On April 21, Hong Kong stock Anta Sports opened sharply lower, falling by more than 7% during the session.
Affected by this, Hong Kong sportswear concept stocks opened lower one after another. Xtep International fell by more than 6%, Li Ning fell by more than 5%, and 361 Degree fell by nearly 2%.
On the morning of April 21, Anta Sports announced that the controlling shareholder Anta International and Merrill Lynch (Asia Pacific) Limited, J.P. Morgan Securities (Asia Pacific) Limited and MorganStanley & Co. International plc entered into an agreement to place 88 million ordinary shares with a par value of HK$0.10 each, accounting for approximately 3.26% of the company’s total issued shares. The price per share was HK$131.48, a discount to the closing price of HK$142.2 on the 20th. About 7.54%. Based on this calculation, Anta International will cash out 11.57 billion Hong Kong dollars (approximately RMB 9.679 billion). This is also the first time that a major shareholder has reduced its holdings since October 2014.
The announcement shows that Anta International is jointly owned by Ding Shizhong, Ding Shijia, Wu Yonghua, Wang Wenmo, Ding Yali and other shareholders. The company directly holds approximately 50.81% of the issued shares of Anta Sports and passed the Its wholly-owned subsidiary (namely Anda Holdings and Anda Investment) indirectly holds 10.23% of the issued shares. After this reduction, Anta International’s shareholding in Anta Sports will drop to 47.56%.
Affected by this news, Anta Sports’ stock price opened more than 7% lower on April 21, opening at HK$132.2.
Affected by this, Hong Kong sportswear concept stocks opened lower one after another. Xtep International fell more than 6%, Li Ning fell more than 5%, and 361 Degree fell nearly 2%. However, 361 Du, Li Ning, and Xtep International have stopped falling and rebounded, but Anta Sports is still unable to rebound. As of closing, Anta Sports’ share price was HK$131.3, and the company’s total market value was HK$354.947 billion.
On March 25, major international brands such as H&M were exposed as “boycotting Xinjiang cotton” and sparked public outrage. The stock prices of domestic brands such as Li Ning and Anta soared. Industry insiders analyzed that Anta Sports’ stock price is currently at a historical high. Since the beginning of 2020, the company’s stock price has risen by more than 90%. This may be one of the reasons why major shareholders choose to cash out.
It is worth mentioning that on April 14, ANTA Sports announced its latest operating performance in the first quarter of 2021. All brands recorded significant growth, including the retail sales of ANTA brand products. (Calculated in terms of retail value, the same below) compared with the same period in 2020, it recorded a positive growth of 40%-45%, FILA recorded a positive growth of 75%-80%, and other brand products (including DESCENTE, KOLON SPORT, SPRANDI and KINGKOW ) recorded positive growth of 115%-120%.
On April 15, Goldman Sachs issued a research report, raising the target price of Anta Sports by 9% from HK$145/share to HK$158/share, maintaining a “buy” rating. Goldman Sachs said in a report that Anta Sports’ strong first-quarter performance was mainly due to better-than-expected retail sales growth of Fila and Descente, and the performance of Anta’s core brands was in line with expectations.
The company maintains its full-year guidance. Since late March, it has seen that online and store sales have been better than expected. In addition, the inventory and retail discounts of Anta and Fila brands have returned to normal. It raised its net profit forecast for 2021-25 by 2% to 5% to reflect better trends in Fila, Descente and Kolon.
On the morning of April 21, Goldman Sachs reiterated that it still maintains a buy rating on Anta Sports and a target price of HK$158 for the next 12 months. This is equivalent to a forecast price-to-earnings ratio of 26 times in 2025. I believe ANTA Sports has long-term prospects for growth in the mainland sporting goods industry. </p
