4Q23 largely beats expectations; Amer Sports listing
Anta Sports (2020.HK) 4Q23 largely beats expectations; Amer Sports listing
- Anta Sports released a strong set of 4Q23 operating performance: Anta Brand scored high-teens sales growth, followed by Fila and All Other Brands exceeding expectations at 25-30% and 55-60% respectively
- Retail discount saw improvement on a q-o-q basis, while online discount rose slightly on seasonal impact
- Separately, JV Amer Sports have filed for IPO on NYSE with potential market capitalisation reaching US$10bn according to Bloomberg
- Our last rating stood at a Buy, TP at HK$117
Anta Sports (2020.HK) released 4Q23 operating data exceeding market expectations. By brand, ANTA brand recorded high teens retail sales growth (Anta adults: high teens; Anta Kids: 20-25%), followed by FILA recorded 25-30% (Fila adults ~30%, Fila kids: 25%; Fila fusion: mid-teens), while All Other Brands recorded 55-60% growth (Kolon Sports: 65-70%; Descente: 55-60%) in 4Q23. For the full-year, ANTA brand recorded high single digit growth; FILA recorded high-teens growth, while All Other Brands recorded 60-65% growth. All in, ANTA brand came in on track with expectations, while FILA & All Other Brands had exceeded earlier guidance. By channel, offline sales marked as the key driver due to low base, while online sales still achieved decent growth across brands (Anta: mid- single; Fila: mid-teens, other brands: very strong). Retail discount has shown an improvement on a q-o-q basis with strong inventory management discipline, while online recorded slightly higher discount due to seasonal festive holiday impact, but stable on a y-o-y basis. The Company is confident in meeting consensus expectation for FY23E, where full-year results & 2024 outlook will be released in March.
Separately, Anta Sports JV, Amer Sports, has filed for IPO listing on NYSE which is largely expected by the market. The net proceeds will be primarily used for the repayment of outstanding borrowings of shareholder loans related to the acquisition in 2019. In 9M23, Amer’s revenue rose 29.9% to US$3.1bn, while GP margin expanded by 2.8ppt. Adjusted EBITDA surged 61.3% to US$422.1m. Net loss expanded to US$113.9m (9M22: US$104.4m) on the back of rising finance costs due to increases in interest rates, as well as higher tax due to loans are held in the JV level making it non-tax deductible. By geographic segment, Greater China sales growth was the largest driver at 68% y-o-y in 9M23, followed by Asia Pacific (+53%), EMEA (+23%), and Americas (+19%). By sales breakdown, America is the largest contributor at 40% (9M22: 44%), EMEA at 33% (9M22: 35%), Greater China at 19% (9M22: 15%), and Asia Pacific at 8% in 9M23 (9M22: 7%). Anta Sports holds an 52.7% interest in Amer Sports with a carrying amount of Rmb9,210m as of 1H23. With potential market capitalisation of Amer Sports at US$10bn, this translates to a 3.7x of its book value, or an enhancement of hk$8.8/share for Anta