Anta's Acquisition Of Amer Sports Is About To Finish, Making Short Contribution To Profits In The Near Future.

In February 26th, Anta sports (02020.HK) announced its annual performance in 2018. During the period, Anta's sports earnings and profits were all high.

The annual revenue was 24 billion 100 million yuan, an increase of 44.4% over the same period, and the gross profit was 12 billion 687 million yuan, up 54% from the same period last year.

"Revenue growth is mainly driven by strong growth in clothing sales."

Zheng Jie, President of Anta group, said at the performance meeting that the overall growth of the group in 2019 was expected to be between 20%-25%, of which the main brand Anta growth was maintained in double digits, and the FILA growth rate would exceed 30%.

Ding Shizhong, chairman and chief executive officer of Anta's board of directors of Finland sporting goods group, said that the acquisition of Anta AMER is relatively smooth. It is expected that there will be an external announcement in March 7th for the recently focused consortium of Anta.

"Takeover is a very complicated process. First, it needs to be examined and approved by many countries' anti-monopoly agreements. At present, all countries' antitrust approvals have been completed, and the next step will be the approval of shareholders of Amer Sports 90%."

Ding Shizhong said.

FILA growth exceeds 80%

Anta annual report shows that Anta's earnings and profits have maintained double-digit growth for five consecutive years.

Among them, the operating profit in 2018 was 5 billion 700 million yuan, an increase of 42.9% over the same period last year, and the profit attributable to shareholders was 4 billion 100 million yuan, an increase of 32.9% over the same period last year.

It is noteworthy that its operating interest rate and shareholders' interest rate have declined, compared with the same period last year, 23.7% and 17% respectively, down 0.2% and 1.5% respectively.

"The decline in operating interest rate is mainly due to the loss of some new brands. The decline in interest rate attributable to shareholders is due to the net exchange loss and the expansion of the proportion."

Anta sports CFO Lai Shixian said.

"The new brand Anta group began to operate for a relatively short time. In 2018, it was mainly to make some optimization and amendment to these brands, so it has not yet achieved profits, but by 2019, these brands will have a good development."

Zheng Jie said in an interview, "these new brands are small in size and occupy a relatively low proportion in the whole group business, and their impact on the whole group is relatively small."

It is understood that Anta group in recent years, the main brand strategy, its sports brands include Anta, FILA, DESCENTE, SPRANDI, KINGKOW, KOLON SPORT and so on.

According to the annual report data, Anta's parent brand is still the main source of revenue for the group. In 2018, Anta's mother brand reached 10057 stores in China.

And Anta's second main brand FILA, has opened a total number of stores 1652.

Zheng Jie said that the FILA growth rate was very fast in 2018, and the proportion of group revenue has also increased considerably.

"In 2018, the growth rate of Anta's parent brand was double digits (15-20%), while the growth rate of FILA brand was more than 80%. But in the whole group dimension, the biggest contribution of Anta brand is Anta brand."

Zheng Jieru said.

Ding Shizhong said, "at present, Anta group has opened more than 12000 stores. In the future, Anta will be more cautious in opening up a mature brand, and keep the quality of the shop open."

Amer Sports has limited contribution in the short term.

In December 7, 2018, Anta announced that it would make a publicly available cash offer for all the issued and issued shares of Amer Sports jointly owned by Fang Yuan capital, Anamered Investments and Tencent. The price per share of Amer Sports shares was 40 euros.

Among them, Anta will invest 1 billion 543 million euros (about 12 billion 421 million yuan), accounting for 57.95% of the shares.

At this meeting, Ding Shizhong said that Anta originally planned to announce the progress of the acquisition on the 28 day of this month. However, due to the relatively late approval of Mexico in the approval of antitrust, it is expected that the acquisition progress will be announced until March 7th.

"We are not a rash company. The acquisition of Anta is still conservative. Therefore, looking for the entire consortium to cooperate in mergers and acquisitions is to take into account the debt ratio.

From the current point of view, Anta's cash flow remains good during the acquisition process.

Ding Shizhong said.

The annual report shows that by the end of 2018, the cash and cash equivalents of Anta group were RMB 9 billion 284 million yuan.

According to the announcement of the takeover, Anta Group invested 700 million -8 billion euros in its own purchase, undertaking about 800 million euros (5 years), interest rate of about 2%, and providing a 1 billion 300 million euro debt guarantee for the consortium.

"In the short term, Amer Sports will not make big profits to Anta, but it should bring about the increase of revenue."

Ding Shizhong said at the performance meeting.

He further said that the value of Amer Sports is difficult to measure. The core strategy of buying this company is to see the space in the Chinese market, and many brands of the company have enough influence in the world.

"Once Amer Sports is successfully acquired, the biggest synergy will be in China, because many of its brands are very small in China, but the brand genes are very strong, but also have unique technology and product strength."

Zheng Jie said.

The acquisition affected Anta's dividend payment.

The annual report shows that in the end of 2018, the final dividend of Anta was HK $28 per share, and the dividend payout was 44.9% of the profit attributable to shareholders this year, down from previous years.

The dividend payout ratio has been reduced because the company needs some cash to prepare for the acquisition.

But with the improvement of Anta's entire business in the future, the dividend payout ratio will exceed 30% in the future. With the improvement of cash flow, dividend payouts will also get higher and higher.

Ding Shizhong said.

For future acquisitions, Ding Shizhong said Anta will focus on existing businesses in the short term.