Anta Has Lost Billions Of Dollars In Its Market Value, And Lining Has Made Profits.

In July 11, 2019, the Muddy Waters issued a report on Anta sports (02020-HK), which was the largest sporting goods seller in China. However, subsequent sniping seemed to be a little bit exhausting. Anta's share price opened early, and then repeated upward.

Muddy water mentioned in the first part of the short selling report that Su Weiqing was an insider of Anta, an important distributor, Beijing Ji Yuan Sheng Bao International Trade Co., Ltd. and two other distributors, while Anta responded that Su Weiqing and other distributors were independent third parties.

Shield with son's Spear

In the third part of the short selling report, muddy water means that the independent third party Mr. Su holds Anta's 46 Fila shop in Beijing, while Anta has always claimed to own all FILA shops. That is to say, if Mr. Su is the agent of Anta, then the representative company has no problem with FILA, but if Mr. Su is an independent third party, that means that Anta does not own all FILA shops.

In view of this, the number of FILA shops is not credible. Anta has been reporting to the auditors and the public about the number of its FILA stores, while claiming that it owns and operates all FILA stores. However, from the evidence shown by the short selling organization, Anta's FILA merger data may be fraudulent.

The final conclusion is that Anta controls the financial department of its first tier distributor. The data of Anta's main brand is unreliable. Anta obviously lies on its ownership of FILA shops, and investors can not believe FILA's financial data. In other words, Anta's financial data are not credible.

Reaction calm

However, the three wave of muddy water is weaker than one wave, and the reaction of the market is very calm. After the morning closing, Anta issued a Clarification Announcement, strongly denied the allegations in the muddy water report, believed that the allegations were not accurate and misleading, and reserved the right to take legal action against muddy water.

From the chart below, we can see that the short selling power of muddy water is not as powerful as the Soren Aandahl of the founder of Blue Orca Capital. When he attended a forum in May 30, 2019, he pointed out that there were corporate governance problems in Fujian listed companies, while the revenue of Anta's FILA was over 40%. The sales efficiency of the branches was much higher than that of the international counterparts, resulting in Anta's share price dropping more than 14% on that day, and the number of short selling stocks reached 12 million 920 thousand shares on two days, and the selling amount amounted to HK $607 million 800 thousand.

Look at the short selling of muddy water. The first part of the report was released in July 8, 2019, when Anta traded at HK $55.30 and its market value was HK $150 billion. By the end of July 11, 2019, Anta's share price was HK $51.30, and its market value was HK $138 billion 600 million (from ten thousand shares), which was 7.6% lower than that of the time when the report was issued.

No fish comes to water.

In the previous article, the financial community had mentioned that Anta had little disclosure on FILA and other outsourced brands, only the total number of shops ending, the number of shops opened in the future, and the total retail sales. However, the sales base of Anta and the non Anta brands were not detailed.

FILA was founded in Italy in 1911 and is one of the ten major sports brands in the world. In 2007, FILA will transfer the trademark right in mainland China, Hongkong and Macao to BELLE international for 48 million US dollars. BELLE International did not open the market for FILA China, and finally had to transfer it to Anta in 2009.

Anta's 2009 annual report shows that net cash or net worth of actual transactions is about 400 million yuan, but the performance of FILA is not ideal. During the period from October 1, 2009 to December 31, 2009, FILA's contribution to China's business was 18 million 417 thousand yuan, with a loss of 13 million 820 thousand yuan. According to the data provided by Anta, the annual profit recorded by FILA in 2009 was 77 million 367 thousand yuan, while the annual loss was 27 million 935 thousand yuan. Anta's turnover in 2009 was 5 billion 875 million yuan, with a net profit of 1 billion 251 million yuan. FILA China's contribution was insignificant at that time and its profitability was much less than that of Anta's original business.

After the acquisition of FILA, Anta continued to purchase other foreign high-end brands in a big way. From the annual report of Anta, in order to enhance the penetration of these brands in the mainland market, it expanded the influence of these brands by opening stores, upgrading stores, promoting marketing activities, collaborating with famous designers in launching new products, optimizing supply chain and improving logistics efficiency.

However, Anta's acquisition of these new brands is rather low-key. Only in addition to the progress that has not been completed by the amamin buyout regularly, the information disclosed in other transactions is very inhibited. Taking the acquisition of SPRANDI as an example, the company did not issue a formal announcement, nor did it disclose any specific transactions in the performance report. Only in the Affiliated Companies list of the 2016 annual report, there were more SPRANDI related subsidiaries.

Since the third quarter of 2016, Anta has also disclosed the sales performance of non Anta brand, but it is only limited to the growth rate. There is no base data and no sales data from the same store. Anta, like other Fujian based footwear brand listed companies, has abolished the previous quarter's announcement of the same store sales growth, replacing it with somewhat vague retail sales growth.

Does Lining benefit from fishing?

On the contrary, Lining, a sports brand listed company founded by former world gymnast champion Lining, has always maintained the practice of disclosing the same store's sales performance, so that Fujian's peers are still able to protect themselves when they are sniping by many short selling agencies. It is worth noting that in 2018 8-12 months in 2018, Lining opened "NING SPACE" interactive experience space in Shenzhen, Beijing and Guangzhou, offering high-end "China Lining" products. At present, this high-end brand is very popular in the first tier cities.

Lining released Ying Xi in June 24, 2019. He expects that the total profits in the first half of 2019 should be increased by no less than 440 million yuan over the same period in 2018. In the first half of 2018, the company's total profit amounted to 268 million 600 thousand yuan, which means that in the first half of 2019, it should account for a total profit or 709 million. The main reason was that revenue grew by more than 30% and the operating profit rate continued to improve. The profit from continuous operations was increased by not less than 240 million yuan (or 90%), and the one-time non recurrent profits of not less than 200 million yuan (mainly from investment income). According to the data of its surplus announcement, the profit of the first half of 2019 is close to the annual level of the company in 2018.

When the short selling agency was playing the Fujian shoe salesman, Lining's share price had more than doubled, from 9.18 Hong Kong dollars at the beginning of GMT sniping in June 14, 2018 to 19.30 Hong Kong dollars in July 11, 2019, up 1.1 times.

Anta's share price rose from HK $45.15 in June 14, 2018 to HK $51.30 in July 11, 2019, rising by only 13.6%.

Anta's latest performance

Anta announced its operating performance in the second quarter of 2019 after today's closing. Anta's main brand's retail sales increased by about 15% over the same period last year, while the retail sales of other brands (excluding amamfin) increased by 55%-60% compared with the previous performance. In the first half of 2019, the retail sales of Anta's main brand had a low growth rate of 10%-20% during the same period, while the increase of other brands was about 60%-65%.

epilogue

Muddy water's short selling report has weakened its influence, and it is estimated that it will eventually be lost in the forgetful capital market. Is Anta really innocent? Not necessarily. The continuous follow-up report of the financial community has thoroughly explored Anta's lack of information disclosure, and muddy water has also provided evidence for its illustrations.

In recent years, Anta has acquired many popular international brands, which should attract many fans. Although the behavior of overseas short selling institutions is of interest motive, investors can not turn a blind eye to the warning of short selling agencies. First, they will cause fluctuations in stock prices. Two, their accusations are not without reason. It is believed that smart investors can learn more about the company from these information and make the right investment choices.