Description of the event

Anta Sports announced the 2024Q3 results. Q3 Anta Logistics increased year-on-year, FILA's low orders declined, other brands grew by 45%-50%, and Anta & FILA's performance was slightly lower than expected.

Incident comments

Anta's online growth is better, and the Olympics have catalyzed a boost in retail sales. Q3 Anta brand turnover increased year-on-year. E-commerce growth is expected to be superior to offline, core markets and new stores are performing well, while street stores are relatively weak. Looking at the monthly situation, the catalytic growth of the August Olympics is expected to accelerate month-on-month compared to July, while the growth rate is expected to decline somewhat due to the Mid-Autumn Festival mistake in September. With overall clothing consumption picking up during the National Day season, Anta is expected to perform well in terms of growth.

FILA's short-term flow is under pressure, and kids&fusion needs to be adjusted. Q3 FILA turnover declined year-on-year with lower orders. Among them, large goods are expected to remain flat, and Kids&Fusion is expected to decline. Under the Q3 consumption downgrade, the growth rate of all categories is expected to decline. The growth rate of golf & tennis is expected to be relatively good, but FILA Kids & Fusion still needs to be adjusted. The recovery in National Day passenger flow is expected to drive FILA's growth rate performance to be superior to that of international brands.

Inventory remained healthy, and Q4 went to battle lightly. Although Anta Brand & FILA's sales performance fell short of the company's expectations, it is expected that Anta and FILA brand discounts will remain stable. The ANTA warehouse sales ratio is expected to be 4-5 months, and the FILA warehouse sales ratio is expected to be close to 5 months. The inventory is all relatively healthy, and the Q4 is followed by a lightweight package.

Looking forward to the future, the Anta brand's National Day is expected to contribute to an increase in the opening and transformation of 300 new stores. Inventory pressure is not high, and the Q4 lightweight upstream flow rate is expected to accelerate. The FILA brand's short-term children's & trendy brand still needs to be adjusted. There is still uncertainty about the retail performance in Q4, but considering the company's proper fee management and excellent discount control, the annual performance is still expected to maintain steady growth. The overall forecast is that the company will achieve net profit of 11.7/13.6/15.1 billion yuan in 2024-2026 (not considering the one-time income of 1.6 billion yuan contributed by Amer's listing), with year-on-year increases of 15%/16%/11%, respectively. The PE corresponding to the current price is 20/17/15X, respectively, maintaining the “buy” rating.

Risk warning

1. Retail recovery falls short of expectations;

2. Multi-brand integration falls short of expectations;

3. Inventory removal falls short of expectations.