Industry Trends - The Chinese sports market is diversifying, with a market size of 400 billion yuan and a pre-pandemic compound annual growth rate (CAGR) of 17%, while penetration rates are expected to rise from 7.3% in 2010 to 15.3% by 2024 [1] - The industry has experienced three growth cycles: 2008-2010 saw the rise of professional sports and leisure; 2014-2019 was marked by a high-end sports fashion trend; and from 2021 onwards, professional and outdoor sports have led diversified development [1] - Compared to China, the penetration rates in Europe, America, and Japan are generally higher, with distinct development paths: Europe and America focus on mass sports and hardcore outdoor activities, while Japan and South Korea emphasize fashionable sports [1] Company Overview - Anta Sports is a leading multi-brand sports company, projected to achieve revenue of 70.8 billion yuan in 2024 with a gross margin of 62% [2] - The company has a well-structured brand matrix with three major brand groups: professional, outdoor, and fashion, which are developing synergistically [2] - Anta has expanded its brand matrix through acquisitions, including MAIA ACTIVE and Jack Wolfskin, and has formed a global dual-drive with Amer Sports (brands like Arc'teryx and Salomon) [2] Competitive Advantage - The company is capitalizing on the trend of sports merging with leisure and social activities, with its brands catering to various consumer needs [3] - Anta's main brand focuses on professional sports with a strong retail system and cost-performance advantage, while other brands like Descente and Salomon target niche markets [3] - High-end brands leverage design and celebrity endorsements to capture market share, with FILA enhancing its fashion appeal and Descente focusing on high-end customer engagement [3] Growth Potential - The brand matrix strategy is expected to stimulate incremental demand, with global operations likely to yield significant growth opportunities [4] - Recent popularity of brands like Arc'teryx and Salomon has led to substantial growth in categories like outdoor jackets and shoes, with social media engagement projected to increase by 80%-200% by 2025 [4] - The overseas sports market is six times larger than China's, with higher consumer spending power in developed regions, indicating strong potential for international brand growth [4] Profit Forecast - The brand matrix is anticipated to drive growth and profitability, with the main brand expected to achieve mid-to-high single-digit compound growth and stable profit margins [5] - FILA is projected to maintain steady growth focusing on elegant sports, while other niche brands like Descente and Kolon are expected to sustain over 30% compound growth [5] - Amer Sports is expected to contribute net profits, growing from over 1 billion yuan this year to over 2 billion yuan in three years [5]

Investment Rating - The report maintains a "Buy" rating for Anta Sports with a target price of HKD 113.6, reflecting a potential upside from the current price of HKD 92.45 [6]. Core Insights - Anta's main brand recorded low single-digit growth in Q2 2025, slightly below expectations, while FILA achieved mid-single-digit growth. Other brands saw significant growth of 50-55% [2][3]. - The company has completed the acquisition of Jack Wolfskin, a German outdoor brand, for USD 290 million, which is expected to enhance its presence in the outdoor market in China [3]. - The financial projections for EPS from 2025 to 2027 are estimated at RMB 4.72, RMB 5.26, and RMB 5.88 respectively, indicating a positive growth trajectory despite some fluctuations in profit margins [4][3]. Summary by Sections Brand Performance - Anta's main brand experienced low single-digit growth in Q2 2025, with children's products performing better than bulk items. The overall H1 performance showed mid-single-digit growth [2]. - FILA's Q2 2025 revenue growth was in the mid-single digits, aligning with expectations, while other brands, including Descente and KOLON, reported over 40% and 70% growth respectively [2][3]. Financial Projections - Revenue is projected to grow from RMB 62.36 billion in 2023 to RMB 92.97 billion by 2027, with a compound annual growth rate (CAGR) of approximately 10.8% [4]. - The net profit for 2025 is expected to be RMB 13.25 billion, reflecting a decrease of 15% compared to 2024, followed by a recovery in subsequent years [4]. Valuation Metrics - The report assigns a 2025 PE ratio of 22 times, based on industry averages and brand premium considerations, supporting the target price of HKD 113.6 [3][4]. - The projected gross margin remains stable around 62%, with net profit margins expected to fluctuate between 16.9% and 17.8% over the forecast period [4][11].