External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>2Q23 results was a slight beat with 1) inline retail sales growth (Anta was a miss but FILA and other brands had a beat) and 2) a better-than-expected retail discounts.</li><li>Since retail sales growth in Jun-Jul 2023 were similar and still weak, we think sales and earnings could remain at risk.</li><li>However, after massive derating since May 2023, current valuation of 23x FY23E P/E is not too demanding. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

2Q23 results was a slight beat with 1) inline retail sales growth (Anta was a miss but FILA and other brands had a beat) and 2) a better-than-expected retail discounts.Since retail sales growth in Jun-Jul 2023 were similar and still weak, we think sales and earnings could remain at risk.However, after massive derating since May 2023, current valuation of 23x FY23E P/E is not too demanding. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Anta Sports (2020 HK) – A Slight Beat in 2Q23 but Outlook Is Still Fragile

Thematic (Sector/Industry)

<ul><li>On one hand, retail sales growth in 5-1 Golden Week was a beat (after a soft Feb-Mar and an inline Apr).</li><li>On the other hand, retail discounts surprisingly widened due to increased competition from the de-stocking by brands like Adidas and Li Ning.</li><li>While fundamentals (sales, discounts and inventory) are trending good into 2H23E and setting up for a decent FY24E, we should still keep our eyes on the end demand and intensity of competition. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

On one hand, retail sales growth in 5-1 Golden Week was a beat (after a soft Feb-Mar and an inline Apr).On the other hand, retail discounts surprisingly widened due to increased competition from the de-stocking by brands like Adidas and Li Ning.While fundamentals (sales, discounts and inventory) are trending good into 2H23E and setting up for a decent FY24E, we should still keep our eyes on the end demand and intensity of competition. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Sportswear Sector – 5-1 sales beat but competition intensified

<ul><li>Both Anta and FILA’s performance in 1Q23 were inline with mgt. guidance.</li><li>While Mar-Apr 2023 retail sales growth accelerated, Anta did underperform FILA and other peers.</li><li>However, given the much healthier inventory and retail discounts, there is room for sales to catch up in 5-1 golden week. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Both Anta and FILA’s performance in 1Q23 were inline with mgt. guidance.While Mar-Apr 2023 retail sales growth accelerated, Anta did underperform FILA and other peers.However, given the much healthier inventory and retail discounts, there is room for sales to catch up in 5-1 golden week. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Anta Sports (2020 HK) – A soft 1Q23 but guidance was maintained

<ul><li>The sharp drop in inventory level for 2023 YTD is certainly a decent surprise, and we do think this is just the beginning of the turnaround.</li><li>Backed by better margin improvement and net profit growth, Anta remains as our sector top pick.</li><li>FY22 result slightly beat. Anta’s sales grew by 9% YoY to RMB53.7bn, inline with CMBI/ BBG est. and net profit decreased by 2% YoY to RMB 7.59bn, 5%/ 4% better than CMBI/ BBG est., mainly driven by higher than expected government grants and net finance income.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The sharp drop in inventory level for 2023 YTD is certainly a decent surprise, and we do think this is just the beginning of the turnaround.Backed by better margin improvement and net profit growth, Anta remains as our sector top pick.FY22 result slightly beat. Anta’s sales grew by 9% YoY to RMB53.7bn, inline with CMBI/ BBG est. and net profit decreased by 2% YoY to RMB 7.59bn, 5%/ 4% better than CMBI/ BBG est., mainly driven by higher than expected government grants and net finance income.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Anta Sports (2020 HK) – Fair guidance but decent inventory and margin

<ul><li>Even though we are trimming our FY22E net profit forecasts, we believe the sector has already bottomed out in 1Q23E, supported by: 1) decent YTD retail sales growth, 2) turn around in inventory level and retail discounts.</li><li>While we expect a more conservative FY23E guidance by the brands, we do see decent upside surprises from GP margin improvements, helped by better retail discounts and cheaper input costs, etc.</li><li>Therefore, for brands with a higher DTC mix, we believe brands like Anta (2020 HK) and Topsports (6110 HK) are going to outperform.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Even though we are trimming our FY22E net profit forecasts, we believe the sector has already bottomed out in 1Q23E, supported by: 1) decent YTD retail sales growth, 2) turn around in inventory level and retail discounts.While we expect a more conservative FY23E guidance by the brands, we do see decent upside surprises from GP margin improvements, helped by better retail discounts and cheaper input costs, etc.Therefore, for brands with a higher DTC mix, we believe brands like Anta (2020 HK) and Topsports (6110 HK) are going to outperform.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Sportswear Sector – We expect prudent guidance but decent margins

China

ANTA Sports Products Limited designs, develops, manufactures, and markets sportswear, including sports footwear and apparel for professionals and the general public.

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Anta Sports Products (2020 HK)

Anta Sports (2020 HK) – A Slight Beat in 2Q23 but Outlook Is Still Fragile

2Q23 results was a slight beat with 1) inline retail sales growth (Anta was a miss but FILA and other brands had a beat) and 2) a better-than...

CMB International

China Sportswear Sector – 5-1 sales beat but competition intensified

While fundamentals (sales, discounts and inventory) are trending good into 2H23E and setting up for a decent FY24E, we should still keep our eyes...

CMB International

Anta Sports (2020 HK) – A soft 1Q23 but guidance was maintained

Both Anta and FILA’s performance in 1Q23 were inline with mgt. guidance. While Mar-Apr 2023 retail sales growth accelerated, Anta did underperform...

CMB International

Anta Sports (2020 HK) – Fair guidance but decent inventory and margin

The sharp drop in inventory level for 2023 YTD is certainly a decent surprise, and we do think this is just the beginning of the turnaround.

CMB International

China Sportswear Sector – We expect prudent guidance but decent margins

While we expect a more conservative FY23E guidance by the brands, we do see decent upside surprises from GP margin improvements, helped by better...

CMB International

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