Citi: ANTA's operating profit surged in the first half of the year, driven by government subsidies exceeding expectations and stable advertising promotion expenses

Citi stated that ANTA SPORTS (02020.HK) is expected to achieve a year-on-year operating profit growth of 17% in the first half of 2025, which is 10% higher than market expectations. This is mainly attributed to a year-on-year increase of 63% in "other income (mainly government subsidies)" that exceeded expectations, as well as lower-than-expected advertising and promotion expenses (only a year-on-year increase of 1%), despite sales (up 14% year-on-year) and gross profit (up 13% year-on-year) meeting expectations. The operating profit margin of the ANTA brand business performed strongly (up 1.5 percentage points year-on-year), benefiting from a lower-than-expected ratio of advertising and promotion expenses to sales (down 0.9 percentage points year-on-year to 6.6% at the group level) and higher-than-expected government subsidies (up 64% year-on-year to RMB 1.2 billion at the group level). Although the operating profit margin of the Fila brand business decreased by 0.9 percentage points year-on-year as expected, the operating profit margin of other brand businesses performed excellently in the first half of 2025, reaching 33.2% (up 3.3 percentage points year-on-year). Rating "Buy," target price RMB 111.6