Amer Sports positions itself as the world's leading multi-brand sports outdoor boutique operator.
The company owns many well-known brands such as Arc'teryx, Salomon, Wilson, etc., and the categories cover professional sports, outdoor sports, and ball sports.
Based in the Nordic market, the company initially expanded its brand matrix through continuous acquisitions. It was acquired by Anta in 2019. Relying on Anta's operation and management, the company achieved mutual empowerment between brands, and has now developed into the world's leading multi-brand sports and outdoor boutique operator. The company's revenue in 2023 was US$4.4 billion, +23% year-on-year, with America/Europe, the Middle East and Africa/Greater China/Asia Pacific contributing 40%/33%/19%/8% respectively; the company's core advantage is precise brand positioning, building a diversified product portfolio, and continuing to promote product innovation and upgrading; the market and brand influence are spread all over the world, and multi-channel distribution strategies meet the needs of consumers in different regions and enhance brand loyalty. Looking ahead to 24, Amer is leading double-digit revenue growth with earnings of $0.30-0.40 per share.
Industry Overview: The domestic outdoor sportswear industry is growing rapidly, and Amer is using Anta's strength to accelerate penetration.
According to Euromonitor, China's outdoor footwear market is currently about 45 billion yuan, with a CAGR of about 20% in the past three years. The participation rate in outdoor activities in China is lower than in the US (35% in China vs. 60% + in the US). The rapid rise of outdoor activities since the epidemic has led to an increase in the penetration rate of outdoor sportswear in China, and at the same time, the expansion of outdoor clothing into business and leisure scenarios has opened up the industry ceiling. Amer's brands are already well known abroad, but they are still relatively niche high-end brands at home. After Amer was acquired by Anta in 2019, it began to accelerate its expansion into the domestic market. By the end of 2023, Amer had 64 Arc'teryx self-operated retail stores in Greater China (30 more than in 2019) and 37 Salomon self-operated retail stores. Greater China's revenue CAGR in 2019-23 was 43%, showing a strong growth trend. In the future, Amer is expected to continue to use Anta's channel advantages to rapidly seize the Chinese market. At the same time, its boutique operation and international vision will also inject new growth vitality into Anta.
It suggests Anta's layout opportunities: strong channel operations, flexible short-term Amer contributions, and clear long-term diversified growth.
The underlying logic depends on the company's strong channel and product operation capabilities, and the steady improvement of discounts and operating profits under the DTC model. The company's revenue/operating profit in 2023 was 62.7 billion yuan/10.2 billion yuan respectively, +16%/+35% year-on-year, and profits exceeded market expectations. Meanwhile, the overall Anta Group/Anta/FILA/OPM of other brands were +3.7pct/+0.8pct/+7.6pct/+6.5pct, respectively. The core benefits from improved single-store efficiency and discounts, reflecting the improvement of the company's channel operation capacity under DTC reform.
In '24, Anta's two main brands still had business highlights, and Anta and FILA maintained a 10-15% turnover growth target. Looking ahead to 2024, Anta: On the product IP side, the company previously signed NBA star Kerry Owen as the spokesperson for Anta, and focused on launching the Owen series to enhance the competitiveness of basketball products, and also became the IOC's official sportswear supplier for 2024-2027, improving brand potential; on the channel side, channel classification strategies are further refined for different markets and business districts to match different brand resources and product IPs to reduce transaction costs. Channel classification and refinement of operations are expected to drive continued improvement in store efficiency and customer orders over the long term. FILA: The online layout of new retail increases the reach of new customers, and the offline “three top” strategies drive continuous improvement in store efficiency.
Long-term multipolar growth is clear, and the short-term Amer listing contributed to profit elasticity. In 2023, Descent/Colon grew by 50% +/ 80% + respectively, with the core due to increased store efficiency; according to company guidelines, Descent/Colon grew by no less than 20/ 30% in 2024; at the same time, Amer's listing and operating levels improved dramatically, which is expected to positively contribute 20.7-2.23 billion to the Group's profit in 24 years (including 1.6 billion one-off non-cash accounting profits). In the long run, with the advantage of outdoor racetracks, multi-pole growth can be expected.
Profit forecast: In 2024-2026, we expect the company's main business revenue of 709, 796, and 88.4 billion yuan (+14%/+12%/+11%) and net profit to mother of 134, 139, and 15.7 billion yuan (+30%/+4%/+13%), respectively. According to the latest stock price, the corresponding PE will be 16, 16, and 14 times, respectively. I am optimistic about the company's future growth, covered for the first time, and given a “buy” rating.
Risk warning: declining demand, increased market competition, exchange rate fluctuations, risk of untimely data updates, etc.