ANTA SPORTS releases best half-year performance, widening the gap with competitors

Adhering to the "single focus, multiple brands, globalization" strategy, and guided by the principles of "increasing efficiency, improving quality, and seeking steady progress," ANTA SPORTS (02020) delivered a high-quality growth performance for the mid-term of 2024 on August 27.

According to the financial report, in the first half of the year, ANTA SPORTS achieved a revenue of RMB 33.74 billion, a year-on-year increase of 13.8%, reaching a new historical high for the half-year period, further expanding its leading position in the Chinese market. While the revenue growth outperformed the industry, the quality of growth exceeded market expectations. The net profit attributable to shareholders increased by 0.5 percentage points year-on-year to 18.3%; inventory turnover days were 114 days, a decrease of 10 days year-on-year. At the same time, ANTA SPORTS continued to maintain financial stability, demonstrating good cash generation capability and risk resistance. The group's operating net cash inflow was RMB 8.5 billion in the first half of the year, with free cash flow of RMB 7.62 billion; by the end of the period, the group held a total of RMB 47.83 billion in cash and cash equivalents, bank deposits, and pledged deposits.

In terms of brands, the revenue of the ANTA brand increased by 13.5% year-on-year to RMB 16.08 billion, with an operating profit margin of 21.8%, consolidating its leading position in the Chinese sports brand market; FILA brand revenue increased by 6.8% year-on-year to RMB 13.06 billion, with an operating profit margin of 28.6%, leading in growth among major international brands of the same scale; revenue from all other brands increased significantly by 41.8% year-on-year to RMB 4.6 billion, with an operating profit margin of 29.9%, maintaining strong growth.

Lai Shixian, Executive Director and Co-CEO of ANTA GROUP, stated: "Despite facing many uncertainties in the consumer trend in the first half of the year, ANTA GROUP has always adhered to the development strategy of 'single focus, multiple brands, globalization,' laid out a confident long-term layout in the industry, driven high-quality growth with innovation as the foundation, and further solidified the three core competencies. With the ability and determination to cross the cycle, we will advance globalization exploration with the unique business model of brand + retail, steadily moving towards becoming the 'world's leading sports goods group.'"

Leading the Chinese sports goods industry, equivalent to 1.2 Nike China in size

In a horizontal comparison of revenue scale in the first half of 2024, the top four companies in the Chinese sports goods industry are ANTA SPORTS, Nike China, Li-Ning Group, and Adidas China. In the first half of the year, the revenue scale of ANTA GROUP was equivalent to 1.2 Nike China, 2.4 Li-Ning Group, and 2.6 Adidas China; the revenue growth rate of ANTA GROUP was 6 times that of Li-Ning Group, 3.6 times that of Nike China, and 3.3 times that of Adidas China.

In the competition between domestic and international brands, the combined revenue of ANTA and Li-Ning is 1.2 times that of Nike and Adidas, with the domestic giants continuing to dominate the international giants on their home turf. At the same time, the "dual giants" pattern of ANTA + Nike leading the Chinese sports footwear and apparel market since 2022 is still evolving In the first half of 2024, the revenue gap between ANTA Group and Nike China has exceeded 5 billion yuan, equivalent to the size of 361 Degrees during the same period. Compared to the same period in 2023, the lead has nearly doubled. Since the first half of 2022, ANTA Group has been leading Nike China in revenue for the past 5 consecutive half-years.

Comparing with top local Chinese brands. In the first half of the year, the main brand of ANTA Group - ANTA brand, achieved a revenue of 16.08 billion yuan, accounting for 48% of the group's revenue, surpassing Li-Ning Group and Adidas China with the strength of a single brand. In terms of various key operating indicators, ANTA brand has established a comprehensive competitive advantage over Li-Ning.

Multi-dimensional Reinforcement of "Capability Building", ANTA Marches Steadily Towards the World

The continuous expansion of ANTA Group's leading advantage can be summarized in nine words, namely "sufficient confidence, strategic alignment, strong capabilities".

In the view of Zhitong Finance and Economics APP, ANTA Group's "confidence" comes from China's huge and dynamic consumer goods market. As stated in the report by the Chairman of ANTA Sports: even though the market may face some challenges in the short term, the industry and the development prospects of ANTA Group remain clear. China is a consumption powerhouse, and the sports industry is a high-growth track.

In this context, ANTA Group has sufficient confidence to invest in the future. This includes: continuously creating and stabilizing employment, sharing development achievements with employees; continuously strengthening innovation and research and development investment.

As of June 30, 2024, the total number of employees in ANTA Group has exceeded 62,000. The proportion of group employee costs to income exceeds 15%, which is 1.8 times that of Li-Ning, 2.3 times that of Xtep, and 2.5 times that of 361 Degrees. Whether it is the number of employees, total employee costs, per capita employee costs, or the proportion of employee costs to income, ANTA Group is far ahead of industry standards.

On the research and development front, the R&D cost expenditure in the first half of 2024 is approaching the 1 billion yuan mark, with a year-on-year growth of over 30%, nearly 1.5 times the total R&D expenditure of Li-Ning, Xtep, and 361 Degrees during the same period. ANTA Group's R&D investment intensity leads the way in the Chinese sports goods industry

From an empirical perspective, research and development (R&D) investment, as an important indicator to measure the development of industries and companies, is widely regarded as a crucial support and driving force for listed companies to maintain high growth. In fact, under the high-intensity innovation R&D investment, ANTA Group's core technological achievements are accelerating transformation.

