Financial News
Written by: Ou Jiajun
2020-07-21 13:05
Last update date: 2020-07-21 13:05The epidemic has affected the sales of sports goods in the Mainland, and continued promotion has also negatively affected gross profit. After leading companies Anta (2020) and Li Ning (2331) rushed to near historical highs, their share prices have recently lost momentum. In an interview, an analyst at Bank of Communications International said that the market has doubts about the continuity of retaliatory consumption, which has caused the stock prices of the two leading companies to pull back and recommend another backward sportswear distributor in the Mainland.
Anta Sports (2020) issued a profit warning on July 15. It is expected that the profit attributable to shareholders will not fall by more than 35%. If the losses of the joint venture are not taken into account, the net profit is expected to fall by not more than 25%. This is mainly due to four major reasons. The epidemic affected revenues in the first half of the year that remained flat or fell by no more than 5%; second, returns, inventory repurchases, and retail discounts had a negative impact on the gross margins of Anta and Fila; third, the decline in accounts receivable caused by proactively granting distributors credit flexibility Provisions increased; fourth is the increase in staff costs caused by the amortization of new hires’ salaries and equity incentive expenses.
The continuous discount promotion activities of sporting goods companies have a negative impact on gross profit. Just look at online channels and check the official flagship stores of various brands on Tmall. The latest Anta brand is launching a "RMB 398 minus 110 yuan" promotion from July 19 to 21 During the same period, the Fila brand offered "over 699 minus 80 yuan", and the Li Ning (2331) brand offered "over 339 minus 70 yuan". Other shopping coupons and store coupon discounts were also included.
Bank of Communications Lu Haojiang: The market questioned the continuity of the V-shaped rebound and the stock price callback
In a telephone interview, Lv Haojiang, Head of Consumer Industry Research at Bank of Communications International, said that Anta’s net profit fell more than expected in the first half of the year. According to management’s guidance for the second half of the year, Anta’s brand retail sales increased by 10% from the original increase to 5 To 10%; Fila brand sales increased from more than 30%, down to an increase of 20 to 30%, but based on the high brand discount rate, continued discounts, and inventory levels higher than normal, he believes that the company has given a higher level of guidance.
However, Anta announced that the revenue of other brands in the second quarter recorded a positive growth of 25 to 30% year-on-year, which was one of the highlights of the operating performance in the first half of the year. Lu Haojiang said that he noted that Anta’s DESCENTE brand is growing rapidly. "Brand positioning and Klook", but since the brand focuses on the ski market, from a volume perspective, sales contribution is expected to be low.
Lu Haojiang pointed out that Li-Ning brand sales resumed growth in May. (Profile picture)
As for Li Ning’s failure to announce its operating performance for the second quarter, according to his understanding, the Li-Ning brand resumed its sales growth in May, but the recovery momentum was more volatile. Like Anta’s reliance on its sub-brand Fila, China’s Li-Ning performed better than the main brand, and the discount rate Maintain 10% off.
Pou Sheng International benefits from Nike and Adidas recovery momentum
The stock prices of Anta and Li Ning had risen to near historical highs in early July. Lu Haojiang believes that the market expects retaliatory consumption after the epidemic, and brand sales will rebound in a V-shaped manner. However, due to concerns about the continuity of the V-shaped rebound, the share price has appeared. Callback. He said that the bank maintains a "buy" rating on the two stocks, and the target prices for Anta and Li Ning are 77 yuan and 27 yuan, respectively, leaving only about 10% upside space from the current price.
He pointed out that the bank prefers Baosheng International (3813), which has a lagging share price this year. Based on the fact that Nike and Adidas brands are also heavily discounted this year, they may attract consumers from Anta and Li Ning to upgrade to the two brands. The growth momentum of these two international brands in the first half of the year It is also better than Anta and Li Ning.
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