ANTA SPORTS PRODUCTS LIMITED
Incorporated in the Cayman Islands with limited liability
Stock Codes: 2020 (HKD counter) and 82020 (RMB counter)
Sports for Life
ANTA for
China
INTERIM REPORT 2024
Contents
Corporate Profile | 1 |
Results Highlights | 2 |
Financial Overview | 4 |
Our Business Model | 5 |
Chairman's Statement | 6 |
Management Discussion and Analysis | |
- Market Review | 10 |
- Business Review | 13 |
- Financial Review | 26 |
- Prospects | 35 |
Investors Information | 38 |
Corporate Information | 39 |
Independent Review Report of the Auditors | 41 |
Condensed Consolidated Statement of Profit or Loss | |
and Other Comprehensive Income | 42 |
Condensed Consolidated Statement of Financial Position | 43 |
Condensed Consolidated Statement of Changes in Equity | 45 |
Condensed Consolidated Statement of Cash Flows | 46 |
Notes to the Interim Financial Report | 47 |
Other Information | 73 |
Glossary | 84 |
CORPORATE PROFILE
ANTA was established in 1991; while ANTA Sports Products Limited, a widely recognized global sportswear company, was listed on the Main Board of HKEx in 2007 (Stock Codes: 2020 (HKD counter) and 82020 (RMB counter)). The mission of the company is to integrate the sports spirit of "Going Beyond Oneself" into everyone's daily life. ANTA Sports principally engages in design, R&D, manufacturing, marketing and sales of professional sports products including footwear, apparel and accessories. Over the years, the company formed three brand groups: Performance Sports Brands, Fashion Sports Brands and Outdoor Sports Brands, empowering everyone who loves sports. By embracing an all-round brand portfolio including ANTA, FILA, DESCENTE, KOLON SPORT and MAIA ACTIVE, etc., ANTA Sports aims to unlock the potential of both the mass and high-end sportswear markets. ANTA Sports is also the largest shareholder of Amer Sports,
Inc., a global group of iconic sports and outdoor brands, including Arc'teryx, Salomon, Wilson, Peak Performance, and Atomic, whose shares are
listed on the New York Stock Exchange (NYSE: AS).
VISION
TO BECOME A LEADING MULTI-BRAND
SPORTSWEAR GROUP IN THE WORLD.
MISSION
TO INTEGRATE THE SPORTS SPIRIT
OF "GOING BEYOND ONESELF" INTO
EVERYONE'S DAILY LIFE.
THREE CULTURAL
VALUES
- CONSUMER-ORIENTED
- BENCHMARKING AGAINST HIGH STANDARDS
- LEADING BY EXAMPLE
RESULTS HIGHLIGHTS
FINANCIAL PERFORMANCE
(For the six months ended 30 June 2024)
REVENUE
Increased by 13.8% to
RMB
33.7 Billion
GROSS PROFIT MARGIN
Increased by 0.8% point to
64.1%
PROFIT ATTRIBUTABLE TO
EQUITY SHAREHOLDERS
Increased by 62.6% to
RMB
7.7 Billion
BASIC EARNINGS
PER SHARE
Increased by 58.0% to
RMB
2.75
PAYOUT OF THE PROFIT
ATTRIBUTABLE TO EQUITY
SHAREHOLDERS, without the effect of non- cash accounting gain arising from equity dilution under the Amer Sports Listing*
50.1%
- Payout of the profit attributable to equity shareholders, with the effect of non-cash accounting gain arising from equity dilution under the Amer Sports Listing 39.9%.
