Core Viewpoint - Anta Sports reported a solid performance in the first half of 2025, with revenue growth driven by multiple brands and strategic acquisitions, despite challenges in the retail environment and rising tax rates [1][5][7] Financial Performance - In the first half of 2025, Anta achieved revenue of 38.54 billion yuan, a year-on-year increase of 14.3% [1] - The net profit attributable to shareholders was 7.03 billion yuan, up 14.5% year-on-year, while the main business net profit was 6.60 billion yuan, reflecting a 7.1% increase [1] - Earnings per share (EPS) stood at 2.53 yuan, with a proposed interim cash dividend of 1.37 HKD, resulting in a payout ratio of 50.2% [1] Profitability Metrics - Gross margin for the first half of 2025 was 63.4%, a decrease of 0.7 percentage points year-on-year [3] - Operating profit margin improved to 26.3%, an increase of 0.6 percentage points year-on-year [4] - The effective tax rate rose to 28.4%, primarily due to an increase in dividend tax [1] Brand Performance - Amer, a newly acquired brand, reported revenue of 19.26 billion yuan, a year-on-year increase of 23.5%, and a net profit of 1.09 billion yuan [2] - Revenue growth for main brands in the first half included Anta at 5.4%, FILA at 8.6%, and other brands at 61.1% [2] - Online sales increased by 17.6%, contributing to 34.8% of total revenue, with offline sales growing approximately 13% [3] Strategic Initiatives - The acquisition of the German outdoor brand Wolfskin was completed in May 2025, enhancing Anta's presence in the professional outdoor sports market [5] - Anta established a joint venture with MUSINSA to operate Korean fashion business in mainland China and Hong Kong, aiming to strengthen its position in the sports fashion segment [6] Future Outlook - For the full year 2025, Anta's retail revenue guidance for its main brand was adjusted from high single digits to mid-single digits, while FILA maintained its mid-single-digit growth forecast [6] - The company plans to expand its store count significantly, targeting 7,000-7,100 for Anta and 2,100-2,200 for FILA by the end of 2025 [6] - As of June 2025, Anta had a strong cash reserve of 31.54 billion yuan, indicating robust financial health [6]

Investment Rating - The report emphasizes the importance of stabilizing the stock and real estate markets to boost consumer spending, indicating a positive outlook for the consumption sector as asset prices stabilize [3][4]. Core Insights - The relationship between asset prices and consumer spending is complex, with asset price increases leading to higher income levels and economic activity, which in turn boosts consumption [3][5]. - The report highlights that real estate assets dominate household wealth in China, making housing price stability crucial for consumer confidence and spending [3][10]. - The impact of asset price fluctuations on discretionary consumption is more pronounced than on essential consumption, with discretionary spending responding more immediately to asset price changes [24][30]. - The report identifies key investment themes in the consumption sector, including smart consumption driven by technological advancements, the preferences of Generation Z, and the aging population's consumption needs [3][32]. Summary by Sections 1. Impact of Asset Prices on Consumption - The report outlines five main effects through which asset prices influence consumption: wealth effect, expectation effect, borrowing effect, savings effect, and cultural effect [5][6]. - It notes that the wealth and expectation effects are dominant, with a growing influence from borrowing and savings effects [6][10]. 2. Differences in Impact Between Housing and Stock Prices - Housing assets significantly outweigh financial assets in Chinese households, leading to a greater impact of housing price changes on consumer behavior compared to stock prices [10][12]. - The report discusses the synchronized movements of housing and stock prices, noting that while they often rise and fall together, their effects on consumption differ [19][20]. 3. Consumption Categories and Asset Price Influence - The report categorizes consumption into essential and discretionary, stating that asset price changes have a more immediate effect on discretionary spending [24][30]. - It emphasizes the need for updated classifications of consumption categories to reflect changing consumer behaviors and preferences [30]. 4. Investment Strategies Based on Asset Price Trends - The report suggests differentiated investment strategies for high-end and mass-market products, indicating that high-end products tend to perform well in strong liquidity environments [32][34]. - It highlights the importance of aligning investment strategies with the current economic cycle and consumer trends [32][34]. 5. Sector-Specific Insights - The report provides insights into specific sectors such as high-end liquor, where the relationship between asset prices and consumption is particularly strong [39][40]. - It also discusses the performance of high-end traditional Chinese medicine products, noting their resilience despite economic fluctuations [55][58].