Orient Securities released a research report stating that it maintains the “buy” rating of Anta Sports (02020) and is optimistic about Amer's positive contribution to Anta Sports after improving profitability. Currently, it maintains earnings of 3.42, 4.13 and 4.77 per share for 2023-2025, with a target price of HK$103.54. In the early days, AmerSports expanded its brand matrix through continuous acquisitions. Currently, it focuses on the three core brands of Archeopteryx, Salomon, and Wilson, accounting for 86.3% of total revenue in 2022.
The main views of Orient Securities are as follows:
Anta joined hands with the consortium to acquire Amer Group in 2019. After Amer's IPO again in 2024, the pressure on interest-bearing debt is expected to be greatly reduced.
The company was initially listed on the NASDAQ Nordic market in 1977; in 2019, Anta Sports formed a consortium with Anamered, Fangyuan Capital and Tencent to successfully acquire AmerSports Group. The group was delisted from the Helsinki Stock Exchange in August 2019 and officially completed; in February 2024, AmerSports successfully registered on the NYSE. Currently, Anta holds 44.74% of Amer's shares. The bank believes that after listing, Amer's interest-bearing debt pressure is expected to be drastically reduced (especially related party loans, which have been generated nearly every year for the past 3 years (US$150 million in interest expenses), helped improve profitability, and is also expected to make a positive contribution to Anta Sports' statements.
AmerSports report split:
Revenue side: After Anta enabled Amer's revenue, DTC channels and Greater China were the main drivers. Since the consortium's acquisition in 2019, AmerSports' revenue CAGR for 20-22 was 20.4% (significantly higher than the CAGR of 5.5% in the 10-18 years before the acquisition); by brand, Archaeopteryx, Salomon, and Wilson contributed the main revenue, with Archaeopteryx and Wilson growing rapidly. By channel, DTC's revenue achieved rapid growth, with a revenue CAGR of 40.5% in 20-22; in the subregion, Greater China accounted for 15% revenue in '22, and the revenue CAGR in 20-22 was 60.9%, leading the growth rate far ahead of other regions.
Profit side: Gross margin continued to rise, financial expenses dragged down overall profitability, and adjusted EbitdaMargin maintained a healthy level. The improvement in overall gross margin is mainly due to an increase in the share of revenue from DTC channels with high gross margins. In terms of profitability, net profit has been negative in recent years, mainly dragged down by financial costs, depreciation and amortization. If one-time expenses such as impairment or restructuring expenses are restored, eBitDamargin has remained around 12.5%-14% after adjustments in recent years.
In the prospectus, AmerSports clarifies its future growth strategy, which mainly includes the following aspects: 1) maintaining R&D and innovation leadership in core categories; 2) improving key market penetration and expanding sales areas; 3) customizing channel strategies to strengthen interaction with consumers; 4) enhancing brand awareness and customer loyalty; 5) using AmerSports' platform-based advantages to promote the rapid growth of various brands.