Anta Sports (02020. HK) Financial Report Review: 2022 performance aligns with expectations. Amer Sports turns losses into profits.

The company released its 22-year performance, with revenue of 53.65 billion yuan, +8.8% year-on-year; net profit attributable to the parent company of 7.59 billion yuan, -1.7% year-on-year; annual dividend payout ratio of 42.4%.

H22 revenue in line with expectations: In 2H22, the company achieved revenue of 27.69 billion yuan, +4.4% year-on-year, which was in line with expectations overall. Among them, Anta brand revenue was 14.36 billion yuan, +6.9% year-on-year, mainly due to e-commerce +10.8% year-on-year, and DTC business +45.3% year-on-year; Fila revenue was 10.75 billion yuan, -2.3% year-on-year, mainly due to the more significant impact of the epidemic on Fila. The revenue of other brands was 2.58 billion yuan, +23.5% year-on-year, maintaining a rapid growth trend.

Gross profit margin decreased by 1.8 points, and OPM improved by 0.4 points under strict cost control: the company's gross profit margin in 2H22 was 58.5%, -1.8 points year-on-year, mainly due to the decline in the gross profit margin of the Fila brand (-4.7 points), and part of it was replaced by Anta brand DTC Offset by higher gross profit margin under the mode. The operating profit margin improved by 0.4 points to 19.6%, benefiting from strict cost control and dynamic management. The company achieved a net profit of 4.00 billion yuan attributable to the parent company, a year-on-year increase of +3.1%.

AmerSports turned losses into profits, contributing a profit of 28 million yuan: AmerSports has performed brilliantly in 22 years, among which Arc'teryx's turnover exceeded 1 billion euros, Solomon's and Wilson's turnover exceeded 900 million euros, DTC business accounted for 29%, and its turnover exceeded 1 billion euros; China The market turnover was +42% year-on-year, accounting for 15%. Management is confident in the five billion euro plan. The profit contribution of the joint venture company is lower than the previous guidance of 100 million yuan, mainly due to the provision for goodwill impairment and the mid-to-long-term incentive plan for senior executives in 22 years.

Since 2023, all brands have performed well, and the management is more optimistic about 2023: Since 2023, the performance of all brands has been better than management's expectations. Looking forward to 2023, the administration is more favorable. It is expected that the Anta and Fila brands will see double-digit growth in revenue and turnover in 2023; the profit margin will improve year-on-year; 5).

The company has excellent multi-brand operation capabilities.

Its brand matrix is differentiated.

Its development path is clear.

Its growth has long-term sustainability.

It is estimated that the company's net profit attributable to the parent in 23-25 years will be 9.33, 11.69, and 13.91 billion yuan, maintaining the "strongly recommended" rating.

The terminal retail environment is weak.

The Anta brand upgrade is less than expected.

The development of outdoor sports brands is less than expected.