HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> achieved a decent 3Q23 with sales performance of major brands outperformed. With a low comparison base, 4Q23 sales will be even more impressive. </li>
<li>Indications are that sales for the Golden Week are satisfactory and "double-11" sales are optimistic. The acquisition of MAIA ACTIVE will further add to its product portfolio.</li>
<li>Amer's IPO is another catalyst and reports are that this has been filed in the US. Anta Sports' stake may be valued at US$4bn, almost 12% of its market cap.</li>
</ul>



Anta Sports Products (2020 HK) achieved a decent 3Q23 with sales performance of major brands outperformed. With a low comparison base, 4Q23 sales will be even more impressive. 
Indications are that sales for the Golden Week are satisfactory and "double-11" sales are optimistic. The acquisition of MAIA ACTIVE will further add to its product portfolio.
Amer's IPO is another catalyst and reports are that this has been filed in the US. Anta Sports' stake may be valued at US$4bn, almost 12% of its market cap.


Anta Sports (2020 HK): Bucking the Challenging Trend

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.

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

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>After one month from the March batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 24 stocks. </li>
<li>We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.</li>
<li>This time we observe outperformance when inclusion took place but not between announcement and inclusion. Southbound trade account for a significant portion of the trading volumes, still.</li>
</ul>


After one month from the March batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 24 stocks. 
We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.
This time we observe outperformance when inclusion took place but not between announcement and inclusion. Southbound trade account for a significant portion of the trading volumes, still.


HK Connect: Mar '22 Inclusion Post-Event Analysis

<ul>
<li>The new share placement of <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> has caught the market by surprise, but we think long-term story for the company should not be affected.</li>
<li>With proceeds to be used for repayment of outstanding debts, expansion in China and pursuing SE Asia markets, we should not overlook the benefits to be generated. </li>
<li>An IPO of Amer Sports is clearly brewing and this represents an important catalyst. Anta's 26.4x and 20.9x FY23 and FY24 PERs do not look stretched relative to earnings growth. </li>
</ul>


The new share placement of Anta Sports Products (2020 HK) has caught the market by surprise, but we think long-term story for the company should not be affected.
With proceeds to be used for repayment of outstanding debts, expansion in China and pursuing SE Asia markets, we should not overlook the benefits to be generated. 
An IPO of Amer Sports is clearly brewing and this represents an important catalyst. Anta's 26.4x and 20.9x FY23 and FY24 PERs do not look stretched relative to earnings growth. 


Anta Sports (2020 HK): Our View After Placement

<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

361 Degrees International Ltd. designs, develops, manufactures, markets and distributes sportswear products, including athletic footwear, apparel and accessories.

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361 Degrees International (1361 HK)

Anta Sports (2020 HK): Bucking the Challenging Trend

Anta Sports had a solid 3Q23, with major brand sales outperforming. 4Q23 sales are expected to be even better. Acquisition of MAIA ACTIVE and...

Osbert Tang, CFA

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

HK Connect: Mar '22 Inclusion Post-Event Analysis

We analyzed the performance of stocks for the March 2023 batch of Hong Kong Connect inclusion, including the performance post announcement, post...

Ke Yan, CFA, FRM

Anta Sports (2020 HK): Our View After Placement

With proceeds to be used for debt repayment, expansion in China and pursuing SE Asia markets, we should not overlook long-term benefits. News flow...

Osbert Tang, CFA

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Anta Sports (2020 HK): Bucking the Challenging Trend

​Anta Sports had a solid 3Q23, with major brand sales outperforming. 4Q23 sales are expected to be even better. Acquisition of MAIA ACTIVE and...

Osbert Tang, CFA

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

HK Connect: Mar '22 Inclusion Post-Event Analysis

We analyzed the performance of stocks for the March 2023 batch of Hong Kong Connect inclusion, including the performance post announcement, post...

Ke Yan, CFA, FRM

Anta Sports (2020 HK): Our View After Placement

With proceeds to be used for debt repayment, expansion in China and pursuing SE Asia markets, we should not overlook long-term benefits. News flow...

Osbert Tang, CFA

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

Anta Sports had a solid 3Q23, with major brand sales outperforming. 4Q23 sales are expected to be even better. Acquisition of MAIA ACTIVE and...