Stock Analysis & Valuation ANTA Sports Products Limited (2020.HK)

• Previous Close: HK$78.25
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, HK$	Upside, %
Artificial intelligence (AI)	109.00	39
Intrinsic value (DCF)	129.59	66
Graham-Dodd Method	18.30	-77
Graham Formula	124.90	60

Strategic Investment Analysis

Company Overview

ANTA Sports Products Limited is a leading Chinese sportswear manufacturer and retailer that designs, develops, manufactures, and markets athletic footwear, apparel, and accessories globally. Operating a powerful multi-brand portfolio strategy, ANTA owns and manages several prominent brands including its flagship ANTA brand, premium Italian sportswear label FILA, high-performance winter sports specialist DESCENTE, outdoor lifestyle brand KOLON SPORT, and children's sportswear lines. With over 11,791 stores across China and international markets as of December 2021, the company has established one of the most extensive retail networks in the sportswear industry. ANTA strategically caters to diverse consumer segments from mass-market to premium athletic wear, positioning itself as a comprehensive sports lifestyle solutions provider. The company's vertical integration from manufacturing to retail, combined with strong brand management capabilities, has made it a dominant force in the Asian sportswear market and a growing global competitor.

Investment Summary

ANTA Sports presents an attractive investment opportunity as China's largest sportswear company by market capitalization, demonstrating strong financial performance with HKD 70.8 billion in revenue and HKD 15.6 billion net income. The company's multi-brand strategy provides diversified revenue streams and reduces dependency on any single brand, while its extensive retail network of nearly 12,000 stores offers significant market penetration. Strong operating cash flow of HKD 16.7 billion supports continued expansion and brand development. However, investors should monitor China's consumer spending patterns given the company's cyclical nature, increasing competition in the Chinese sportswear market, and potential supply chain disruptions. The company's debt level of HKD 28.1 billion against HKD 11.4 billion in cash requires careful monitoring, though its dominant market position and brand portfolio provide competitive advantages.

Competitive Analysis

ANTA Sports has established a strong competitive position through its multi-brand strategy that spans different price points and consumer segments. The company's ownership of the FILA brand has been particularly strategic, allowing it to capture premium market segments that complement its mass-market ANTA brand. This diversification provides resilience against market fluctuations and competitive pressures. ANTA's vertical integration, from manufacturing to retail, creates cost advantages and supply chain control that many competitors lack. The company's extensive retail network of nearly 12,000 stores across China represents a significant barrier to entry for new competitors and provides unparalleled market access. ANTA's focus on sports-specific innovation, particularly in basketball and running categories, has helped it build technical credibility. However, the company faces intensifying competition from both global giants expanding in China and domestic competitors improving their product quality and brand appeal. ANTA's success with international brand acquisitions demonstrates sophisticated brand management capabilities, but integrating multiple brands while maintaining distinct identities presents ongoing challenges. The company's deep understanding of Chinese consumer preferences and distribution channels provides a home-market advantage against international competitors.

Major Competitors

• Nike, Inc. (NKE): Nike is the global sportswear leader with superior brand recognition, innovation capabilities, and marketing resources. Its strengths include dominant market share in basketball footwear, strong direct-to-consumer channels, and premium pricing power. However, Nike faces challenges in adapting to local Chinese preferences where ANTA has deeper market understanding. Nike's higher price points also make it vulnerable to trade-down during economic downturns, potentially benefiting ANTA's more affordable offerings.
• adidas AG (ADS.DE): adidas is a global sportswear powerhouse with strong heritage in football/soccer and running categories. The company excels in innovation, particularly in sustainability and performance materials. However, adidas has faced challenges in the Chinese market recently, losing share to local competitors like ANTA. Its global distribution is a strength but also makes it more vulnerable to macroeconomic fluctuations compared to ANTA's China-focused operations.
• Li Ning Company Limited (2331.HK): Li Ning is ANTA's primary domestic competitor and a well-established Chinese sportswear brand with strong nationalistic appeal. The company has successfully repositioned itself as a premium domestic brand and has strong design capabilities. However, Li Ning's single-brand strategy lacks the diversification of ANTA's multi-brand portfolio, making it more vulnerable to brand-specific issues. Its retail network is also smaller than ANTA's, limiting market reach.
• China Dongxiang (Group) Co., Ltd. (3818.HK): China Dongxiang operates the Kappa brand in China and has strength in sport-fashion crossover products. The company has particular appeal among younger, fashion-conscious consumers. However, Dongxiang has significantly smaller scale than ANTA and has struggled with consistent growth. Its narrower product focus and smaller retail presence limit its competitive threat compared to ANTA's comprehensive sportswear offering.
• Skechers U.S.A., Inc. (SKX): Skechers has strong positioning in comfortable, lifestyle-oriented footwear with particular success in walking and casual categories. The company has been expanding aggressively in China and other international markets. However, Skechers has weaker credentials in performance sports compared to ANTA's sport-specific offerings. Its brand perception is more casual than athletic, limiting direct competition in technical sportswear segments where ANTA focuses.
• Puma SE (PUM.DE): Puma has strong brand heritage in football/soccer and motorsports, with successful collaborations in fashion and lifestyle segments. The company has been growing rapidly in China and other Asian markets. However, Puma's smaller scale compared to Nike and adidas limits its marketing and R&D resources. Its China presence, while growing, remains significantly smaller than ANTA's extensive distribution network and local market knowledge.