Anta Focuses On Developing Its Own Brand

A year after the pformation channel, Anta sports (02020.HK), which listed in Hong Kong last year, announced the sale of 187 million yuan to sell the Shanghai frontline that distributes international brand retail business, giving up its expansion to the channel area, thereby concentrating on the development of Anta's own brand business.

Shanghai frontline loss 5 million 500 thousand "First Financial Daily" yesterday learned from the Hongkong stock exchange, Anta sports wholly-owned subsidiary of Xiamen Anta Cci Capital Ltd has signed an agreement with the third party buyer Jiangsu and Sheng Investment Guarantee Development Co., Ltd., the 187 million 400 thousand yuan total price will Shanghai forward and Affiliated Companies pfer the latter.

According to Anta's listed prospectus, the main purpose of the Shanghai forward in October 2006 was to launch Anta's new retail business.

The company is authorized to sell Adidas and Reebok brand products in China, including footwear, clothing and accessories, as well as the sale of Kappa brand products in Shanghai.

When Anta was listed in 2007, it revealed that the company plans to open a self operated retail Sports City in prime locations, including Anta products, group licensed brand products and products distributed by other retailers.

Up to now, the Shanghai forward has opened 13 Adidas, 15 Reebok and 12 Kappa stores through its 5 wholly owned Affiliated Companies, namely Xiamen forward, Suzhou forward, Beijing forward, Harbin forward and Guangzhou frontline.

According to Anta insiders, the revenue of Anta brand sports products far exceeded that of Shanghai. Last year it generated about 2 billion 988 million yuan and operating profit of about 495 million yuan, while Shanghai's frontline revenue was about 193 million 700 thousand yuan, with a loss of 5 million 500 thousand yuan.

To this end, the company believes that the sale and distribution of international brand sport products retail business is a good move for us.

The group will focus on its own brand management business in the future. In view of the increasingly fierce competition in China's distribution and retail market, the group's own brand will provide higher returns than the retail distribution business.

For Anta to sell retail business, Credit Suisse thinks Anta management focuses on developing brand and strategy.

And then slightly increased its 2008 profit forecast of 1% to HK $0.28 per share, the target price increased from HK $11.5 to HK $11.61, and the rating maintained "big win".

Credit Suisse expects Anta's earnings per share to grow by 38.7% in the next three years, a slight increase of 0.3 percentage points, and a 1 times earnings growth rate.

Financing for the acquisition of a new brand, Anta was disclosed at the beginning of its listing. The total amount of proceeds raised by the global sale of the company is about HK $696 million, which is planned to develop international brand retail business, and to set up a retail sports city and to set up Anta flagship store.

As of April 30, 2008, about HK $81 million 200 thousand in financing income has been put into operation.

But with the Shanghai forward being sold, the remaining HK $615 million will change its use.

According to Anta insiders, the company is currently planning to acquire and operate other domestic or international sports apparel brands.

The sale through the Shanghai frontline is an international brand product retailing business, while the acquisition of international brands is carried out for sportswear brand management and product design business.

It is reported that Anta has identified potential brand acquisition targets, but so far, no legally binding agreement has been established.

Due to the withdrawal from the Shanghai frontline, Anta now has 6 distributors to enhance its brand image and popularity, and the sales channel is mainly based on distributors.

"Anta will be dominated by brand management in the future, and the acquired brand will be differentiated from Anta, but it will also be dominated by management."

Ding Shizhong, chairman of Anta's board of directors, has revealed that the order is now ideal and orders have been arranged to the fourth quarter of this year.

The group plans to add 1000 new sales outlets this year.

For the recent increase in raw material costs, Ding Shizhong thought the gains were acceptable. Anta plans to increase the unit price by no more than 10%.

In addition, the group will spend 700 million yuan to build shoe material city in Fujian, adding 8 production lines, and is expected to be put into operation in 2010.