Investment Rating - The investment rating for Anta Sports is "Outperform the Market" (maintained) [1] Core Views - Anta Sports Group achieved double-digit revenue growth in the first half of the year, with healthy and controllable discount inventory levels [1][4] - In Q2 2025, Anta's main brand recorded low single-digit growth, while FILA achieved mid-single-digit growth, and other brands saw a remarkable 50-55% growth [2][4] - The management maintains its annual guidance for all brands despite the overall market pressure [4][5] Summary by Sections Retail Performance - In Q2 2025, Anta's overall revenue growth was double digits, with FILA and other brands performing well. The main brand's low single-digit growth was impacted by channel adjustments [3][5] - The online discount levels were influenced by the extended 618 promotional period, and inventory levels remained healthy [3][5] Brand Performance - Anta's main brand recorded low single-digit revenue growth in Q2 2025, with a sell-through ratio of five months at the end of the quarter. The running shoe series performed exceptionally well [6][9] - FILA's revenue growth was in the mid-single digits, with strong performance in golf and tennis categories [9][14] - Other brands, particularly KOLON, saw revenue growth exceeding 70%, while Descente grew over 40% [10] Financial Forecasts - The forecast for Anta's net profit for 2025-2027 is estimated at 134.8 billion, 154.6 billion, and 170.0 billion respectively, with comparable profit growth rates of 13.0%, 14.7%, and 10.0% [4][15] - The reasonable valuation range is maintained at 113-118 HKD, corresponding to a 2025 PE of 22-23X [4][15]

Core Insights - Anta Group held its third Innovation Awards ceremony in Xiamen, awarding over 1 million in total prizes, recognizing 21 innovative achievements across various categories [1] - The awards aim to enhance brand value and consumer perception through innovative products, technologies, and business models, laying a solid foundation for long-term growth [1] - Anta Group's commitment to innovation is reflected in its goal to become a global benchmark for innovation by 2030, as stated by the company's Executive Director and Co-CEO [2] Group 1: Innovation Awards - The Innovation Awards received nearly 300 submissions this year, with 21 projects recognized, including 8 in product innovation, 7 in technology innovation, and 6 in business model innovation [1] - The "PG7" running project won the gold award for product innovation, while the "Polyimide Technology" thermal material project and the "AI Simulation Engine" project won gold in technology innovation [1] - The awards have been held for three consecutive years, encouraging participation from all employees across various brands and departments within the group [1] Group 2: Innovation Initiatives - Anta Group launched the industry's first sports goods industry innovation accelerator, inviting startups to participate in strategic research and commercial applications of cutting-edge sports technology [3] - The innovation accelerator focuses on three key areas: advanced materials, digital intelligence, and logistics innovation, aiming to attract innovative resources and lead industry technological advancements [3] - A strategic partnership was established with Yushutech and Hong Kong Polytechnic University to research humanoid robots in sports science, enhancing the open innovation ecosystem in China's sports industry [3] Group 3: Future Investment in Innovation - Anta Group has invested a total of 20 billion in innovation over the past decade and plans to invest an additional 20 billion in the next five years for independent research and development [4] - The company holds the highest number of patent applications in the industry, with 5,830 patents, and is the first in the world to receive ISO56001 international innovation management system certification [4] - Anta Group has established a global open innovation ecosystem involving 7 design and R&D centers, over 70 universities and research institutions, and a significant number of experts and suppliers [4]

Investment Rating - The investment rating for Anta Sports is "Buy" and is maintained [6]. Core Views - Anta Sports is expected to achieve a revenue of 70.83 billion yuan in 2024, representing a year-on-year growth of 13.6%. The net profit attributable to shareholders is projected to be 15.6 billion yuan, a year-on-year increase of 52.4%. Excluding the gains from the Amer listing and placement, the net profit is expected to be 11.93 billion yuan, reflecting a 16.5% year-on-year growth. Overall, the revenue and performance are in line with expectations, although the operating profit margin (OPM) is slightly lower than anticipated after excluding government subsidies [2][4]. Summary by Sections Revenue and Profit Forecast - For 2024, Anta's revenue is forecasted at 70.83 billion yuan, with a growth rate of 14%. The net profit is expected to be 15.6 billion yuan, showing a significant increase of 52%. The earnings per share (EPS) is projected to be 5.56 yuan, with a price-to-earnings (P/E) ratio of 14.82 [9]. Brand Performance - In 2024, the revenue growth for Anta, FILA, and other brands is expected to be 10.6%, 6.1%, and 53.7%, respectively. The Anta brand is experiencing rapid growth, particularly in top-tier markets, while FILA is undergoing adjustments with a new CEO expected to drive high-quality growth [7]. Margin Analysis - The operating profit margins for Anta and FILA are projected to decline by 1.2 and 2.3 percentage points, respectively, due to increased e-commerce channel contributions and rising product development costs. The overall OPM is expected to be 21.0% for Anta and 25.3% for FILA, with government subsidies contributing positively to performance [7]. Future Outlook - Short-term challenges include pressure on OPM due to high marketing and promotion expenses. However, the long-term growth potential remains strong, particularly with the multi-channel store strategy and FILA's adjustments. The net profit forecasts for 2025-2027 are 13.4 billion, 15.0 billion, and 16.6 billion yuan, with respective year-on-year growth rates of 13%, 11%, and 11% [7][9].

