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

PUBLISHED : Wednesday, 22 February, 2017, 9:16pm
UPDATED : Wednesday, 22 February, 2017, 11:17pm

Anta Sports Products, the largest Chinese sportswear maker, reported record earnings for 2016 as the Rio de Janeiro Olympic Games reinvigorated sports enthusiasm, triggering higher attendence for both winter and summer recreational sports across a wide range of age groups and cultures.

Net profit leaped 16.9 per cent on year to 2.39 billion yuan (US$347 million), in-line with consensus analyst estimates of 2.34 billion yuan, according to a Reuters’ poll. The company reported 2016 revenues were up 20 per cent on year to 13.35 billion yuan.

In China, a nationwide drive for healthier lifestyles, evident from the growing attendence of enthusiastic Chinese “damas” gathering in parks and squares to dance in unison, has made the country’s athletics goods sector a rare sweet spot immune to the cooling pace of economic growth.

Global researcher Economist Corporate Network forecast the size of China’s sportswear market to account for 3 per cent of the country’s gross domestic product by 2025 -- equivalent to the current level for the United States and South Korea. And with support from the Chinese central government, the industry could balloon to 5 trillion yuan annually by 2025.

“The next 10 years will see the sports shoes and apparel markets expand, driven by mainly demand from the middle to mid-upper classes as their spending continue to see significant increase,” said Ding Shizhong, chairman of Anta, as he highlighted running, indoor training, basketball, soccer and winter sports as recreational activities with the brightest prospects.

Running is also becoming a lucrative endeavour. A record 2.79 million people in China participated in marathons last year, a 86 per cent surge from 2015, according to data from the Chinese Athletic Association.

“With increasing sports participation, Anta, with strong branding, stands to benefit,” said Terence Lok, an analyst with Guosen Securities.

Anta’s running shoes and shirts have lower price tags than global labels Nike and Adidas AG -- the two ubiquitous brands that boast the biggest market share in China.

To give its image a facelift, Anta has poured millions of dollars into sponsorships and advertising. In 2015 the company signed Golden State Warriors guard Klay Thomson to a multi-year endorsement deal. The Fujian-based athletic goods maker is the official partner of the Chinese Olympic Committee, having outfitted the national teams for the London and Rio Olympics.

Anta operated 8,860 self-branded stores at the end of 2016, up from 8,510 locations at the end of the fist half of 2016. The company aims to grow its retail network in China to around 9,000 by the end of 2017 .

The company has also benefited from its Greater China rights to Italian sports fashion brand Fila. The brand is popular among middle class Chinese consumer seeking premium goods.

Ski garments and equipment is another growth area for Anta thanks to the rising popularity of the sport among China’s newly affluent. In 2016 Anta teamed up with Japanese premium outdoor equipment maker Descente in an effort to jointly promote their brands in China.

Anta’s Hong Kong-listed shares rose 0.83 per cent on Wednesday to close at HK$24.30, lifting its gain in the past 12 months to 27 per cent.