Anta'S "Money Making Power" Secret Worry: Huge Sponsorship Drag On Performance

Behind the big sports marketing board, the net profit margin declines and the inventory turnover rate drops.

The biggest hidden danger.

The Indonesian Asian Games gradually entered the climax, and the controversy about clothing sponsorship was also at the cusp of the ceremony.

Sun Yang, who won 3 gold medals in the evening of the 19 day of the three day of the Jakarta Asian Games, did not wear the prize.

(02020.HK) sponsored

And plunged into the vortex of public opinion.

to this end

A statement was issued to accuse Sun Yang of not having the spirit of contract.

As Anta, who eventually replaced Adidas 10 years ago, has been confronted with other brands' "cut in" mood.

Behind the big sports marketing board, the decline in net profit margins and the decline in inventory turnover are still the biggest hidden dangers of Anta.

Sponsorship is a drag on performance?

Behind the Sun Yang incident, Anta's development path, which is gradually broken through by sponsorship, has aroused public concern.

This is a major move after the chairman and chief executive of the Anta Sports Products Limited chairman and chief executive, Ding Shizhong young school, to surpass Lining to become the first major sports brand in China, second only to the brand of the sports giants such as aadi and Nike.

On the occasion of the expiration of the Adidas contract in 2009, Anta took the opportunity to become a partner of the Chinese Olympic Committee.

The contract period is four years, and there are many Anta events in the four Asian Games.

Since then, Anta's sponsorship of sports events has been unmanageable, and has taken the resources of weightlifting, judo and other sports resources, and won the Chinese gymnastics team regarded by Li Ning Co as "spiritual pillar", so that its brand awareness is constantly improving.

2017, on the basis of Anta's taste, signed a contract renewal agreement with International Olympic Committee and the Chinese Olympic Committee in 2024.

Besides, in order to get the chance to compete with Nike and Adi, Anta took NBA for two years.

Before that, the sports competition was also a must for Anta.

In 2012, the London Olympic Games and the Rio Olympics in 2016, Chinese athletes came to the stage to receive the awards, which were all designed by Anta.

In 2022, the Beijing Winter Olympic Games and the winter Paralympic Games, Anta also declined, signed this year to become official.

Cooperative partner.

In addition, Anta has sponsored 24 national teams, signed Kong Linghui and star Clay Thompson successively, and made its brand appear on the international stage more and more.

With the continuous expansion of the sponsorship team, Anta is also ushered in.

Counter attack.

Anta's 2009 earnings report showed that its annual revenue was only 5 billion 870 million yuan.

But in the 2012 years, it has become the "big boss" in the domestic sporting goods industry.

The gap between Lining and it was highlighted in 2014.

According to Anta's first half results announcement, as of June 30, 2014, Anta's operating income was 4 billion 120 million yuan, an increase of 22.4% over the same period, with a net profit of 803 million yuan and a profit of 803 million yuan for shareholders, an increase of 28.3% over the same period last year. The profit of Anta was 803 million yuan.

Lining's results for the first half of 2014 were dismal: revenue of 3 billion 137 million yuan, net loss of 586 million yuan.

Not only did the revenue catch up with Lining, but the market value of the two companies also reversed.

As of July 30, 2014, Anta's market value was 32 billion 400 million yuan, and Li Ning Co's market value was 6 billion 400 million yuan.

It means that Anta has surpassed Li Ning Co and become a new king in the sporting goods industry.

In 2015, Anta's revenue exceeded 11 billion 100 million yuan in history, becoming the first local brand to break through 100 billion yuan annual revenue.

However, when Anta wins the brand of local sports brand, its investment is also increasing.

Industry insiders told reporters that a wide range of sports marketing cards, burning huge money to drag on the company's performance can be imagined.

However, for the sponsorship fee, in the process of the interview, Anta did not disclose specifically, but said it was a relatively confidential matter of the company.

But insiders have told reporters that in 2009, Anta won the Chinese Olympic Committee sports clothing sponsor rights and interests price close to 400 million yuan.

In addition, another industry insider told reporters that Anta won the 2013-2016 year Olympic Games sponsors' rights and interests of the Chinese Olympic Committee in 2012 at a price of at least 600 million yuan.

In response, insiders told reporters that although Anta has become the biggest sports brand in China by sponsorship, Anta's soaring sponsorship fees will become a hidden danger of performance.

A few days ago, Lai Shixian, chief financial officer of Anta, revealed that in the first half of 2018, the advertising and publicity expenses of Anta reached 1 billion 235 million yuan, compared with 681 million yuan in the same period last year.

Speaking of reasons in the performance conference, Lai Shixian said: "the main reason for the increase in publicity costs is the renewal of the Chinese Olympic Committee in the fourth quarter of last year."

Hidden dangers of fast running

"With the increasing scope of Anta sponsorship and more and more money, it also brings long-term development drawbacks to Anta, which relies on advertising and marketing, especially the decline in net interest rates and the decline in inventory turnover. This makes Anta's real dilemma in the decline of operating net cash flow."

Insiders told reporters.

In August 14th, Anta sports released its bright mid-term results, with net profit of about 1 billion 945 million yuan, an increase of 34% over the same period last year.

However, what the industry can not ignore is that although Anta's performance has reached a record high, the growth rate is also the highest level since the outbreak of the industry inventory crisis in 2013. However, it is strange that its gross profit margin will increase while the net interest rate will decline.

Anta reported that after 2013, Anta's gross profit margin continued to increase, from 41.11% in 2013 to 54.26% in 2018, and 13 percentage points in 5 years.

However, at the same time the gross profit margin increased, the net interest rate of the company did not increase at an equal rate, maintaining at 19%.

Net interest rate fell to 18.54% in the first half of 2018, even lower than that when the industrial crisis broke out in 2013.

According to the industry analysis, from the financial data, there are two main factors in the decline of Anta's net interest rate. In the first half of 2018, the advertising and publicity expenses accounted for 11.7% of total revenue, representing an increase of 2.4 percentage points over the same period in 2017.

The other is the rise in the actual tax rate.

In the first half of this year, the company's actual tax rate was 27.5%, an increase of 1.2 percentage points over the same period in 2017.

In addition, Anta's operating net cash flow has no ideal in previous years.

Data show that the first half of 2018, the company's operating net cash flow fell 28% to 1 billion 476 million yuan over the same period, has been significantly lower than the same period net profit, the difference between the amount of more than 400 million yuan.

Meanwhile, the inventory turnover rate dropped from 3.16 times in 2015 to 2.18 in 2018.

"If we only sponsor, it will eventually lead to insufficient internal motivation."

Insiders told reporters that from the perspective of net profit margins and many other data, Anta has entered the turning point of its performance, and whether it can yet rely on the rise of sponsorship is unknown.

It is noteworthy that, on the day of performance disclosure, Anta's stock price fell more than 10%, and its market value evaporated more than HK $10 billion.

Although there was a slight correction in the two days thereafter, it still failed to recover the lost territory.

In August 22nd, the "China Times" reporter interviewed Anta sports related leaders in the form of interview outline in terms of sports marketing, inventory turnover and many other problems. But as of press release, Anta sports parties did not have specific responses to the above questions.

With Anta's sponsorship of sports events again, can it fundamentally solve the problem of inventory and cash flow?