Summary of Anta Sports Conference Call Company Overview - **Company**: Anta Sports - **Fiscal Year**: 2024 - **Sales Revenue**: 70.8 billion RMB, with a strong performance across brands [3][2] Key Financial Performance - **Anta Brand Contribution**: 33.5 billion RMB, 47.3% of total revenue, up 10.6% YoY [3][2] - **FILA Brand Contribution**: 26.6 billion RMB, 37.6% of total revenue, up 6.1% YoY [3][2] - **Other Brands Contribution**: 10.7 billion RMB, with growth exceeding 40% [3][2] - **Overall Gross Margin**: 62.2%, Net Margin: 23.4% [2][3] - **2025 Revenue Growth Projections**: High single-digit growth for Anta, mid-single-digit for FILA, and over 30% for other brands [2][3] Strategic Initiatives - **ESG Integration**: ESG is central to corporate strategy, focusing on energy transformation and operational efficiency [2][4] - **Multi-Brand Strategy**: Targets different consumer segments with value propositions, including zero-carbon stores and Design V3 product series [2][4] - **Retail Network Optimization**: Closing inefficient stores while opening high-efficiency ones to support revenue growth [15][16] Market Positioning and Competition - **Pricing Strategy**: Anta adopts a strategy of brand elevation with lower pricing to counter market competition [5][2] - **New Retail Formats**: Introduction of Champion Stores and Super Anta Stores aimed at enhancing brand influence, particularly in lower-tier markets [5][2] - **E-commerce Strategy**: Anta's e-commerce penetration is approximately 35%, with a balanced approach between online and offline sales [8][2] Brand-Specific Developments - **FILA Brand Leadership**: New CEO Jiang Yan to reassess brand positioning and product strategy, focusing on tennis and golf segments [10][2] - **Store Expansion Plans**: Anta aims to increase flagship stores to 190-200, while FILA will selectively open new stores [9][2][15] Supply Chain and Taxation - **Supply Chain Collaboration**: High autonomy for brands with shared services in procurement to enhance efficiency [13][2] - **Effective Tax Rate**: Expected to remain between 26%-27%, influenced by one-time non-cash items and project-specific tax rates [14][2] International Expansion - **Overseas Market Strategy**: Focus on Southeast Asia, Middle East, and North Africa for business expansion, with plans to enter the North American market through partnerships [18][21] - **Local Product Development**: Introduction of products tailored to local climates in overseas markets [19][21] Long-term Outlook - **Growth Potential**: Anta emphasizes long-term value creation, focusing on product quality and a multi-brand global strategy [22][23] - **Market Ceiling Concerns**: Anta does not set market ceilings but continuously redefines brand value propositions to meet consumer needs [24][2] - **Competitive Advantage**: Maintains a cautious yet optimistic outlook, leveraging product innovation and brand activities to enhance market presence [25][2]

Financial Data and Key Metrics Changes - The total revenue of ANTA Sports Products exceeded JPY 100 billion for the first time, achieving a year-on-year growth of 13.6% [4] - Operating profit attributable to shareholders increased by 15% [4] - Free cash flow was reported at JPY 13.5 billion, indicating stable cash generation ability [4] - The final dividend for the year was JPY 123, up 20% year on year [5] Business Line Data and Key Metrics Changes - ANTA brand revenue reached JPY 60 billion, growing by 10.6% year on year [6] - FILA brand revenue was JPY 30 billion, up 6.1% year on year [6] - Other brands, particularly Dessence and Colin, saw significant growth of 53.7% year on year [6] - Online sales grew by 20%, while offline sales also achieved double-digit growth [7] Market Data and Key Metrics Changes - The overall gross profit margin was 62.2%, a slight decline of 0.4 percentage points [7] - FILA's gross profit margin decreased by 1.2 percentage points due to increased investment in merchandise [8] - The consumer market in China grew at a low rate of 3.5% in 2024, with a consumer confidence index of 86.2% [21][22] Company Strategy and Development Direction - The company aims to maintain its number one market share in China and expand its multi-brand strategy [3][50] - ANTA is focusing on brand breakthroughs and enhancing product quality, particularly in performance sports [27][51] - The company plans to replicate its successful strategies in China to international markets [51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a gradual rebound in the consumer market supported by government policies [22] - The global sports industry is expected to grow steadily, with opportunities in running, outdoor, and tennis categories [22] - The company is committed to low carbon innovation and sustainable practices to enhance brand influence [52] Other Important Information - The company has invested JPY 2 billion in R&D, representing a 20% increase [11] - ANTA's inventory turnover days are at a healthy level of 123 days, with a sellout rate of 87% [14][17] - The company has made significant strides in ESG performance, including a reduction in water consumption intensity by 2.5% [46][48] Q&A Session Summary Question: What are the key growth drivers for ANTA in 2025? - The company will focus on brand breakthroughs for ANTA and FILA, aiming for high-quality development in footwear and apparel [51] Question: How is ANTA addressing sustainability? - ANTA is committed to low carbon innovation and sustainable materials, with a goal of 50% sustainable products in the order book [48][52] Question: What is the outlook for the consumer market? - Management anticipates a gradual recovery in consumer confidence and spending, supported by government initiatives [22]