Anta Sports released 2024Q3 operating data. In the third quarter, the number of units of Anta's main brands increased year-on-year, and the growth rate slowed down; FILA brand turnover decreased year-on-year; sales volume of other brands increased by 45%-50% year on year, continuing high growth.

Anta: Q3 turnover growth slowed month-on-month, and inventories remained at a healthy level. 2024Q3 Anta's main brand turnover is growing year-on-year (2024Q2 is increasing the number of units). We expect e-commerce sales to be better than offline, continuing to grow by more than 20%, and the performance is impressive. Inventory is expected to increase slightly during the Q4 peak season, but the overall inventory ratio is still below 5 months, with offline discounts remaining flat and online discounts improving. The main brand channel reform has achieved good results, and refined store types to improve customer base matching: Super Anta stores focus on higher cost performance. Anta Champion stores target middle- and high-income groups seeking quality, and Anta SV stores attract young customers who love sneaker culture. The efficiency of core stores is better than street stores, and it has become an important gripper for improving offline sales. Super Anta stores plan to open 50 stores this year. Judging from the stores that have been opened so far, their store performance is superior to ordinary large stores.

FILA: Q3 turnover performance was weaker than expected, and cost control was actively strengthened. The number of units of 2024Q3 FILA decreased year-on-year. It is expected that the performance of large goods will be relatively stable, and professional products such as golf and tennis will grow significantly; children's and trendy brands are under pressure, mainly due to fluctuations in the external retail environment, and children's and trendy brands themselves are still in the adjustment stage. The inventory to sales ratio remained stable for about 5 months, and discounts remained stable. Q2 began to actively strengthen the control of marketing and other expenses to improve the quality of operations.

Other brands: Q3 sales continued to increase, up from the second quarter. The turnover of other 2024Q3 brands increased 45-50% year over year (2024Q2 increased 40-45% year over year). Kolon's growth rate is expected to be faster than Descente, and all brands have improved markedly in terms of discounts. The penetration rate of the outdoor industry continues to rise and remains high. Kolon is still in a period of brand growth. Both the number of stores and store efficiency have increased, and it is steadily expanding into the previously weak southern market.

Profit forecast and investment suggestions: As a leading sportswear leader in domestic sportswear, under the trend of hierarchical consumption, multi-brand operations cover segmented users, increase in domestic product strength, and seize the emerging window of outdoor and other emerging sports tracks. Under the DTC model, discounts and operating profits are improving steadily, and the performance exceeds expectations. Passenger flow improved and sales improved during Golden Week on the 11th of this year. Both Anta and FILA's turnover performance were better than the company's expectations. Combined consumer promotion policies have been introduced, and Q4 has entered the peak sales season. It is expected to boost brand terminal sales. The company is expected to maintain high-quality growth under strengthened cost control. We temporarily maintain the company's profit forecast for 24-26. We expect the company to achieve net profit of 13.5, 14.2, and 16 billion yuan in 2024-2026, up 32.2%, 4.7%, and 12.8% year-on-year, maintaining a “buy” rating.

Risk warning: risk of consumer demand being pressured, risk of increased market competition, risk of channel expansion falling short of expectations