Thematic interviews
Written by: Jiajun Qu
2020-03-15 07:00
Last updated: 2020-03-15 07:00The epidemic affects sports events, the NBA announces an indefinite suspension, the mainstream football leagues such as La Liga and Serie A are suspended, and the Tokyo Olympics is "unclear"; on the other side, the epidemic has also weighed on the consumer market. Adidas recently announced the first quarter of sales in China. Loss of up to 1 billion euros, what is the outlook for sporting goods stocks?
Hong Kong's sporting goods stocks mainly include Anta (2020) and Li Ning (2331). The former announced in mid-February that nearly 40% of its stores have resumed operations and will strengthen electronic channel marketing. It is expected that the epidemic will affect the industry and the group's finances in the first half of the year. The performance has caused some impact, and it is expected to return to normal levels as soon as the second half of the year.
Anta's financial impact or lag
Lu Haojiang, Bank of Communications International Consumer Industry Research Director, said in a telephone interview that the impact of the epidemic on the sporting goods industry is not limited to sales. Due to stagnant sales, fine brands and distributors have tremendous pressure on inventory and cash flow. The same situation has also occurred From 2011 to 2013, at that time, different brands hit prices and cleared inventory, triggering a wave of store closures, and the adjustment period lasted about 2 years. He pointed out that some brands have seen promotions, and the discount rate has increased significantly from February. "Previously it was 20% off, now it is 40% off (new)".
He estimated that nearly 70 to 80% of Anta's stores have resumed business, but opening stores does not mean that sales will be completely restored. Due to the decline in foot traffic and sports goods are non-essential consumption, shopping sentiment will be more affected. "Everyone wants to buy a wave. Shoes, went to buy masks and hand sanitizers. "
Lu Haojiang pointed out that the impact of the epidemic on Anta's performance may not fully surface in the first half of the year, because its Anta brand is a wholesale business and is sold through distributors, and distributors generally place orders before two quarters. If sales stagnate, it will only affect the next year. order amount. However, he estimates that Anta will not affect orders next year, and would rather provide subsidies and repurchase of goods to dealers to help them immediately, but this will hurt the gross profit in the first half of the year. As for the FILA brand, which is a retail business, the sales gap will be affected immediately and will be reflected in the first half of the year.
Domestic brands strengthen e-commerce sales
In addition to Anta's claim that it will strengthen electronic channel marketing and actively encourage consumers to shop through e-commerce platforms, different companies have also tried to compensate for the stagnation of offline sales, but it seems to be unsuccessful for the time being. According to the Bank of Communications International Report, domestic sports brands (Anta, Li Ning, 361, and Xtep) recorded sales declines of 10 to 19% on Tmall and Taobao in February, while Nike and Adidas recorded positive sales of 6% and 75%. Sales growth. Fortunately, Anta ’s FILA brand ’s sales in February continued to grow strongly by 64% year-on-year, but it was down from 100% in January and December last year.
However, the report issued by Bank of Communications on March 11 also pointed out that Anta "as a long-term growth stock, the value has emerged", and the acceleration of industry integration based on the epidemic will enable Anta to gain more market share and describe it as "short pain "Long-term benefits", based on a 23x price-earnings ratio, upgraded its rating from neutral to buy, and raised its target price from 71 yuan to 77 yuan.
The bank predicts that Anta's overall sales will decline 23% year-on-year in the first quarter, remain flat year-on-year in the second quarter, and grow 33% in the third quarter, before returning to 45% in the fourth quarter. Considering that the company repurchases inventory and provides subsidies to distributors, and this problem will be resolved in 2020, Anta will reduce its net profit by 9% in 2020 and maintain its net income forecast for 2021.
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Anta investment strategy