As of June 2024, the group has accumulated 4,655 national patent applications, ranking first among Chinese sports brands. The "Global Open Innovation Ecosystem" built by the group is entering a period of harvest, with multiple joint innovation achievements between universities and enterprises successfully completing market transformation. "Soft yarn" has become FILA's technological mindset, contributing over a billion in business, while technologies such as "ANTA film" and "nitrogen technology" have established leading mindshare. The group's research and development of Olympic competition equipment for weightlifting, boxing, gymnastics, and other events have helped Chinese athletes shine on the Paris Olympic stage with professional performance.

According to Zhitong Finance and Economics APP, ANTA Group's investment in human resources and innovative R&D not only creates products that consumers "want to buy," but also provides strong support for the group to develop strategies that align with market trends.

In terms of changes in industry demand, the consumption of sports shoes and apparel is showing a trend of "four transformations": consumer segmentation, scene specialization, functional expertise, and personalized expression. New scenarios and opportunities are emerging, with rapid growth in markets such as outdoor, children's, and women's. Against this backdrop, niche brands with distinct positioning are outpacing mainstream brands in growth rate, becoming a new force reshaping the market competition landscape.

For ANTA Group to secure victory in the future, it needs to focus on the trends of the times, establish a leading position for multiple brands in various niche areas, adapt its business model to current market trends, cover all scenarios, demographics, and tracks, enhance the group's risk resistance across cycles, and build a fundamental logic for future medium- to long-term growth.

To ensure the smooth realization of the strategic goals of "single focus, multiple brands, globalization," ANTA Group relies on its unique competitive edge forged through strategic initiatives. It focuses on building the core competencies of "multi-brand synergistic management," "multi-brand retail operations," and "global resource integration."

EGS Empowers ANTA to Achieve Value Leap

Zhitong Finance and Economics APP notes that on the journey of globalization, creating economic value is ANTA Group's pursuit. As a part of society, it upholds the corporate value proposition of "creating symbiotic value," actively undertakes corporate social responsibility, and is committed to this direction.

In 2024, ANTA Group continues to coexist with its employees. As of the end of the reporting period, the group has over 62,000 employees, with nearly 13,000 new college graduates and young talents under the age of 35 newly recruited, indirectly creating over 200,000 jobs in the industrial chain. The group promotes diversity and inclusion culture, appoints a "Chief Diversity Officer," and establishes a women's association to focus on the development and rights protection of female employees Symbiosis with Society: In the first half of the year, the total public welfare charity expenditure of the group and the founder's family's "He Min Foundation" exceeded 300 million yuan, reaching a historical high. The "ANTA Thriving Growth Public Welfare Program," which integrates sports and education to support rural revitalization, has released a new three-year plan. By 2026, it will donate another 700 million yuan in cash and materials to underdeveloped areas in China, benefiting a total of 10 million young people. As of the end of the reporting period, the actual expenditure on public welfare charity has exceeded 2.4 billion yuan.

Symbiosis with the Environment: ANTA Group's ESG work has been internationally recognized, with MSCI ESG ratings rising two levels to BBB, CDP climate change performance ratings receiving a B rating, and becoming the only representative of the Chinese sports goods industry included in the "Hang Seng Sustainable Development Enterprise Benchmark Index." During the reporting period, ANTA introduced professional running and outdoor products with third-party carbon neutrality certification for the first time, and created the first carbon-neutral award uniform made from environmentally friendly fibers for the Chinese delegation to the Paris Olympics. At the same time, the first carbon-neutral store in the Chinese footwear and apparel industry certified by an authoritative institution, "ANTA Zero Carbon Mission Store," was established in Shanghai, committed to achieving carbon reduction goals from product manufacturing to end operations. In addition, the group has been involved in the development of standards to promote the green transformation of the footwear and apparel industry, encouraging over 140 suppliers to use clean and renewable energy and assisting them in obtaining green certifications.

According to observations from the Zhitong Finance APP, overall, the fulfillment of ESG responsibilities by enterprises in the medium to long term can be reflected in the positive impact on financial performance through the increase in the value of existing businesses and the creation of value for potential opportunities and new businesses. In terms of existing businesses, ESG responsibility fulfillment can enhance corporate reputation, improve management capabilities, reduce corporate risks, establish competitive advantages, increase product value, and ultimately enhance financial performance.

As China's economy enters a new stage of high-quality development, especially against the backdrop of "dual carbon" goals and common prosperity, the concept of ESG is receiving more attention from Chinese enterprises, and the investment value of ESG-focused companies is also on the rise. Empirical results show that practicing ESG has a significant impact on the short-term stock prices and long-term market value of listed companies.

In conclusion, guided by clear strategic objectives, ANTA Group will continue to enhance its core competitiveness to draw nutrients from the vast global sports goods consumer market and boost company performance. At the same time, as one of the actively engaged companies in ESG practices, ANTA Sports' long-term value is also expected to achieve new heights through persistent ESG practices and recognition