Anta Sports (02020):2019 Operation Exceeded Expectations, Acquisition Transaction Costs.

Guosheng securities issued a research report on Anta sports in December 7th.

Anta group manages ultra expected, Amer Group expects to maintain profitability, acquisition transaction costs and amortization. The company announcements Earnings Preview announcement: revenue growth is expected to exceed 35% in 2019, operating performance of more than 5 billion 945 million yuan, the growth rate is more than 45%, net profit is expected to exceed 5 billion 330 million yuan, the growth rate of 30%+. In the process of amerSports integration, JVco of the joint venture company is expected to bring losses to the Anta group report not more than 650 million yuan, of which about 200 million are one-time financial expenses, and less than 500 million are amortized for the acquisition price PPA (PPA). We estimate that the conventional business of AmerSports is profitable, and the amortization expense will be gradually reduced in the next 5 years.

Terminal sales were beautiful and gross margin increased, resulting in business performance exceeding expectations. Revenue side: the steady growth of Anta brand and the rapid growth of other brands such as FILA, Dizon and other brands brought the company's revenue in 2019 to over 35% growth: 1) the double-digit growth of the company's Q1-Q3 Anta brand in 2019, and the growth trend of Q4 continued, Anta children's clothing / Online retailers Rapid growth; 2) FILA brand continued high growth, annual growth rate is expected to exceed 50%, considering that some of the franchised stores are turning direct this year, the growth rate of report end revenue is slightly higher than the growth rate of water consumption. 3) other brands of Desanto show bright eyes and expect to run more than 1 billion this year. Earnings performance: Group gross margin increased over the same period in the proportion of retail business contribution, and the operating cost rate was relatively stable, and the operating profit margin increased.

The company is judged to be sound in operation and healthy in stock. According to multiple terminal tracking, we estimate that in 2019, the Anta brand library sales ratio was 4-5, and the FILA brand was around 5. At the same time, the discount rate of the terminal is basically the same as that of last year (Anta brand 7.2-7.3 discount, FILA consider discount store discount rate of 25% off), so it is judged that the company's operation is healthy and stock condition is healthy.

AmerSports integration promotes core management interest binding. Anta's consortium's acquisition and establishment of the new board will plan the future development of Amer in the next 5 years. We hope that the integrated Amer group will achieve an annual revenue growth of 10%-15%. The early announcement indirectly transferred the Amer group 5% stake at the price of 133 million 300 thousand euros. The buyer was mainly the core executives of Anta group (Ding Shizhong, Lai Shixian, Wu Yonghua, Zheng Jie), which deeply tied the interests of management and introduced useful strategic investment capital.

Earnings forecasts and investment proposals. As the leading body of local sports apparel, the brand matrix is perfect, the main brand is steady, and FILA is growing at a high speed. At the same time, the company bought Amer strategically and opened the door of internationalization. According to the company's terminal revenue and business performance (excluding mergers and acquisitions), we raised the company's 2019/2020/2021 performance forecast to 60.0/69.7/85.0/ billion yuan. Considering the loss of JVCO level and the future amortization expenses, we adjusted the net profit of 2019/2020/2021 to 54.1 /70.2/85.8 billion yuan (formerly 56.3/70.5/86.7 billion), giving the target market value of HK $220 billion, the target price of HK $82, corresponding to 2020 PE28 times, maintaining the "buy" rating.

Risk warning: the development of multi brand and overseas business is not smooth; the fluctuation of RMB exchange rate brings about the fluctuation of business performance. Source: flush Financial Research Centre