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Hong Kong company reporting season

China’s largest sportswear brand Anta posts 29pc profit growth on increased sales

Analysts expect the cash-rich company to sustain double-digit profit growth in 2018, with a potential acquisition

PUBLISHED : Tuesday, 27 February, 2018, 1:43pm
UPDATED : Tuesday, 27 February, 2018, 11:28pm

Anta Sports, China’s largest sportswear brand and the third largest in the world by market capitalisation, has posted a 29.4 per cent growth in 2017 net profit, attributing it to increased sales that resulted from its multi-brand strategy and through its e-commerce channels.

The company, whose market capitalisation tops HK$100 billion (US$12.78 billion), said its net profit for the 12 months ended December 31 reached 3.09 billion yuan (US$489.95 million), or 1.17 yuan per share, compared with 2.39 billion yuan in net profit for 2016, in a filing to the Hong Kong stock exchange on Tuesday.

Revenue for the period rose 25.1 per cent to 16.69 billion yuan, from 13.35 billion yuan in 2016.

The results were slightly higher than analysts’ estimated net profit of 3.02 billion yuan for the period, according to Reuters.

Anta has proposed a final dividend of 41 HK cents per share and a special dividend of 16 HK cents per share.

“As domestic consumption continues to grow and the external economic environment remains stable, we believe the overall consumer market will maintain steady growth,” said Anta chairman Ding Shizhong in the statement.

“With the Beijing Olympic and Paralympic Winter Games approaching, we believe that our sponsorship of the Chinese Olympic Committee Winter Olympic Delegation will again enhance Anta's influence globally.”

The company highlighted “significant contribution” from e-commerce channels, including record-setting sales numbers during last year’s Singles’ Day event, one of the country’s biggest online shopping festivals.

“We believe Anta will sustain robust high-teen top-line and double-digit net profit growth momentum in 2018, as we expect it to continue to be a market-share taker amid an increasingly competitive landscape in China’s sportswear industry,” wrote Daiwa analysts Arian Chan and Anson Chan in a research note.

With more than 10 billion yuan in net cash, the analysts also expected Anta to make an acquisition or take on a joint venture.

The company also said its new logistics centre would be put into use in the first half of the year, which could raise its operational efficiency.

Anta Sports, which listed in Hong Kong in 2007, has six major sportswear brands – Anta, Anta Kids, Fila, Fila Kids, Descente and NBA, and newly added kidswear brand Kingkow and a joint venture with South Korea’s outdoor sports activity brand Kolon Sport in 2017.

Anta Sports bets on China’s two-child policy with acquisition of clothing brand King Kow

While Anta, Anta Kids and NBA mainly target the mass market, the three other sportswear brands have been positioned as high-end sportswear products. The company operates 9,467 Anta stores in China and 1,086 stores under the Fila brand in the mainland, Hong Kong, Macau and Singapore, and 64 Descente stores in China.

Morgan Stanley raised its target price for Anta to HK$44.50 before the earnings results. The investment bank believes that the company as a pure China play has delivered stronger momentum in sales and earnings growth, compared to the China businesses of Nike and Adidas and should not trade below the global players’ average valuation.

Anta shares fell nearly 3 per cent to HK$39.35 on Tuesday.

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