Anta Sports Layout AMEAS In The Next 5 Years Optimistic About China'S Market Restructuring GTM

Event: Anta sports (02020) held investor reception day on 11, and elaborated on the strategic planning and deployment of AMEAS in the next 5 years.

Under the strategy of big brands, big channels and big markets, footwear, direct business and Chinese business have become the focus of AMEAS in the next 5 years. As a global leader in sports market, AMEAS occupies the first place in the field of cross-country running and equipment (SALOMON), alpine skiing equipment (ATOMIC, SALOMON), tennis (Wilson), diving watch (SUUNTO) and so on. Since 2018, global income has reached 2 billion 800 million euros, and has been operating in over 34 countries. After the privatization of AMEAS by Anta consortium, it established a clear 5 year development strategy, including:

1) restructure GTM globally: from brand combination GTM to focus single brand GTM, and plan to cultivate 3 single brands with 1 billion euro income volume, namely ARC 'TERYX, SALOMON, Wilson;

2) focus on footwear business: Sales of shoes and clothing products increased from 40% in 18 to over 50%.

3) retail Transformation: DTC business revenue increased from 11% in 2018 to 30%, and integrated group resources accelerated the global SAP retail system update, giving consumers a better retail experience.

4) speed up the development of China's market: the Chinese market has increased from 15% in 2018 to 15%, especially in ARC, TERYX, SALOMON and other brands in China, hoping that the number of ARC 'TERYX stores will expand from the existing 100+ to 300-400, and the SALOMON business will also extend to the field of shoes and clothing, and expand in China's direct store.

5) new management incentives and strategic guidelines: AMEAS original CEO and main management continue to lead the company, brand executives and core personnel are also retained after the acquisition. The management incentives will focus on long-term value creation, and the new board will also provide strategic guidance to the management. Overall, the company plans AMEAS CAGR in the next 4-5 years to achieve 10%-15% and profitability.

Anta has high hopes for AMEAS, and management's direct shareholding highlights its confidence. In November, Anta announced that it would sell four Amer (Sports), senior management team members (0.83%), Sequoia Capital (1.13%) and ZWC capital (0.38%) to the economic interests of the 5% Sports (5% non voting B shares, Anta sports voting rights) and sell the Amer Sports 0.25% stake to Fountain Vest (Fang Yuan capital). Among them, Anta Sports Executive Director Ding Shizhong, Lai Shixian, Wu Yonghua and Zheng Jie will use their own funds to invest 71 million 200 thousand euros to buy Amer Sports B shares. The four executive directors are directly involved in the expansion of Amer Sports and the adjustment of the overall business structure. The stake can further bind the interests of the management and the company, and also shows the management's optimistic outlook on the future development of AMEAS.

Earnings forecast and investment rating: Overall, the company has performed pretty well in the past 19 years, and the original main business income / net profit has increased by 35%+/45%+. AMEAS acquisition for 650 million years has brought 650 million expenses for the Anta report (mainly for JVCO level transaction and financial expenses and PPA amortization), but it is expected to bring positive profit contribution in 2020. We expect 19/20/21 net profit to increase from 31.7%/28.3%/22.4% to 54.0/69.3/84.8 billion in 19/20/21, corresponding PE32/25/21X, as the world's third leading sports leaders, keep optimistic growth and maintain "buy" rating.

Risk warning: Retail cooling caused the same store growth less than expected, shop less than expected, AMER SPORTS operation than expected.