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ANTA Sports Products Ltd 02020

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Morningstar’s Analysis

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Reducing Anta's Fair Value Estimate on Fila Slowdown; All Eyes Now on Singles Day Performance

Ivan Su Senior Equity Analyst

Analyst Note

| Ivan Su |

Narrow-moat Anta's third-quarter numbers were disappointing--group-level retail sales grew just 10% year over year by our estimate, representing a 12% two-year CAGR. Fila was the main drag, with sales growth at just 5% in the quarter. Even though some of the negative effects on Fila's performance were short term in nature, management's lowering of long-term growth guidance to what sounded to us like 15%-20%, down from 25-30%, suggests consumer appetite could be waning. Thus, we reduce our fair value estimate for Anta to HKD 171 from HKD 210 after scaling back sales and margin assumptions for Fila. Our updated five-year forecast has the group growing its revenue at 22% CAGR (down from 27%) with an operating margin (including Amer) of 27.50% (down from 29.10%) in 2025. We have also raised our uncertainty rating to high from medium, reflecting increased variability in Fila's performance. Even so, we still view Anta’s shares as worthy of holding onto as the market underestimates the domestic sales potential for brands like Arc'teryx, Solomon, and Wilson. 

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Company Profile

Business Description

Anta Sports is the largest Chinese sportswear company, engaging in the design, manufacturing, and marketing of sportswear. Brands under Anta’s management include the Anta core brand, Fila, Descente, Sprandi, Kolon, and KingKow. As of the end of 2020, the company had 12,260 stores, of which 9,922 were Anta stores and 2,006 were Fila stores.

Anta Headquarters Building, Dongshan Industrial Zone, Chidian Town
Jinjiang, 362212, China, People's Republic of
T +86 59585929999
Sector Consumer Cyclical
Industry Leisure
Most Recent Earnings
Fiscal Year End Dec 31, 2021
Stock Type
Employees 47,000