Anta shares soar 17pc after results top forecasts

Shares in Anta Sports Products jumped more than 17 per cent yesterday on a narrower-than-expected decline in net profit for the first half - and brushing aside a caution from management that demand in the sportswear industry is unlikely to rebound in the short term.

The Fujian-based branded sportswear retailer reported net profit for the six months to June of 769.6 million yuan (HK$936 million), down 17 per cent from 927.3 million yuan last year.

Turnover dropped 11.6 per cent to 3.9 billion yuan as the nation's sportswear industry struggled to maintain sales against a backdrop of weak consumer sentiment and sluggish economic growth.

But the decline was lower than market expectations and Anta's stock surged 17.15 per cent after the announcement to close at a four-week high of HK$4.85, making it one of the top gainers in Hong Kong trading.

Anta was the first home-grown sportswear retailer to release first-half results, and the market responded to the news by chasing the shares of other sportswear retailers, including Li Ning, Peak Sport Products, 361 Degrees and Xtep, 5 to 10 per cent higher, outperforming a 1.69 per cent gain in the Hang Seng Index.

'I think the market is over-optimistic about the company. Both its sales and net profit growth will continue to decline over the next year,' said Alfred Ying, an equity analyst with Piper Jaffray Asia Securities.

Lai Shixian, chief operating officer of Anta, said the major challenges in the whole industry still remained and it was difficult to predict if the worst was yet to come. The company said in a separate filing yesterday that the order value at its trade fair for the first quarter of 2013 decreased by 20 to 30 per cent year on year.

Same-store sales growth declined by a mid-single-digit percentage from a year earlier. Anta said it had adopted flexible replenishment arrangements and communicated with distributors and franchisees to help them adjust orders and reduce inventory risks.

Lai said same-store sales growth would remain under pressure in the second half. The company intends to adopt a prudent pricing strategy, focusing on mid-end products priced between 200 and 300 yuan and opening more discount shops and outlets to clear inventory.

As of June this year, Anta had 7,807 shops and counters, 691 kids' apparel and shoe shops, and 689 sports lifestyle shops under its brand.

An interim dividend of 23 HK cents per share was declared for the period.

The sportswear industry has been cooling since last year. Several players, including Li Ning, Peak Sport and China Dongxiang, have issued profit warnings over the past two months.

3.9b yuan

Anta reported turnover of this much, in yuan, in the first half, down 11.6 per cent from the same period last year