HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<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

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Equity Capital Markets

<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>  aims to raise around US$1.5bn in its top-up placement. </li>
<li>Anta hasn’t specified what it aims to do with the money that it's looking to raise, furthermore, it's already net cash.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>



Anta Sports Products (2020 HK)  aims to raise around US$1.5bn in its top-up placement. 
Anta hasn’t specified what it aims to do with the money that it's looking to raise, furthermore, it's already net cash.
In this note, we will talk about the placement and run the deal through our ECM framework.


Anta Sports Placement - A Large Deal to Digest with Unknown Use of Proceeds but Track Record Is Good

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.

<ul><li>Beat in 1Q23E was industry leading and FY23E guidance was partly raised. Hence, we maintain</li><li>BUY given its attractive outlook and valuation (0.8x PEG).</li><li>1Q23 retail sales growth was an industry leading beat</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.

Beat in 1Q23E was industry leading and FY23E guidance was partly raised. Hence, we maintainBUY given its attractive outlook and valuation (0.8x PEG).1Q23 retail sales growth was an industry leading beatContent 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.

Xtep (1368 HK) – Strong 1Q23 with retail sales guidance raised

<ul><li>FY22 results and FY23E guidance were roughly inline but the YTD performance was impressive and solid.</li><li>We still like Xtep due to its attractive PEG of 0.7x.</li><li>FY22 results inline. Xtep’s sales grew by 29% YoY to RMB 12.9bn while net profit rose by 1% YoY to RMB 922mn.</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.

FY22 results and FY23E guidance were roughly inline but the YTD performance was impressive and solid.We still like Xtep due to its attractive PEG of 0.7x.FY22 results inline. Xtep’s sales grew by 29% YoY to RMB 12.9bn while net profit rose by 1% YoY to RMB 922mn.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.

Xtep (1368 HK) – Excellent YTD performance among all brands

<ul><li>We are impressed by the quick recovery of retail sales growth during CNY, even with high base last year.</li><li>Moreover, we do find FY23E guidance encouraging, hence we maintain BUY and revise up our TP to HK$11.52, based on a 21x FY23E P/E (which is 1 s.d. higher than the 5 years average of 15x, up from 19x given the turnaround) and its valuation is not too demanding at 17x FY23E P/E.</li><li>After the improvement in Dec 2022, a HSD drop vs mid-teen decline in Nov 2022, retail sales growth had further accelerated to 20%+ during the first 10 days of 2023 CNY season (vs same season last year), and the retail discounts also improved to just 25% to 30% off (about 1-2ppt better than last year).</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.

We are impressed by the quick recovery of retail sales growth during CNY, even with high base last year.Moreover, we do find FY23E guidance encouraging, hence we maintain BUY and revise up our TP to HK$11.52, based on a 21x FY23E P/E (which is 1 s.d. higher than the 5 years average of 15x, up from 19x given the turnaround) and its valuation is not too demanding at 17x FY23E P/E.After the improvement in Dec 2022, a HSD drop vs mid-teen decline in Nov 2022, retail sales growth had further accelerated to 20%+ during the first 10 days of 2023 CNY season (vs same season last year), and the retail discounts also improved to just 25% to 30% off (about 1-2ppt better than last year).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.

Xtep (1368 HK) – Speedy recovery in CNY and robust guidance

China

Xtep International Holdings Limited designs, develops, manufactures, markets, and sells sportswear, including footwear, apparel, and accessories for adults and children. The company operates a multi-brand portfolio, featuring its core Xtep brand alongside international brands such as Saucony and Merrell. It was founded in 1987 and is headquartered in Xiamen, Fujian, China.

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Xtep (1368 HK)

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

Anta Sports Placement - A Large Deal to Digest with Unknown Use of Proceeds but Track Record Is Good

Anta Sports Products (2020 HK) aims to raise around US$1.5bn in its top-up placement. In this note, we talk about the deal dynamics and run the...

Sumeet Singh

Xtep (1368 HK) – Strong 1Q23 with retail sales guidance raised

Beat in 1Q23E was industry leading and FY23E guidance was partly raised. Hence, we maintain BUY given its attractive outlook and valuation (0.8x PEG).

CMB International

Xtep (1368 HK) – Excellent YTD performance among all brands

FY22 results and FY23E guidance were roughly inline but the YTD performance was impressive and solid. We still like Xtep due to its attractive PEG...

CMB International

Xtep (1368 HK) – Speedy recovery in CNY and robust guidance

We are impressed by the quick recovery of retail sales growth during CNY, even with high base last year. Moreover, we do find FY23E guidance...

CMB International

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