Muddy Water Short For Anta To Quietly Complete The "Surgical" Framework Adjustment

In muddy water in July 8th, the first short report led to a 7.32% drop in Anta's stock price. After adjusting for 7 trading days, Anta's stock price returned to 53.65 Hong Kong dollars on the 17 day, which is only 1.65 Hong Kong dollars from 55.30.

Where is Anta's real crisis? Obviously, muddy water short report did not give the answer.

In these four short reports, muddy water raised the issue of dealer independence and deceptively raised profit margins, the issue of FILA brand direct mode, and the issue of self financing at the expense of investors in the process of selling subsidiaries. In addition, muddy water also revealed 14 previous achievements in the air stock market - 6 delisting, 1 suspension for nearly 5 years, 2 acquisition by management premium, 2 companies' share price plummeting over 90%, 2 company's share price fell significantly, and only 1 companies' share price rose.

The four reports came one after another, and the preparation of muddy water was not enough. It seemed that there was a tendency to put Anta on the ground. However, from the reaction of the capital market, investors have not lost confidence in Anta after having experienced a brief panic on the first day. In fact, on the day of the fourth part of the short report, Anta's stock price did not drop, but also increased by 2.92%.

As a fast rising company, Anta is obviously not unassailable. However, whether from the business operation or from the reaction of the investment market, the problems listed in muddy water will not affect the real crux of Anta's future development.

From the first time in 2015, the revenue of the whole year broke through 10 billion RMB. In the first half of this year, it successfully completed the acquisition of Amer Sports (amamin sports). It directly or indirectly managed more than 20 brands, and its market value was more than 150 billion Hong Kong dollars. Anta spent less than 5 years in total.

Over the past 4 years, Anta has rapidly expanded into a multi brand management group facing the global market from a Chinese sports shoes and apparel company, which is mainly owned by its own brand. Its biggest challenge is strategic issues such as company structure, personnel training and globalization.

In fact, for this reason, Anta itself had a clear understanding and began adjusting and coping in a low profile a year ago.

At the end of April 2019, Anta quietly launched the "Anta micro Recruitment" WeChat public number. In the social recruitment survey, it shows the current division of Anta: professional sports, fashion sports and outdoor sports three brand business groups, plus group retail, procurement, production, functions, electricity suppliers five parts -- this is a new organizational structure.

It is understood that Anta has taken the initiative in drastic adjustment of the internal structure, and changed the past single brand management mode to the classified business group management mode. Each business group has a CEO responsibility. For example, Yao Weixiong, who was previously the president of FILA Greater China, changed her title to "vice president of Anta group and CEO of fashion sports brand".

In the latest structure, professional sports brands include Anta main brand, Anta children, AntapluS and Spandi, and are responsible for Anta's executive director and sales manager, Wu Yonghua. Basketball, comprehensive training, running and sports life are all set up separately.

The fashion sports brand group includes FILA and FILA children, which are also divided into FILA fashion movement (FILA), Trend Sports (FILA FUSION) and professional sports (FILA ATHLETICS), thus leading the former FILA Greater China President Yao Weixiong.

Outdoor sports brands include the Kolon Sport Strategy Department and Amer Sports, Anta executive director and Anta group president Zheng Jie as outdoor sports brand group CEO, and responsible for group strategy and assist Group CEO in handling related international affairs. Desanto and the chief executive of the strategy department, Liang Xia, the former president of Desanto. Unlike professional sports and fashion sports, mainly in Xiamen office, outdoor sports business group will set up a base camp in Shanghai.

The three business groups have related functions such as design, brand and marketing, and sales, purchasing, production, and electricity providers are all co organized by the group's specialized independent departments. Production procurement is headed by Anta executive director and Ding Shizhong's brother Ding Shijia. All departments are still reporting to Ding Shizhong, chairman of Anta sports board and group CEO.

The brand of Amer Sports (Salomon, etc.) currently adopts two financial systems with Anta, and does not carry out consolidated statements, maintaining independence with each other. However, former Anta basketball general manager Xu Yang has been transferred to the general manager of Amer Sports, one of the most concerned brands.

For Anta, the restructuring is a big operation and has brought about many changes.

First of all, even the main brand of Anta is not alone, but has become part of the professional sports brand. FILA has supported the fashion sports brand group. An objective factor is that the group does not have the same items of other fashion movements to merge. At the same time, this is also the proof that FILA volume reaches enough.

The biggest change may be many brands besides Anta and FILA.

Spandi, who has joined the professional sports department, is known for his strong foot shoes. It may change some of its positioning. Recently, a salesperson in a Spandi store got a new introduction of salesmen like "we used to make walking shoes, now we do casual shoes and sports shoes".

For many brands including Desanto, Kron and Spandi, it is undoubtedly the upgrading of strategic positioning. They will get more resources to increase their actions in the market. The importance of multi brands in Anta group is further improved.

