Anta Sports Investor Day: Strengthening its market-leading position
Anta Sports (2020.HK) Anta Sports Investor Day: Strengthening its market-leading position
- Anta Sports hosted an Investor Day in Beijing, outlining its strategy and 12-month outlook for its multi-brand portfolio.
- No change in FY23E guidance; new sales growth targets in FY23-26F for its brands, including Anta (10-15%), Fila (10-15%), Descente (30-35%), and Kolon Sports (20-25%)
- Key growth drivers identified in outdoor wear, women’s wear, and kids’ wear categories
- Retain a BUY rating on Anta Sports’ multi-brand approach to capture large share of consumer demand, TP unchanged at HK$130
Anta Sports (2020.HK) hosted its Investor Day in Beijing, presenting its strategy and 12-month outlook for its multi-brand portfolio. Overall, Anta aims to deliver FY23-26E sales CAGR targets for Anta (10-15%), Fila (10-15%), Descente (30-35%), and Kolon Sports (20-25%). The medium-term OP margin target remains largely unchanged, with Anta at 20-25%, while FILA and Other Brands target 25-30%. Key brands, Anta and Fila, are meeting market expectations, but Kolon Sports’ topline growth forecast may have disappointed the market slightly, considering its >30% year-on-year growth. In the short term, the Company maintains FY23E guidance with Anta and Fila expected to deliver double-digit growth, and Other Brands targeting 40% year-on-year growth.
Anta Sports maintains a strong focus on developing a multi-brand strategy, with an emphasis on premiumization led by Fila, Descente, and Kolon Sports. The Anta brand will retain its mass-market appeal while continuously upgrading products for running and basketball, solidifying its market position in Anta Kids. Three target categories, including outdoor wear, women’s wear, and kids’ wear, are highlighted as key growth drivers across the brands. On a brand-specific basis, the Company sees opportunities in the shoe category and plans to open specialty shoe stores for Anta and Fila brands. Overall, we are impressed with the Group’s ability on leveraging on its extensive supply chain and channel management to support brand integration. We maintain a positive outlook on Anta Sports’ multi-brand approach to capture a larger share of consumer demand, and our last rating is a Buy.
Anta Sports (2020.HK) hosted Investor Day in Beijing, its first physical Investor Day since 2019. Today, Anta has morphed into a 15-multi-brand portfolio, encompassing Anta, FILA, Descente, Kolon Sports, Amer Sports which possesses brands such as Artercy, Salomon, and Wilson. Most recent addition includes MAIA ACTIVE, a premium yoga apparel brand based in Shanghai.
The Company has set segment targets to focus on Outdoor wear, Kidswear, and Women’s.
- Outdoor Wear: Expected 5-year CAGR of 14.2% (Growth rate amidst pandemic: 19.4%) China’s penetration in outdoor wear was only 1/5th of EU and US market penetration at roughly c.9%; In 1Q23, Tmall growth rates for camping (+44% yoy), skiing (+74% yoy), cycling (+41% yoy)
- Kids Wear: Projected market size of Rmb300bn; expected 5-year CAGR of >8%; In 2020-22, CR-5 concentration increased from 12% to 14% with expectation to continually rise. Of which, sports brands (~12%) outperformed leisure wear (~4%) in 2019-22.
- Women Wear: Women spending is roughly 15-20% above on fitness over men. In emerging sports such as camping, 60% of the participants are women. Among new golfers, 2/3rd are women.
Brand strategy and outlook
Anta Sports: ANTA brand has seen the most improvement in DTC direct retail efficiency with DTC channel now accounting >80% of sales. Since the pandemic, ANTA maintained a high-single digit growth rate. It is the most associated brand with Olympics in China, with a no. 1 market leading position in ANTA KIDS. ANTA brand is projected to deliver a FY23-26E sales CAGR of 10-15% reaching Rmb60bn in sales by FY26E (FY23E: Rmb40bn). Going forward, Anta will (1) retain leading market brand in China as official supplier for International Olympics for 2024-27E, (2) fortify its product portfolio in running shoes and basketball shoes, (3) sustain its market leading position in Anta Kids through emphasis on functional products in running, basketball and invest in girls’ products. Lastly, (4) Anta targets to revitalise store layouts with 5 major layout formats including Arena level (store size avg. c.2,000sqm), Palace 500 & P300 targeted at premium shopping malls, Elite level (standard shopping malls), Standard level (neighborhood malls) and Elementary level (pop-ups). Anta also plans to introduce Sneakerverse Black, White and Anta Running, which will only sell sports shoes.
FILA. Fila brand, with the motto of “Live Your Elegance”, is projected to deliver FY23-26E CAGR of 10-15% to reach Rmb40-50bn in sales by end-FY26E. FILA possess strong fundamentals including 5x inventory turnover, with new SKU at >80%. In 1H23, same-store sales rose >10% y-o-y. FILA brand store productivity is up to Rmb2m monthly. At the same time, online sales account >30%, where Douyin sales rose >50%, accounting up to mid-teens of FILA e-commerce sales. FILA brand will target 3 product segments including (1) fashion, leisure, (2) premium end kidswear and family orientated option, (3) functionality targeting specialised sports including golf, tennis, outdoor sports (running).
Descente. Descente emphasizes focus on premium, functional wear targeting skiing, golf and triathlon. Between 2019-23, Descente has achieved monthly sales/store from Rmb600k/store to Rmb1.8m+, while total number of stores increased from 134 to 200 stores over the period. Overall retail sales have risen from less than Rmb1bn to Rmb5bn+ between FY19-23. Descente currently is concentrated in North-east and North China, with intention to expand into East China, South China and HKG/Macau.
Kolon Sports. Kolon Sports specialises in outdoor apparel targeting hiking and camping products. Between FY22 and 1H23, monthly store sales jumped from Rmb550k to Rmb900k, with retail sales doubling y-o-y in 1H23 (FY22: Rmb1.3bn). Kolon Sports looks to introduce all-terrain waterproof jackets, revitalise its camping aesthetics and invest in its footwear business with sponsorship of its first trail running event. The brand aims to strengthen its presence in South China, deepen operations in Sichuan, Chongqing, and solidify its presence in Jiangsu, Zhejiang and Shanghai.