ANTA Sports Products (02020.HK) reported that retail sales of the Anta brand recorded positive growth in the third quarter of 2022 compared with the same period last year; the FILA brand recorded positive growth of 10-20 per cent year-on-year; and all other brands recorded positive growth of 40-45 per cent year-on-year. The results in the third quarter are in line with expectations, and running water still maintains steady growth.

The third-quarter results were in line with expectations and inventory pressure increased. From a brand point of view, the Anta brand has maintained steady growth in the third quarter, but due to the preparation of "11" Golden week and "double 11" full-platform stock, the inventory-to-sales ratio is more than 5 times, slightly higher than the normal level. Retail discounts remained basically flat in the third quarter compared with the same period last year, and the discount rate of the children's division business was improved by 2-3 points. Facing the disturbance of epidemic situation and other factors offline, new online channels continue to make efforts, and the online running water of the Fila brand has increased by more than 65% compared with the same period last year. The comprehensive discount rate of retail sales in the third quarter is about 74-25%, while the monthly inventory in Prida is about 7-8 times, which is also slightly higher than normal. Among other brands, Disante has grown by about 35% compared with the same period last year. Benefiting from the improvement in store efficiency, KOLON has increased by about 55% compared with the same period last year, still maintaining a relatively strong growth momentum. Although the results in the third quarter are basically in line with expectations, inventory pressure has increased due to the impact of the epidemic and weak consumption. Promotions such as the upcoming "Singles Day" in the fourth quarter are expected to further boost performance, and inventories are expected to return to normal levels by the end of the year.

Continue to benefit from the increase in consumption related to camping. Trip.com data show that during the National Day period, camping tourism orders increased more than 10 times compared with the same period last year. In addition, Ai media consulting data show that the scale of the core market of China's camping economy is increasing year by year. In 2021, the core market of China's camping economy reached nearly 74.8 billion yuan, an increase of 62.5 percent over the same period last year. It is expected that the core market size of China's camping economy will rise to 248.3 billion yuan in 2025. There is more room for development in camping and related industries. Although the willingness to spend has decreased after the epidemic, outdoor and sports-related consumption is still supported.

Investment advice: the company maintains the China report guidelines and expects to achieve the revenue growth target of more than 20% for Anta brand, low double digits for FILA in the second half of the year and more than 30% for other brands in 2022. By strengthening cost control, profit margins are expected to maintain a reasonable level. Still optimistic about Anta's "single focus, multi-brand, globalization" strategy, the company will continue to benefit from the rise of domestic consumption and sports consumption-related policy support. Short-term weak consumption or drag on the performance of the optional consumer sector, it is recommended to pay attention to the "Singles Day" sales, bargain-hunting layout.