Event: ANTA Sports Products recently announced the operation of 2022Q3, in which the Anta main brand recorded medium unit growth compared with the same period last year; FILA recorded low growth of 10-20% year-on-year; and other brands increased by 40-45% year-on-year. Taken together, we predict that the EPS for 2022-2024 will be 3.11 PE 3.84max, giving the company a target price of HK $108x in 2023, maintaining a "buy" rating.
Summary of the report
Repeated epidemics and steady growth under the high base, repeated outbreaks have occurred in many parts of the country this year, which has affected the company's stores of various brands to varying degrees. Among them, Anta main brand recorded medium unit growth compared with the same period last year, in which large goods / children / e-commerce respectively achieved year-on-year growth of medium / high / high units, which was basically in line with expectations under the high base number and epidemic disturbance of the Winter Olympic Games, and the inventory-to-sales ratio was slightly more than 5, still at the normal level, mainly due to the demand for stock on National Day and Singles Day. It is believed that Q4 inventory will gradually return to normal. As for DTC, due to the impact of the epidemic, it is difficult to improve store efficiency in the short term, and it still takes time to adjust. FILA recorded low growth of 10-20 per cent year-on-year, with large goods / children / Fusion growing in the middle / one double digit / one double digit respectively, while e-commerce still maintained rapid growth, with a growth rate of 65 per cent, outperforming other international brands as a whole; other brands grew by 40-45 per cent year-on-year, Disante grew by more than 35 per cent and Kelon grew by more than 55 per cent. Benefiting from the outbreak of demand for outdoor camping and other sports, Kelon's performance is eye-catching, with an increase of 50-60% both online and offline, and the store efficiency reached about 500000 in September-October. It is believed that there will be a better momentum of development in the second half of the year. In addition, Amer's business is going smoothly, with a loss of 179 million yuan in the first half of the year and is expected to contribute positive profits for the first time this year.
Q4 takes pipeline growth as the first goal, continuous dynamic management of the upcoming Singles Day will become the main battlefield of consumption, I believe the company will also seize the opportunity this year to speed up and expand the online layout. Q4 will take pipeline growth as its first goal and strive to clean up more inventory while controlling costs, so discounts are expected to deepen. At the same time, the company takes "dynamic management" as a long-term implementation plan to maintain a healthy inventory level in a difficult and challenging environment, and optimize the product portfolio and improve the overall ASP by increasing the proportion of high-priced products. In addition, champion stores continue to open around the country, there are a total of 11 stores. With the endorsement of the Olympic Games, the improvement of the company's brand strength and product strength has also been further verified.
Investment advice: the epidemic has repeatedly and continuously affected domestic consumption, and the performance of Q3 also reflects the weak recovery of overall consumption. in this context, the company's brands have still achieved relatively stable growth. In recent years, the state has continued to introduce various policies to encourage sports consumption and support the development of the sports industry, and the long-term growth logic of the domestic sporting goods track remains unchanged. As the leader of domestic brand industry, the company will give priority to the growth dividend of the industry. Taken together, we predict that the EPS for 2022-2024 will be 3.11 PE 3.84max, giving the company a target price of HK $108x in 2023, maintaining a "buy" rating.
Risk tips: macroeconomic decline; repeated epidemic situation; intensified competition in the industry; the follow-up development of new brands is not as expected.