2 ANTA Sports Products LimitedInterim Report 2024
OPERATIONAL PERFORMANCE
(As at 30 June 2024)
Performance Sportswear Category
Number of ANTA stores in
Mainland China and overseas stood at 7,073 (7,053*)
Number of ANTA KIDS stores in Mainland China and overseas stood at 2,831 (2,778*)
High-end Sports Fashion Category
Number of FILA stores (including FILA KIDS and FILA FUSION standalone stores)
in Mainland China, Hong Kong SAR, Macao SAR and Singapore stood at 1,981 (1,972*)
High-quality Performance
Sportswear Category
Outdoor Sportswear Category
* As at 31 December 2023
Number of DESCENTE stores in Mainland China, Hong Kong SAR, Macao SAR and overseas stood at 197 (187*)
Number of KOLON SPORT stores in Mainland China and
Hong Kong SAR stood at 160 (164*)
Interim Report 2024 ANTA Sports Products Limited 3
FINANCIAL OVERVIEW
2024 | 2023 | Changes | |||
Six months ended 30 June | (RMB million) | (RMB million) | (%) | ||
Revenue | 33,735 | 29,645 | p | 13.8 | |
ANTA | 16,077 | 14,170 | p | 13.5 | |
FILA | 13,056 | 12,229 | p | 6.8 | |
All other brands | 4,602 | 3,246 | p | 41.8 | |
Gross profit | 21,618 | 18,755 | p | 15.3 | |
ANTA | 9,106 | 7,912 | p | 15.1 | |
FILA | 9,168 | 8,461 | p | 8.4 | |
All other brands | 3,344 | 2,382 | p | 40.4 | |
Profit from operations | 8,660 | 7,623 | p | 13.6 | |
ANTA | 3,503 | 2,972 | p | 17.9 | |
FILA | 3,731 | 3,638 | p | 2.6 | |
All other brands | 1,375 | 985 | p | 39.6 | |
Profit for the period | 8,419 | 5,294 | p | 59.0 | |
Profit attributable to equity shareholders | |||||
- without the effect of share of profit or loss of an | |||||
associate/a joint venture and gain arising from | 6,161 | 5,264 | 17.0 | ||
equity dilution under the Amer Sports Listing | p | ||||
- with the effect of share of profit or loss of an | |||||
associate/a joint venture and gain arising from | |||||
equity dilution under the Amer Sports Listing | 7,721 | 4,748 | p | 62.6 | |
Free cash inflow | 7,619 | 9,523 | q | 20.0 | |
(RMB) | (RMB) | (%) | |||
Earnings per share | 2.75 | ||||
- Basic | 1.74 | p | 58.0 | ||
- Diluted | 2.68 | 1.70 | p | 57.6 | |
(HK cents) | (HK cents) | (%) | |||
Interim dividend per share | 118 | 82 | p | 43.9 | |
(%) | (%) | (% point) | |||
Gross profit margin | 64.1 | 63.3 | p | 0.8 | |
ANTA | 56.6 | 55.8 | p | 0.8 | |
FILA | 70.2 | 69.2 | p | 1.0 | |
All other brands | 72.7 | 73.4 | q | 0.7 | |
Operating profit margin | 25.7 | 25.7 | - | ||
ANTA | 21.8 | 21.0 | p | 0.8 | |
FILA | 28.6 | 29.7 | q | 1.1 | |
All other brands | 29.9 | 30.3 | q | 0.4 | |
Net profit margin | 25.0 | 17.9 | p | 7.1 | |
Margin of profit attributable to equity shareholders | |||||
- without the effect of share of profit or loss of an | |||||
associate/a joint venture and gain arising from | 18.3 | 17.8 | 0.5 | ||
equity dilution under the Amer Sports Listing | p | ||||
- with the effect of share of profit or loss of an | |||||
associate/a joint venture and gain arising from | 22.9 | 16.0 | 6.9 | ||
equity dilution under the Amer Sports Listing | p | ||||
Effective tax rate(1) | 26.8 | 27.2 | q | 0.4 | |
Advertising and promotional expenses ratio | 7.5 | 7.1 | 0.4 | ||
(as a percentage of revenue) | p | ||||
Staff costs ratio (as a percentage of revenue) | 15.5 | 15.5 | - | ||
R&D costs ratio (as a percentage of revenue) | 2.7 | 2.3 | p | 0.4 | |
As at 30 June | 2024 | 2023 | Changes | |
(RMB) | (RMB) | (%) | ||
Shareholders' equity per share | 20.23 | 17.19 | p | 17.7 |
(%) | (%) | (% point) | ||
Gearing ratio(2) | 15.9 | 16.5 | q | 0.6 |
Return on average total | ||||
shareholders' equity | 28.6 | 23.0 | 5.6 | |
(annualized)(3) | p | |||
Return on average total assets | 16.4 | 12.5 | 3.9 | |
(annualized)(4) | p | |||
Average total shareholders' equity | 57.4 | 3.0 | ||
to average total assets | 54.4 | p | ||
(in 182 | (in 181 | (days) | ||
days) | days) | |||
Average inventory turnover days(5) | 114 | 124 | q | 10 |
Average trade receivables | ||||
turnover days(6) | 19 | 17 | p | 2 |
Average trade payables | ||||
turnover days(7) | 52 | 42 | p | 10 |
Cautionary Statement Regarding Forward-Looking Statements
This Interim Report 2024 contains certain forward-looking statements with respect to the financial conditions, results of operations and business of the Group.These forward-looking statements represent the Group's expectations or beliefs concerning future events and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Certain statements, that include wordings like"potential","estimated","expects", "anticipates","objective","intends","plans","believes","estimates", and similar expressions or variations on such expressions may be considered as"forward-looking statements".
