domestic companies to capture this market [23]. - Since 2018, domestic brands have gained traction, with 78.2% of consumers frequently purchasing local products [29]. - Li Ning has seen significant growth, with a revenue increase of 31.85% to 138.80 billion yuan in 2019, and its stock price surged nearly 20 times from 5 HKD to 102 HKD [31][33]. Group 3: Future Market Dynamics - The Chinese sports market is expected to grow, with the government aiming for the sports industry to reach a total scale of 5 trillion yuan by 2025 [41]. - The focus on domestic demand and innovation will likely become the main development line for companies in the face of international trade tensions [50]. - Investors are encouraged to focus on companies with high localization of revenue and competitive advantages in the domestic market [51].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 113.28, representing a potential upside of 27.1% from the current price of HKD 89.15 [4][6]. Core Insights - The company is expected to achieve a core net profit growth of 16.5% in 2024, indicating a continuation of high-quality growth [2][6]. - The overall performance of the company aligns with expectations, supported by strong revenue growth across all brands and a robust financial position with net cash of RMB 31.39 billion [6][7]. Financial Summary - Revenue for 2023 is reported at RMB 62.36 billion, with projections of RMB 70.83 billion for 2024, reflecting a year-on-year growth of 13.6% [3][7]. - The net profit attributable to shareholders for 2023 is RMB 10.24 billion, with a significant increase to RMB 15.60 billion in 2024, marking a growth of 52.4% [3][6]. - The basic earnings per share (EPS) is projected to rise from RMB 3.69 in 2023 to RMB 5.55 in 2024, a growth of 50.5% [3][6]. - The company’s operating profit for 2024 is expected to be RMB 16.60 billion, with an operating profit margin of 23.4% [6][7]. Brand Performance - The main brand, Anta, recorded a revenue increase of 10.65% to RMB 33.5 billion, driven by e-commerce growth and enhanced product performance [6][7]. - FILA brand revenue grew by 6.1% to RMB 26.63 billion, while other brands saw a remarkable increase of 53.7% to RMB 10.68 billion, primarily driven by DESCENTE and KOLON [6][7]. Future Outlook - For 2025, the company anticipates high single-digit growth for the Anta and FILA brands, with other brands expected to grow by over 30% [6][7]. - The company plans to increase its overseas business contribution to 15% over the next five years, with a focus on Southeast Asia and the Middle East [6][7].