Anta: The industry is still not improving and expects a turnaround in 2014

Anta announced its 2012 results. Sales decreased by 14.4% year-on-year to RMB 7.62 billion (***, same below). The gross profit margin decreased by 4.3 percentage points year-on-year to 38.0%. Except for the year-on-year decline in product prices, the company’s stock repurchased in the second half of the year indirectly increased the cost of sales and lowered the overall gross profit level. The size of repurchased inventory is approximately 2-3 billion yuan at wholesale prices. Basic earnings per share decreased by 21.5% year-on-year to 0.54 yuan. In addition to distributing a final dividend of HK$0.17 per share, the company also added a special dividend of HK$0.08 per share with a dividend payout ratio of 71.7%. Net cash increased by 14% year-on-year to RMB5 billion, of which free cash flow increased by 32.0% from the same period last year. 16.1 billion yuan, showing the company's good operational management. Based on the current adequate cash level, it is expected that the company will continue to maintain a high dividend payout rate in the absence of other uses of funds in the future. According to 12X2013P/E, a one-year target price of HK$6.5 was drawn.

Financial status did not improve significantly 1) According to product category, footwear and apparel business accounted for 48.7% and 48.2% of sales, respectively, a year-on-year decrease of 14.5% and 14.3%; gross profit margin was affected by the decrease in average selling price, which decreased 3.6 and 4.8 percentage points to 39.0% and 37.2%. We do not see any sign of significant improvement in the industry in 2013 and we expect the gross margin to continue to be under pressure. 2) In terms of expenses, due to the lack of CBA sponsorship and a series of related expenses, the proportion of sales of advertising and promotional expenses decreased by 3.2 percentage points from the same period of last year to 10.5%. In the future, the company still hopes to maintain advertising and promotion costs at a level of 11-13%. . Staff and R&D expenses have remained stable, and it is expected that this situation will continue to be maintained. 3) The inventory turnover days and accounts receivable turnover days increased from 13 to 51 and 8 respectively to 34 days, showing continuous upward pressure on inventory, and no significant improvement is expected in the short term. During the period, the company had made an inventory of 90.5 million yuan for the inventory held at the end of 2012 and a provision for bad debts of 44.34 million yuan. There was no such charge in comparison with the same period of 2011.

It is expected that the retail market will not be able to improve until 2014. As of December 31, 2012, Anta Store and Sports Lifestyle Stores have reduced a total of 590 to 8075, children's sporting goods stores have increased 201 to 833, and FILA stores have exceeded 300. . In 2013, the number of Anta stores and sports lifestyle stores will continue to decrease, while the scale of children's sporting goods and FILA businesses will continue to expand. In the fourth quarter of 2012, same-store sales increased by negative median units. Driven by promotions during the Spring Festival, the same-store sales growth in January-February was better than 2012 but still recorded positive growth. In the third quarter of 2013, the company’s order booked orders continued to decline year-on-year, but the margin has narrowed. It is expected that the situation will further improve in the fourth quarter.