Hong Kong company reporting season

Anta’s interim net profit beats forecasts, rising 28.5 per cent on higher sales of sportswear

PUBLISHED : Tuesday, 15 August, 2017, 3:09pm
UPDATED : Tuesday, 15 August, 2017, 11:00pm

Anta Sports, China’s largest sportswear firm, reported better-than-expected profit growth for the first half of 2017 as the company said its multi-brand strategy delivered market share gains in both the mass and high end sports wear markets.

Net profit rose 28.5 per cent to 1.5 billion yuan (US$217.8 million), or 0.56 yuan per share, from last year’s 1.1 billion yuan, said the Fujian-based company. The result beat the 1.3 billion yuan consensus forecast of analysts polled by Bloomberg.

Revenue for the period increased 19.2 per cent to 7. 3 billion yuan, from 6.1 billion yuan in 2016, in line with analyst consensus estimates of 7.2 billion yuan.

Anta Sports attributed the net profit growth to surging demand for sports wear products from Chinese consumers as well as its multi-brand strategy.

“Despite the intense competition within the Chinese sportswear market, our ‘single-focus, multi-brand and omni-channel’ strategy continues to deliver breakthroughs in terms of market share and

profitability,” Anta’s chairman Ding Shizhong said in a statement.

When asked at Tuesday’s results briefing if Anta had plans to acquire more overseas brands such as German sports wear maker Puma, Ding said the company welcomed any suitable target brands but would not confirm individual deals.

Fujian sportswear maker Anta says 2016 net profit jumped 16.9 pc, lifted by domestic sales

Anta Sports, which listed in Hong Kong in 2007, has six major sports wear brands including Anta, Anta Kids, Fila, Fila Kids, Descente, and NBA.

While Anta, Anta Kids and NBA mainly target the mass market, the three other brands have been positioned by the company as high-end sports wear products. The company currently operates 9,041 Anta stores in China and 869 stores under the Fila brand.

In 2016 the combined size of the Chinese sports and fitness market was approximately

1.5 trillion yuan, of which almost 70 per cent was consumption of sporting goods and equipment, according to a report by the Economist.

Ahead of the 2022 winter Olympics in Beijing, the central government is pushing winter sports and other niche sport activities. Displaying an image of Chinese president Xi Jinping wearing one of its winter jackets on its website, Anta Sports has also launched joint ventures with Kolon Sport from South Korea and Japanese ski wear brand Descente, hoping to tap into high end markets which have long been dominated by international brands such as Nike and Adidas.

In addition to the national push for sports, the ongoing consumption upgrade in China will also benefit the company, as millions of customers spend more on experience in pursuit of a healthy lifestyle, rather than splashing on clothes and consumer products.

Still, the prospect of a slowdown looms as consumers in big cities are bearing more pressure to repay mortgages and are spending less on consumption goods, said Tang Xiaotang, founder of luxury retail consultancy Nofashion.

“Usually, there’s more potential in the second and third-tier cities, as consumers there have not had that large a pressure to repay large scale mortgages,” said Tang.

Shares of Anta Sports was up 1.8 per cent to HK$28 by the lunchtime break on Tuesday, before the results were announced.