Gifts / Sports & Toys

After Li Ning, Xtep and other domestic sports brands successively released the 2021 interim report, Anta also ushered in its "highlight moment."

At noon on August 24, Anta Sports (2020.HK) disclosed its 2021 interim results. As of June 30, Anta Sports achieved revenue of 22.812 billion yuan, a year-on-year increase of 55.5%; net profit attributable to shareholders (including share of the joint venture's profit and loss) was 3.84 billion yuan, a year-on-year increase of 131.6%. This also means that Anta makes an average of 21.12 million yuan a day.

"In the sporting goods industry, we should be the best performing company." Zheng Jie, executive director and president of Anta Group, said bluntly at the performance exchange meeting on August 24

As of the close of trading on August 24, Anta Sports' stock price closed up 0.65% to HK$171.2 per share. In the past 250 days, Anta's stock price has risen by 107.9%, and the current total market value is 462.8 billion Hong Kong dollars.

However, the capital market reacted relatively conservatively to Anta's outstanding performance. Huang Kai, an independent analyst in the fashion industry, believes that Anta has already released a signal of high growth in the first half of the year on July 8. With a price-earnings ratio of 50 times, it is normal that the stock market did not make waves on the day the earnings report was released.

1 Anta = 2.2 Li Ning

In the first half of this year, Anta's multiple indicators set historical records.

As of June 30, the revenue of the Anta brand in the first half of the year increased by 56.1% year-on-year to 10.578 billion yuan; the revenue of the FILA brand increased by 51.4% year-on-year to 10.827 billion yuan, and the revenue of other brands increased by 90.1% year-on-year to 1.407 billion yuan, all of which are historical Highest.

In addition, its gross profit margin also surpassed the historical level of the same period, reaching 63.2% in the first half of the year. Among them, the gross profit margins of the main brands Anta, FILA and other brands were 52.8%, 72.3% and 70.4% respectively, an increase of 11.2, 1.8 and 5.9 percentage points year-on-year.

It is worth mentioning that Anta is also far ahead of its peers in important indicators such as revenue scale, net profit scale and gross profit margin.

As of June 30, Anta's revenue of 22.812 billion yuan was approximately 2.2 times that of Li Ning (10.197 billion yuan), 5.5 times that of Xtep (4.135 billion yuan), and 7.3 times that of 361 degrees (3.107 billion yuan). From the point of view of net profit, Anta's net profit was 3.84 billion yuan, about 2 times that of Li Ning's 1.962 billion yuan, 9 times that of Xtep's 427 million yuan, and 10 times that of 361 degrees.

In terms of gross profit margin, Anta's overall profit margin in the first half of 2021 was 63.2%, which was higher than Li Ning and Xtep's 55.9% and 41.8% in the same period.

Huang Kai believes that most of the increase in Anta's overall gross profit margin can be attributed to the main brand Anta. "First, better domestic epidemic control has led to a steady recovery of consumption; second, Anta has accelerated the establishment of a complete DTC model; third, the Xinjiang cotton incident has caused consumption to return; fourth, generation Z, which recognizes domestic brands, has become the main consumer. The last two points All of these have prompted consumers to be more accepting of Anta products sold at regular prices."

In terms of the number of stores, Anta also far surpasses brands such as Li Ning and Xtep. As of June 30, there were 9788 Anta brand stores, 1979 FILA brands, 151 KOLON brands and 178 DESCENTE brands. During the same period, Li Ning and Xtep had 6,745 and 6,015 stores respectively.

Overtake Adidas and catch up with Nike

In the Chinese sports shoes and apparel market, in addition to competing with local brands, the gap between Anta and international brands is also narrowing.

In the first half of 2021, Adidas Greater China revenue was 2.405 billion euros (approximately 18.3 billion yuan), gross margin was 54%, and operating profit was 758 million euros (5.8 billion yuan). In the first half of 2021, Anta surpassed Adidas in these three indicators. In addition, data from the Tmall platform also shows that from January to July this year, the total turnover of Anta Group's brands reached the first place in the "sports outdoor" category in terms of corporate dimensions.

After the "Xinjiang Cotton Incident" in March this year, foreign sports brands were boycotted by Chinese consumers, leading to a periodical decline in sales. Anta took the opportunity to sign Wang Yibo, who was originally the endorsement of the Nike brand.

"Under the background of the vigorous development of domestic sports brands, we have promoted Anta's main brand to achieve such results in the first half of 2021 thanks to Wang Yibo's blessing." Zheng Jie said at the performance meeting.

After completing the surpassing of Adidas Greater China, is Anta's growth trend sustainable? Huang Kai believes that it is possible, but the growth rate will slow down. "Compared with the single-brand Li Ning, Anta Group, which has multiple brands and is in good growth momentum, will be more stable. Surpassing Adidas China is just the beginning. In the next five years, Anta Sports will grow to the scale of Nike China and even surpass it."

However, Cheng Weixiong, a brand management expert in the footwear industry and general manager of Shanghai Liangqi Brand Management Co., Ltd., is more conservative on Anta's growth expectations. He believes that it is possible to surpass Nike with the Anta brand's consolidated statement indicators, but Anta's future also depends on whether the digestion of the acquisition meets expectations. "If not, the overall development of Anta will be dragged down in the future. The main brand Anta has strong growth, but compared with local competitor Li Ning, it is not a small challenge."

According to Euromonitor data, although Anta's market share in the domestic sportswear market reached 22.3% in 2020, it surpassed the leading Adidas (19.6%) and Nike (16.4%) in the past few years to rank first. But from the perspective of the overall market share of the domestic sports shoes and apparel market, it is still second to Nike and Adidas.

In addition, according to the observation of Times Finance, the impact of the "Xinjiang Cotton Incident" on international brands is also diminishing. On July 29 this year, a pair of Nike's barb joint basketball shoes priced at 1599 yuan were snatched by consumers. On the Dewu platform, the highest price of this pair of sneakers is 29,999 yuan. In the past three days, over 100 pairs of this sneaker have been sold on the platform.