From A Short To Medium Term Perspective, Anta Q2 Pipeline Is Expected To Return To Double-Digit Growth.

Short term: the group is actively addressing the challenges posed by public health events. We track and judge Anta group (02020) to take positive measures to deal with the current retail challenge, while online stores are gradually resuming business while actively promoting online channel sales for drainage.

Offline: as of February 17th, nearly 40% of the company's offline stores resumed business, and the proportion of resumed businesses is expected to continue to increase. Online: according to our tracking, since the outbreak in late January, the company has responded quickly and actively promoted online channels. Under the high executive power of the team, Tmall flagship store, micro mall and community sales have been fully draining and converting sales, and given a certain discount to attract consumers. It is expected that the Q1 business will achieve rapid growth.

Medium term: the speed of industry consolidation is accelerating, and the core competitiveness of Anta group is highlighted. The short-term impact of the market in the medium term is the acceleration of market integration and the enhancement of concentration.

1) product and brand level, perfect product planning, quality products and marketing plan are the foundation of revenue growth. Anta annual R & D input to ensure the professionalism of products (R & D fee rate 2%-3%), and Anta brand products continue to innovate, in 2020 each month has launched the IP cooperation series (currently launched Dragon Ball super serial Series). Under the multi brand structure of the company, FILA brand adult wear /kids/fusion/athlete series has developed rapidly. Dizon's top brands will also usher in a good development outlet with the coming of the 2022 Winter Olympic Games.

2) channel level. On the one hand, small and medium-sized franchisees need to be supported by brands and overcome the difficulties and long-term operation. On the other hand, they will test the early layout of brand online channels, and the advantages of leading enterprises are obvious. Anta brand has a long-term cooperative high quality franchisee system, the company's operating cash flow is steady, can give franchisees the necessary support. In addition, Anta's e-commerce channel has been developing rapidly in the past few years, accounting for nearly 20% of the electricity supplier's channel revenue. The e-commerce team is mature and has high executive power. We expect Anta brand and FILA brand to continue to maintain double-digit /30% growth in 2021.

Long term: the internationalization process is advancing, and the Amer group has long-term development plan. The company proposes the strategy of "big brands, big channels and big countries" in the next 5 years, and will develop the three major brands of Arc 'teryx, Salomon and Wilson into one billion euro brands, and focus on the field of shoes and clothing. It will expand the product from professional outdoor sports to outdoor life sports. In the whole five years, the Amer group plans to achieve CAGR profit by 10%-15% of Amer and efficiency. Rate increase.

Investment advice. Anta group has become a leading sport shoes and clothing company running globally. At present, multi brand strategy is developing rapidly. The short-term impact of public health events, considering the relatively small proportion of income in 2-3 months, and stable growth in January, we expect the group Q1 to decline by about 20% in 2020. If the epidemic is controlled in 3-4 months, Q2 will begin to recover to double digit growth and estimate the normal annual Q1/Q2 flow rate of 25%/20%. Forecast to 380.6/472.8 billion yuan (original forecast of 410.8/496.9 billion yuan), net profit to the parent is 63.1/81.6 billion yuan (original prediction is 70.2/85.8 billion yuan). The current stock price is HK $62.65, corresponding to PE24 times 2020, maintaining the "buy" rating.

Risk warning: the duration and duration of the epidemic outweigh expectations; terminal demand is declining; multi brand and overseas business development is not smooth; fluctuations in the RMB exchange rate bring about fluctuations in performance.