Description of the event
The company released retail data for 2024Q1. The turnover of Anta/FILA/other brands increased by 25% to 30% year-on-year in terms of units/high units/, and the turnover performance was in line with expectations.
Incident comments
The growth of the Anta brand accelerated in March, and we look forward to the Olympics catalyzing in Q2. Q1 Anta brand turnover increased year over year. It is estimated that Anta's large products/children's sales volume will all increase year over year, with online orders increasing by 20-25% over the same period last year. The online and offline growth rate is mainly due to the difference in base figures for the same period last year. The growth rate of retail sales in Q1 is expected to be lower than the annual level, mainly due to the high base figures for the 2022/Q1 Winter Olympics and 2023Q1, as well as the fact that many new products will be launched one after another in March. On a monthly basis, the company's achievement rate in January-January is expected to be low, while the acceleration of growth in March drove Q1 turnover to achieve the company's goals. Along with the subsequent decline in the base, the launch of new Olympic products, and the launch of commercial sales of Owen products, etc., it is expected that the growth of the Anta brand will accelerate in the next quarter, and growth guidelines for the whole year can be expected.
FILA continues to increase online, and the completion rate is expected to be high throughout the year. Q1 FILA turnover is growing at a higher year-on-year rate (expected to double growth in core, flat for kids, and a slight decline in fusion). The growth rate of online channels is expected to be better with a low base, and the performance of the newly expanded Douyin channel is expected to be superior to that of traditional e-commerce platforms. FILA has improved store displays, products, and brands in the past to drive better growth. The weak performance of Kids and Fusion is expected to be related to closing last year. The subsequent growth rate of Kids and Fusion stores is expected to accelerate, leading to a high rate of growth throughout the year.
Inventory is at an optimal level, and high-quality growth continues. It is expected that along with the recovery in retail sales, the Q1 Anta and FILA inventory sales ratio is expected to continue to improve to less than 5, which is at the best level in recent quarters. Furthermore, discounts for Anta and FILA brands are also expected to improve. Based on this, they have achieved better turnover growth targets, and high-quality growth will continue in the future.
Looking ahead, on the one hand, all brands performed well in Q1. Continued introduction of new products and activities under the Anta brand is expected to drive subsequent growth. FILA continues to grow at a high quality level, and the achievement rate of the annual guidelines is high. On the other hand, under the trend of increasing Anta's products, channels and brand power, it is expected to accelerate domestic market share growth & overseas market development, and there is room for further growth. The overall forecast is that the company will achieve net profit of 135/138/15.6 billion yuan in 2024-2026 (net profit due to a one-time income of 1.6 billion yuan after Amer's listing contributed 1.6 billion yuan, corresponding to PE 18.5X), an increase of 32%/2%/13% year over year, respectively. The PE corresponding to the current price is 16/16/14X, respectively, maintaining a “buy” rating.
Risk warning
1. Retail recovery falls short of expectations;
2. The risk of opening a store falls short of expectations;
3. Multi-brand integration falls short of expectations.