EUR 850.00 For Business Accounts Only

Morningstar | Anta's multibrand strategy positions it to benefit from China's fast-growing sportswear industry.

Anta is China’s largest homegrown sportswear brand with a reputation for value-for-money products targeted at the midmarket. The group’s core brand, making up approximately 70% of total revenue, will continue to expand its presence in second- and third-tier cities as a reasonable alternative to expensive international brands such as Nike and Adidas. While a portion of its customers will eventually trade up to these costlier brands, economic growth and improving affordability in China will also allow Anta to benefit as others trade up to its products from low-end domestic alternatives.Acquired in 2009 as part of Anta’s burgeoning multibrand strategy, Fila China has found success, giving the company access to the premium market. From 2014 to 2017, Fila enjoyed an estimated revenue CAGR of 50% and currently contributes 30% of the group’s top line. Given its relatively faster growth from a small base and higher gross margins, we see Fila contributing to around 40% of Anta’s operating profit in the next five years, barring future brand acquisitions. Unlike its core brand, which is primarily wholesaled outside of some online sales, more than 80% of Fila’s products are sold directly to consumers through retail stores. Because of this, Fila keeps a firm grip on products and shopping experiences. We believe this is a prudent move to bolster brand equity. Anta will continue to seek regional brands to add to its stable. It recently acquired Japanese ski-wear brand Descente, Korean sportswear brand Kolon, and childrenswear brand Kingkow. These are relatively small, with only around a combined 5% contribution expected to revenue over the next few years. Anta is planning to enhance the product ranges to meet Chinese tastes and can utilize existing expertise to do so. However, investment and additional costs will still have to be incurred to build the physical stores for Descente and Kingkow, while Kolon has existing distribution arrangements. With a multibrand portfolio, the company now covers consumers segments that tend to associate the core Anta brand with affordability.