Anta Sports (2020.HK) 3Q23 data on track with sequential improvement m-o-m
- Anta 3Q23 retail sales by brand for Anta/ Fila/ All other brands recorded growth of high-single digit/ low-teens/ 45-50% y-o-y respectively, on-track with expectations
- Retail discount recorded an improvement on a y-o-y basis, with slight increase on a q-o-q basis.
- Retain BUY rating with TP at HK$130
Anta Sports (Anta) released 3Q23 operational update which was in line with expectations. Anta Sports brand retail sales recorded a high single digit growth in 3Q23, whereas there was sequential improvement on a month-on-month basis. Fila brand retail sales recorded a low-teens growth in 3Q23. All Other brands, Descente and Kolon Sports, recorded a 45-50% growth over the same period. Across the board, inventory to sales level had remained largely healthy, with slight increase on a q-o-q basis due to seasonality for holiday season. Retail discount also recorded an improvement on a y-o-y basis, with slight increase on a q-o-q basis, largely expected by market. Offline sales continue to outpace online sales, abeit the range had narrowed in 3Q23, relative to 1H23.
Looking ahead, Anta is lapping a favourable base, where Anta and Fila brand had reported retail sales decline in the prior year. Volume had been a key driver over ASP growth YTD, and should remain so for the remainder of the year. Typically, Anta does not disclose holiday sales data. In the upcoming Double-11 festival, Anta continues to target on improving its profitability. In recent years, Anta has placed more emphasis on the diversification of online channels gearing towards live streaming, particularly Douyin, which had garnered strong momentum especially under FILA brand. We remain BUY on Anta Sports as we expect continued steady sales driven by multi-brand facet, improving store productivity and potential spin-off of Amer Sports ahead, with TP at HK$130. More to follow with Anta Sports Investor Day next week.
Key Summary
- Anta Sports brand retail sales recorded a high-single digit growth in 3Q23. Of which, the Company had seen sequential improvement on a month-on-month basis. By sub-brand, Anta and Anta Kids reported high single digit, and mid-single digit growth respectively. By channel basis, Anta adult/Anta Kids offline sales rose high-single digit respectively, while online sales rose low-single digit. Inventory to sales ratio was roughly to 5x (3Q22: more than 5x), similar to 1H23. Retail discount improved on a y-o-y basis, while increased slightly on a q-o-q basis.
- Fila brand retail sales recorded a low-teens growth in 3Q23. On sub-brand basis, Fila core, Fila Fusion and Fila Kids all recorded high-single digit growth, while online sales rose mid-teens. Inventory to sales ratio remained stable at c.5x, slightly higher than that of 2Q on the back of seasonality in preparation for National Holidays. Retail discount also retained some improvement on a y-o-y basis, with slight increase on a q-o-q basis.
- All Other Brands, entailing Descente and Kolon Sports, retail sales recorded 45-50% growth in 3Q23, on the back of higher base. By brand basis, Descente and Kolon Sports sales rose 40-45%/ 65-70% respectively. Retail discount and inventory to sales have remained stable.
- Typically, Anta does not disclose holiday sales data. In the upcoming Double-11 festival, Anta continues to target on improving its profitability. In recent years, Anta has placed more emphasis on the diversification of online channels gearing towards live streaming, particularly Douyin, which had garnered strong momentum especially under FILA brand. As reference, Douyin sales roughly accounts mid-teens of Fila online sales.