2025-10-28 03:06Summary of Anta Sports Products Conference Call Company Overview - Company: Anta Sports Products (2020.HK) - Market Cap: HK$247.9 billion / $31.9 billion - Enterprise Value: HK$287.8 billion / $37.0 billion - Current Price: HK$87.80 - Target Price: HK$115.00 - Upside Potential: 31.0% [1][2][27] Key Industry Insights - Industry: Greater China Retail, specifically the sportswear sector - Market Conditions: Weaker macroeconomic environment leading to softer sportswear spending and intensified competition [21][22] Core Financial Updates - 3Q25 Performance: - Anta brand reported low single-digit percentage (LSD%) year-over-year growth, below expectations - Fila brand maintained mid-single-digit percentage (MSD%) growth, while other smaller brands like Descente (+30% yoy), Kolon (+70% yoy), and MAIA (+45% yoy) performed well [1][3][21] - Revenue Guidance: - Full-year revenue growth guidance for Anta brand lowered to LSD% (previously MSD%) - Fila brand and other brands expected to grow at +MSD% and >40% yoy respectively [3][21] - Cost Control: - Company demonstrated strong cost control capabilities, maintaining operating profit margin (OPM) outlook for Anta brand at the lower end of 20-25% and for Fila brand at ~25% [1][3] Strategic Initiatives - E-commerce Strategy: - New e-commerce initiatives expected to take several quarters to execute, with cautious expectations for Double-11 online performance [21] - Store Optimization: - 'Light-house Store Campaign' aimed at upgrading stores in lower-tier cities to enhance customer engagement [21] - Overseas Expansion: - Targeting 15% of sell-through from non-China markets within five years and over 1000 stores in ASEAN markets in three years [21] Inventory and Discount Management - Inventory Levels: - Anta core brand's inventory level at slightly over 5x, considered healthy [21] - Fila's inventory level deteriorated to approximately 6x due to warmer weather [21] - Discount Strategy: - Anta plans to maintain stable offline discounts while managing online discounts carefully during the Double-11 shopping festival [21][22] Earnings Revision - Earnings Forecast: - Revised down 2025-2027 earnings by 3-4% reflecting slower growth at Anta and Fila brands - New revenue estimates for 2025E at Rmb 79,471 million, 2026E at Rmb 87,200 million, and 2027E at Rmb 94,868 million [2][26] Risks and Challenges - Key Risks: - Weaker growth for Anta and Fila brands, discount pressures, and challenges in operating expense control [28] Conclusion - Investment Rating: Maintain Buy rating with a target price of HK$115, reflecting confidence in long-term growth potential despite current challenges [2][27]