2025-06-02 15:44Summary of Anta Sports Conference Call Company Overview - Company: Anta Sports Products Ltd - Industry: Sportswear - Market Share: 23% in 2024 according to Euromonitor [11][17] Key Takeaways 1. Sales and Inventory Trends: - 2Q 2025 continued the solid trend from 1Q 2025 with healthy inventory levels (Anta/Fila at approximately 5 months) [1] - Anticipation of deeper discounts in May due to upcoming events on June 18 [1] 2. 2025 Guidance: - Retail sell-through guidance maintained for Anta/Fila/other brands at high single digits (HSD), mid single digits (MSD), and over 30% respectively [1] - Operating profit margin (OPM) guidance for 2025 remains at 20-25% for Anta, around 25% for Fila, and 25-30% for other brands [1] 3. Operational Adjustments: - Normalization of inventory impairment reversal expected to impact 1H OPM (approximately RMB 300 million reversal) [1] - Anticipated normalization of government grants (RMB 732 million in 1H24) and lower interest income due to reduced interest rates [1] 4. Store Optimization: - Ongoing optimization of Super Anta with a target of 100 stores by 2025, up from the current 60-70 [1] - Introduction of refreshed product offerings (approximately 90% exclusive products) and thematic displays [1] 5. Fila Brand Reforms: - New management leading Fila reforms, including refreshed product offerings and new branding initiatives [1][6] - Expected launch of enhanced professional elements in products by early 2026 [6] 6. Investment in Maia Active: - Increased investments in Maia Active focusing on refined product offerings and supply chain enhancements [1] 7. Acquisition Plans: - Acquisition of Jack Wolfskin expected to complete in June, focusing on retaining core assets for business transition [1] 8. Earnings Forecast: - Earnings for 2025-2027 adjusted upwards by 1-2% [1] - New DCF-based price target for December 2025 set at HK$142, implying a 23x 12-month forward P/E [1][12] Financial Highlights - Revenue Growth: Expected revenue growth of 13.6% for FY24, with projections of RMB 70,826 million [10] - Margins: Gross margin projected to improve from 62.2% in FY24 to 63.2% in FY27 [10] - Earnings Per Share (EPS): Adjusted EPS expected to decline by 13.5% in FY25 before recovering in subsequent years [10] Risks and Opportunities - Downside Risks: - Slower-than-expected performance from Fila [20] - Increased competition and challenges in integrating acquired businesses [20] - Potential downturn in the retail environment and rising raw material costs [20] - Upside Opportunities: - Better-than-expected consumer sentiment and Fila performance [21] - Potential synergies from acquired brands and earlier profitability improvements in emerging brands [21] Conclusion Anta Sports is positioned as a leading player in the Chinese sportswear market with a robust multi-brand strategy and significant growth potential. The company is focusing on operational improvements, brand reforms, and strategic acquisitions to enhance its market position and drive future growth.