Core Viewpoint - Anta's 1H25 adjusted net profit increased by 14.5% year-on-year to RMB7.03 billion, aligning with expectations, driven by strong performance from brands like Descente and Kolon despite pressure on the core brand [1][2] Financial Performance - Anta's 1H25 adjusted net profit growth of 14.5% year-on-year to RMB7.03 billion was in line with consensus, while gross profit margin (GPM) declined by 0.7 percentage points to 63.4%, and operating profit margin (OPM) expanded by 0.6 percentage points to 26.3% [2] - The core brand's OPM improved by 1.5 percentage points to 23.3%, and the "other brands" segment saw an OPM increase of 3.3 percentage points to 33.2%, indicating improved operating efficiency [2] Sales Guidance - Anta revised its 2025 full-year guidance, expecting core brand retail sales value (RSV) to grow in the mid-single digits year-on-year, down from high-single digits, while Fila's RSV remains projected to grow in the mid-single digits [4] - Other brands, excluding Jack Wolfskin, are expected to see RSV growth exceeding 40%, up from previous expectations of over 30% [4] Strategic Developments - Anta's multiband strategy is advancing with a joint venture arrangement with Musinsa, aimed at exploring apparel markets beyond sportswear, potentially benefiting brands like Fila [5] - The company is planning a revitalization of Jack Wolfskin over the next 3-5 years and is open to further mergers and acquisitions, supported by a cash reserve of RMB55.6 billion [5] Market Position - Anta is expected to maintain its leadership in the apparel and sportswear industry, with strong brand performance from Descente and Kolon, and higher guidance from Amer Sports indicating potential for strong growth [7] - Despite a challenging retail environment, Anta is anticipated to trade at higher multiples than its peers [7] Valuation - The target price has been raised to HK$114.7, based on a 20x 2026E price-to-earnings ratio, equivalent to 22.8x 2025E price-to-earnings ratio [8]

Core Viewpoint - Anta Group is reportedly set to acquire the Reebok brand from Authentic Brands Group (ABG), with the transaction already completed [2] Group 1: Reebok's Historical Context - Reebok was founded in 1895 in Bolton, England, originally known for its first spiked running shoes [2] - The brand transitioned to the U.S. market in 1979 and experienced significant growth, even surpassing Nike in market share during its peak [2] - Reebok partnered with the NFL in 2000 and sponsored numerous athletes for the 2004 Athens Olympics [3] Group 2: Recent Ownership Changes - Adidas acquired Reebok in 2005 for $3.8 billion to enhance competition with Nike, but Reebok's market share began to decline [3] - In 2021, Adidas sold Reebok to ABG for €2.1 billion, with ABG delegating regional operations to partners, including a focus on the Chinese market [3][4] Group 3: Current Performance and Future Prospects - Reebok's global market share is projected to remain below 1.5% by 2024, indicating ongoing struggles in the second-tier brand category [4] - Anta Group, founded in 1991, has successfully expanded its brand portfolio through acquisitions, including FILA, which has become a significant revenue contributor [5][6] - Anta's revenue for 2024 is expected to reach ¥70.826 billion, a 13.58% increase year-on-year, with a net profit growth of 52.36% to ¥15.596 billion [6]

Core Insights - Anta has acquired the German outdoor brand Jack Wolfskin, marking the 10th brand in its acquisition portfolio, which has historically revitalized brands in the Chinese market [1][6][13] - The acquisition price for Jack Wolfskin was approximately $290 million, reflecting its current underperformance in China [2][5] - Anta's strategy has successfully transformed brands like FILA from losses to significant profits, indicating a strong operational capability in brand revitalization [1][8][13] Brand Performance - Jack Wolfskin entered the Chinese market in 2007 but has seen a decline in brand recognition and store count, dropping from over 700 stores in 2015 to only 38 by 2025 [4][5] - The brand's unclear positioning and lack of distinctive product offerings have contributed to its diminished presence in a competitive market [5][6] - Anta's acquisition strategy aims to reposition Jack Wolfskin, potentially filling a gap in the affordable outdoor brand segment [5][6] Market Context - The outdoor market in China has become increasingly competitive, with brands like The North Face and Arc'teryx dominating the high-end segment, while domestic brands are rising in the mid-to-low end [5][6] - Anta's approach of acquiring and revitalizing brands has allowed it to capture a significant share of the middle-class market, with a portfolio that includes both international and domestic brands [7][13] Financial Growth - Anta's revenue has grown from 5.87 billion yuan in 2009 to an estimated 70.83 billion yuan in 2024, with gross margins increasing from 42.1% to 62.2% during the same period [10][14] - The successful turnaround of acquired brands like FILA has contributed significantly to Anta's profitability, with FILA alone accounting for over 40% of the group's profits [7][8] Strategic Insights - Anta's acquisition strategy is characterized by a focus on brand repositioning and effective marketing, including celebrity endorsements and social media engagement [8][9] - The company has demonstrated a pattern of transforming underperforming brands into market leaders, suggesting a replicable model for future acquisitions [6][8][13]