Forward-looking statements involve inherent risks and uncertainties. Readers should be cautioned that a number of factors could cause actual results to differ in some instances materially, from those anticipated or implied in any forward- looking statements. Forward-looking statements speak only at the date they are made, and it should not be assumed that they have been reviewed or updated in the light of new information or future events. Trends and factors that are expected to affect the Group's results of operations are described in the section "Management Discussion and Analysis".
Notes:
- Effective tax rate does not include the effect of share of profit or loss of an associate/a joint venture and gain arising from equity dilution under the Amer Sports Listing.
- Gearing ratio is equal to the total borrowings divided by the total assets at the end of the relevant period.
- Return on average total shareholders' equity is equal to the profit attributable to equity shareholders divided by the average balance of total shareholders' equity.
- Return on average total assets is equal to the profit attributable to equity shareholders divided by the average balance of total assets.
- Average inventory turnover days is equal to the average balance of inventories divided by the cost of sales and multiplied by the number of days in the relevant period.
- Average trade receivables turnover days is equal to the average balance of trade receivables divided by the revenue and multiplied by the number of days in the relevant period.
- Average trade payables turnover days is equal to the average balance of trade payables divided by the cost of sales and multiplied by the number of days in the relevant period.
- Average balance aforementioned means the average of the balance as at 1 January and the balance as at 30 June of the relevant period.
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OUR BUSINESS MODEL
Strategy
SINGLE-FOCUS
MULTI-BRAND
GLOBALIZATION
GLOBALIZATION
BUSINESS MODEL
Over 30 years, the Group has successfully developed itself from a traditional footwear manufacturer to a widely recognized global sportswear company with strong upstream, midstream and downstream capabilities. With a sophisticated vertically integrated business model, we are able
to rigorously and effectively monitor and control our entire value chain, from design to R&D, manufacturing, marketing and sales of branded sportswear products, and to quickly respond to the differentiated needs of our consumers.
As we expand our businesses, in order to stay agile to the market changes, we adopt a hybrid operation model to fully capitalize on the advantages and positionings of our different brands. On the one hand, under the wholesale model and franchise business of ANTA's DTC model, we leverage our distributors, franchisees and their local knowledge to sell our products to end customers through the authorized retail stores they operate. On the other hand, under self-operated business of ANTA's DTC model as well as direct retail model of FILA and other brands, we directly operate retail stores, allowing us to be more sensitive to the change in demand of our customers.
Interim Report 2024 ANTA Sports Products Limited 5
CHAIRMAN'S STATEMENT
DEAR SHAREHOLDERS,
On behalf of the Board, I am pleased to present our interim results for the six months ended 30 June 2024.
Enhancing Efficiency, Improving Quality, Advancing with Stability
Through determination and patience, even the most daunting challenges can be surmounted. Navigating the challenges and opportunities of 2024, we have remained steadfast in our strategy of "Single-focus,Multi-brand, Globalization". Guided by our principles of "Enhancing Efficiency, Improving Quality, and Advancing with Stability", we have demonstrated agility in the face of change, achieving steady growth and delivering commendable results that showcase our resilience and competitive edge.
Faced with market uncertainties and uncontrollable factors, we have honed our focus on the sportswear industry. Adhering to the principle of "Enhancing Efficiency", we have adopted a flexible"Dynamic Management"strategy to reduce costs and improve efficiencies, thereby enhancing the operational efficiency of our brands. We have also strengthened our organizational resilience to carve out certainty amidst uncertainties.
"Improving Quality"is the core driving force that underpins the long-term development of our business. We are committed to innovation, staying focus on executing our goals and brand positionings, and upholding longtermism as we navigate market cycles. The synergies and complementary advantages of our multiple brands have not only enabled"High-quality Growth" but also elevated our overall competitiveness and risk capacity.
Amidst a volatile external environment, we are more committed to sustainable operations management that emphasizes"Advancing with Stability". While reinforcing internal management and optimizing our business structure, we have also actively seized opportunities. We continued to invest in digitalization and introduced AI to drive business innovation. We nurtured core talent and explored potential regions for global business expansion in order to lay the groundwork for the Group's medium and long-term growth.