The best result of multi brand strategy is that 1+1 is more than 2. Prior to this, Anta's multi brands were all battalions, each owned a team. The main synergy effects were in procurement, production and channel. This FILA, Desanto, Spandi and other multi brand positioning and arrangement will further cooperate in management, manpower and marketing, and further strengthen in procurement, production and channel. Once run properly, it will highlight the synergistic effect of many brands.

After the success of FILA, Anta has not released its specific performance. Only in the press conference, there are some vague statements about the growth rate for media questions.

The three time in 13 months was short. In addition to this muddy water short, the end of May Blue Orca Capital founder Soren Aandahl questioned Anta's corporate governance and FILA's income opaque, that Anta shares have a drop of up to 34%. Blue Orca thinks FILA's income is exaggerated by 40% by Anta, which is worth 43800 yuan in 2018. This led to a sharp drop in share prices on Anta. However, after the muddy water shorting, Anta shares returned to a relatively stable position. Their share price rose nearly 12% in June, and the total stock price rose by more than 43% this year as of July 17th.

2019 is the tenth year that Anta has taken the FILA interest. When the volume has reached a certain level, it is bound to accept the more rigorous examination and test of the capital market. Anta must solve the problem of being insufficiently transparent about the financial data being criticized. This is one of the bases and ways to reduce the external daydream and doubt. It is also a step that must be taken for an enterprise to modernize its governance.

In August 26th, Anta will release the first half of the 2019 earnings report, after being repeatedly empty, Anta will announce the specific business data of FILA, will become the focus of attention.

In addition to FILA, Anta has yet to prove its effectiveness in many other brands.

It is understood that in 2018, the average annual store efficiency of Dizon Gate store was about about 6000000 yuan, with a total revenue of 800 million yuan, accounting for 3.3% of the total revenue of 24 billion 100 million of the year.

Zheng Jie, President of Anta, said Desanto should be profitable in 2019. Desanto, who is profitable, and the growth and share that he can still make at the stage of cultivation, can further test Anta's multi brand operation capability. It is also a demonstration and reassurance that they need to hand it to the capital market. After all, when Anta's main brand and FILA reach the volume of billions of dollars, it is unrealistic to expect them to maintain their high speed growth in the long run.

This restructuring is more likely for Anta to prepare for "meet" the overall operation of Amer Sports in the future.

After the acquisition of Amer Sports, Anta will have more than 15 brands. It needs a lot of resources and time to nurture. They need more efficient operation of many brands, so that the Amer Sports brand will be formally incorporated into the future in order to have more benefits to the industry. More importantly, a large number of brands need to be managed, and a scientific mechanism is the foundation. Only when the upper level mechanism is properly designed can the brands run efficiently.

From the independence of the original brands, to the confusion of the brands and functions, Anta is preparing for the future to become a global multi brand management company, preparing for the most top-level architecture, and moving towards a more efficient and multi brand shoes and clothing retail management company.

Vans and TNF's parent group VF clearly stated in their earnings reports that VF is organized as the "Commonwealth" (coalitions) for the purpose of management and internal financial reporting, namely, outdoor sports, denim clothing and Imagewear three departments. "The management of all consortium is responsible for running its brand and providing some financial, administrative and system support and discipline control by the VF central functional department."

Of course, structural adjustment is also a great challenge for Anta.

First of all, it means the change and mobility of personnel positions, and the time needed for adaptation. Secondly, there are more gaps in human resources.

From the "Anta group micro Recruitment" WeChat public number this channel can be seen, Anta opened a large area of talent solicitation in May, involving about 220 jobs. Among them, group function recruitment needs the largest, there are 44 posts, mainly financial, human resources, professional sports business group has 32 gaps, fashion sports business group of 29 recruitment related design related, outdoor sports business group 11 positions are sales related posts.

And Amer Sports China has also opened a larger wave of recruitment, involving many brands such as ancestors, Salomon, song Tuo, Precor and so on. It is understood that after the completion of Anta's acquisition, Amer Sports China has larger personnel changes.

While completing the restructuring, it will also be a difficult problem for Anta to recruit talents and match suitable posts in the whole group of brands, while ensuring the efficient operation of new businesses after the arrival of newcomers.

After being repeatedly sold out, the main reason for Anta's current stabilization is the current business foundation. In the current environment of the shoe and clothing market, Anta has taken the initiative to make a big structural adjustment, which in itself is a sense of crisis and courage.

Facing the goal of global multi brand management companies, structural adjustment is a necessary step forward. It once again shows the ambition of Anta and the initiative to deal with the market. With the completion of the acquisition and the three short sale in 13 months, they are bound to withstand the more severe test of the capital market.

The real test of Anta is in the future.