Incident: Anta announced its 2023 annual results. During the year, the Group achieved total revenue of 62.356 billion yuan, +16.2% over the same period last year. Gross profit of 39.028 billion yuan, +20.8% year on year; operating profit of 15.367 billion yuan, +36.8% year on year; operating profit margin 24.6%, +3.7pp year on year. Net profit to mother (including profit and loss of joint ventures) was 10.236 billion yuan, +34.9% year-on-year, and net profit margin to mother was 16.4%, +2.3pp. The dividend payout for the full year of 2023 was HK$1.97 per share, with a dividend payout ratio of 50.7%.
Revenue side: 1) Anta: For the first time, Anta brand's revenue volume exceeded 30 billion yuan and reached 30.306 billion yuan, +9.3% over the same period last year. During the year, Anta brand's revenue growth was mainly due to the increase in same-store sales revenue and the increase in revenue due to DTC transformation in some channels. 2) FILA: FILA brand revenue was 25.103 billion yuan, +16.6% year-on-year.
During the year, FILA returned to high-quality growth through commodity adjustments. 3) All other brands: The total revenue of all other brands was 6.947 billion yuan, +57.7% year-on-year. During the year, Descente and Kolon maintained a rapid growth trend, with revenue growth rates of more than 50% and 80%, respectively.
Profit side: The company's operating quality improved significantly during the year, and profit growth exceeded expectations. The company's overall gross profit margin during the year was 62.6%, +2.4pp year on year. The reason for the increase in gross margin was that Anta's continued DTC transformation improved the level of product management, and FILA's retail discount situation during the year. Excluding the profit and loss effects of joint ventures, net profit attributable to mother was 10.954 billion yuan, +44.9% year-on-year.
Joint venture Amer Sports performed well. Joint venture company Amer Sports achieved revenue of RMB 31.25 billion, +30.1% YoY, while EBITDA reached RMB 3.75 billion, +45.4% YoY.
Amer Sports lost slightly during the year. The main reason for the loss was the drag of goodwill and trademark impairment during the year.
Profit forecast: Anta Group has three growth curves: professional sports, fashion sports, and outdoor sports. Combined with the dividend period of sports and outdoor sports, the company showed strong resilience in the short and long term. We expect the company's revenue in 2024-2026 to be 70.58 billion yuan/79.64 billion yuan/88.82 billion yuan, +13.2%/+12.8%/+11.5% YoY; net profit to mother will be 13.53 billion yuan/14.16 billion yuan/15.41 billion yuan, respectively, +32.2%/+4.6%/+8.8% YoY, maintaining the “buy” rating.
Risk warning: Brand promotion falls short of expectations, DTC implementation falls short of expectations, risk of inventory backlog.