Anta Sports 4Q result preview – Market Share Gains
Gaining market share. Anta will announce its 2021 full year earnings on 22 March 2022. The company has provided guidance for revenue growth of about 25-30%. Over the past year, the company has benefited from boycotts of Nike, Adidas, and Puma in China, as those companies raised concerns over forced labour reports in their Chinese supply chains. The surge in 2021 revenues (see table) compares to Nike’s (NKE) 20% yoy decline in China sales over the same period. As consumer preferences shift to domestic brands and given the increased exposure, we expect market share gains to be sustained.
Success of FILA brand to continue with new collaborations. Anta owns an 85% stake in FILA China. FILA is Anta’s most profitable brand. Anta is collaborating with Hyatt Hotels to launch a FILA-branded hotel in Shanghai. The hotel will be part of ANTA’s new Shanghai headquarters, which will include office buildings, shops, and dining outlets. The complex, including FILA HOUSE Shanghai, is expected to open in 2024.
Growth at a reasonable price. Anta currently trades at 23x 2022F PE, which is attractive given our forecast of 1) long-term sales growth of 18- 25% growth CAGR for the Anta brand and 2) double-digit growth CAGR for FILA brand in the next five years. Consensus EPS CAGR currently stands at 20% for 2022F-2025F.