Navigating Changing Environments with Confidence Backed by Innovation
During the financial period, the Group's business maintained steady development, achieving faster revenue and profit growth in the industry. The Group's revenue increased by 13.8% to RMB33.74 billion (2023 1H: RMB29.65 billion), further cementing our leading position among Chinese sportswear brands. Our overall gross profit margin rose by 0.8% points to 64.1% (2023 1H: 63.3%). With stringent cost control and enhanced operational efficiency, the overall operating profit margin maintained at 25.7% (2023 1H: 25.7%). On a consolidated basis, without the effect of share of profit or loss of an associate/ a joint venture and gain arising from equity dilution under the Amer Sports Listing, the profit attributable to shareholders increased by 17.0% to RMB6.16 billion (2023 1H: RMB5.26 billion). On a consolidated basis, with the effect of the share of profit or loss of an associate/a joint venture and gain arising from equity dilution under the Amer Sports Listing, the profit attributable to shareholders increased significantly by 62.6% to RMB7.72 billion (2023 1H: RMB4.75 billion). Amidst market complexities, the Group's exceptional results highlighted its formidable operational capabilities.
6 ANTA Sports Products LimitedInterim Report 2024
Our Group is underpinned by a solid financial foundation with strong cash reserves and robust operating cash flow. During the financial period, net operating cash inflow of RMB8.50 billion (2023 1H: RMB10.16 billion) and free cash inflow of RMB7.62 billion (2023 1H: RMB9.52 billion) were recorded. As at 30 June 2024, the Group had an aggregate amount of cash and cash equivalents, fixed deposits held at banks with maturity over three months and pledged deposits of RMB47.83 billion (as at 31 December 2023: RMB48.52 billion).
The Group strived to share the fruits of its success with its Shareholders through sustainable dividend growth. In light of the Group's solid performance, the Board has declared an interim dividend of HK118 cents per ordinary share (2023 1H: HK82 cents) for the six months ended 30 June 2024, increased by 43.9% year on year. Ordinary dividend payout was 50.1% (2023 1H: 45.7%) of the profit attributable to equity shareholders, without the effect of non-cash accounting gain arising from equity dilution under the Amer Sports Listing.
The Group's"Multi-brand"strategy leverages a differentiated approach, fostering balanced development across all our brands. During the financial period, ANTA segment revenue increased by 13.5% to RMB16.08 billion (2023 1H: RMB14.17 billion), while its operating profit margin expanded to 21.8% (2023 1H: 21.0%); FILA segment revenue grew 6.8% to RMB13.06 billion (2023 1H: RMB12.23 billion), with operating profit margin slightly declining to 28.6% (2023 1H: 29.7%); revenue of all other brands surged by 41.8% to RMB4.60 billion (2023 1H: RMB3.25 billion), with operating profit margin of 29.9% (2023 1H: 30.3%), maintained at a stable level.
The successful listing of Amer Sports, Inc. on the New York Stock Exchange on 1 February 2024 stands as an inspiring milestone. As the largest shareholder of Amer Sports, Inc., we believe that Amer Sports, Inc. will make a significant contribution to the Group in the future, and further drive the Group towards achieving its"Globalization" strategy.
Interim Report 2024 ANTA Sports Products Limited 7
CHAIRMAN'S STATEMENT
Tiding over Challenges and Shining a Light on Every Passion
The highly anticipated Paris 2024 Olympic Summer Games came to a perfect close. As the brand having the longest partnership with the COC, ANTA has proudly supported Chinese athletes for 16 years, and our collaboration with the IOC has spanned 5 years. During the financial period, we continued to provide high quality equipment for Chinese athletes and launched the official uniform for victory ceremonies for the Chinese Sports Delegation at the Paris 2024 Olympic Summer Games. Made from recycled fiber, the uniform representing China's first carbon neutral official uniform to receive certification from third party, allowing our athletes to showcase Chinese culture, technology innovation, and sustainability on the global stage. Furthermore, with the ongoing expansion of the Group's multi-brand footprint and the advancement of our"Globalization" strategy, our products have reached more sports enthusiasts around the world, gaining recognition for ANTA among global consumers. We have also made steady progress in developing opportunities for FILA, DESCENTE, and KOLON SPORT across various sectors and markets. The healthy performance of our multiple brands reinforces our confidence in both the industry's outlook and the Group's future growth.
Regardless of the circumstances, we consistently uphold the spirit of "Keep Moving", aiming to become the leading multi-brand sportswear group in the world. Armed with a robust strategic focus and unwavering determination to navigate through the cycles, we remain committed to steering towards our established objectives and generating increased value for our Shareholders. On behalf of the Board, I extend my sincere gratitude to the Shareholders and partners who have accompanied us on our journey. At the same time, I wish to express my heartfelt appreciation to all stakeholders and employees who have joined hands with us on this journey.
Ding Shizhong
Chairman
Hong Kong SAR, 27 August 2024
8 ANTA Sports Products LimitedInterim Report 2024