20250716-招银国际-安踏体育-02020.HK-Anta_brand_s_miss_offset_by_other_brands_beat_8页_1mb

CMB International Global Markets Equity Research: Anta Sports (HK 2020) - Company Update

Key Points

• Retail Sales & Discounting: Anta brand retail sales growth in Q2 2025 missed expectations due to subdued consumer demand, weaker product reception, and slower e-commerce growth during 618 and June 2025. Discounts deepened slightly YoY, although inventory-to-sales ratio increased from 4.5 to 5 months in Q2 2025, indicating a tighter supply-demand balance.

• FILA Performance: FILA retail sales in Q2 2025 increased at Market-Driven Growth (MSD), just below prior expectations. The company saw in-line performance, which benefited from its resilience amid macro challenges and growth in categories like golf and tennis. The company systematically widened discounts during Q2 2025 to clear inventories.

• Other Brands: Other brands (including Descente, Kolon Sport, and Maia Active) performed impressively, achieving high-single-digit growth (e.g., 40%+, 70%+, 30%), far exceeding the FY25E guidance of ~30%. The performance was attributed to brands remaining popular and a strong trend in Chinese winter sports and outdoor activities. This helped offset thesales miss by Anta Junior.

• Overall Group Performance: Despite an Anta brand miss of 1ppt, the group posted a market-consensus estimate of high-single-digit (HSD) growth in Q2 2025. However, the overall Gross Profit (GP) margin was under greater-than-expected pressure due to weaker-than-anticipated pricing power and deepened discounts, leading to a downward revision by the analysts.

Financial Forecast Changes

• Earnings Estimates:

  • Revenue: Largely unchanged, but when compared against prior CMBI forecasts, an upward revision of 0.3%–0.7%.
  • Net Profit: Revised downwards by 2.5%–5%.
  • GP Margin: Down 0.3–0.5ppt.
  • OP Margin: Revised downwards due to intensified discounting and weaker inverse operating leverage (OL).

• Valuation:

  • Target Price (TP): Trimmed from HK$119.08 to HK$111.54, representing a ~6.5% cut based on a revised P/E multiple (from 24x to 23x for FY25E).
  • Current Price: HK$89.80, trading at 18x FY25E P/E.
  • Peer Comparison: The stock still appears reasonably valued compared to a P/E-based 5-year average of 25x for Anta.

Management Initiatives

• Strategic Reforms: Management is reforming e-commerce business segmentation between interest-based (e.g. Douyin) and traditional platforms, refiners the pricing strategy and overall inventory management. Anta has appointed a head of e-commerce.

• Cost Management: Expenses are kept under control: R&D and A&P expenses are well-manged, and Labor costs being oversupplied market and rental fees more negotiable due to mall vacancy rates.

• Outlook: Management maintained the FY25E guidance for revenue (CNY78.5bn) despite downward pressure from deepening discounts. Longer-term, the company plans to consolidate via a "Store Optimization Program" over FY24–27E to shift to larger-sized stores, potentially dampening sales growth in Q3 2025E.

Summary

CMB International reaffirms a BUY recommendation but slightly trims its target price and forecasts due to worsened retail results from Anta Junior and deepening discounts. The report highlights strengths in FILA and "Others," however the capacity of Anta to maintain margins is now more uncertain with its reforms only in early stages. The stock trades at reasonable levels but requires monitoring for discounting pressures and potential margin erosion in its cautious medium-term outlook.