Chairman's Message

Dear Shareholders,

On behalf of the Board, I am pleased to present our annual results for the year ended 31 December 2019.

REMARKABLE RESULTS FROM HIGH-STANDARD BENCHMARKING, IMPLEMENT “SYNERGY” TO CREATE “VALUE”

In 2019, the macro-economic environment was filled with uncertainties. The market encountered various issues, including the US-China trade dispute, growing risks in geopolitics, financial deleveraging, entering the rising interest rate cycle, and so on, which had a certain level of impact on the market. However, the fundamentals of the sportswear industry remain robust, and the top brands enjoyed better brand awareness and operational efficiency due to its market-leading status. As such, China’s sportswear industry was able to demonstrate its strong defensiveness amid market volatility. Meanwhile, healthy lifestyle continues to have increasing popularity amongst the general public, reflecting the solid foundation of the industry. Notwithstanding the challenges brought by the novel coronavirus disease (COVID-19) in 2019, we are confident that ANTA Sports, as a global enterprise and an industrial leader, will be able to mitigate and manage the risks through the multi-brand strategies which has been successfully implemented for years. Moreover, we have maintained communications with our consumers through the Internet, demonstrating that we never stop striving even when facing challenges from the Pandemic. We continue to uphold the spirit of “Never Surrender, Never Fear” in order to advance forward even amid difficulties.

During the year, we implemented reforms within our organization in order to effectively improve managerial efficiency and promote synergy and incubation. Following the latest developments in the sportswear industry, customer demand is no longer easily satisfied by traditional categorizations of business segments. With ANTA Sports’ insights on the market, during the year, we completed the reforms of the Company’s business structure by establishing three business groups: performance sports, fashion sports, and outdoor sports. The new business structure represents a more appropriate categorization of business segments and brands, and helps to accelerate synergy and incubation processes, value retailing, as well as globalization. At the same time, we keep assessing performance and allocating resources from a brand perspective.

In addition, we proactively increased our focus towards winter sports-related products. Meanwhile, ANTA also became the Official Sports Apparel Partner for the Organizing Committee of the 2022 Olympic and Paralympic Winter Games. We also launched a winter sports product line in November, with the full product line expected to be completed as soon as possible.

As a leading enterprise in China’s sportswear industry, during the year, ANTA Sports saw great accomplishments in its strategic planning towards a “Year of Synergy and Value”, and was able to achieve another year of astonishing results. Both online and offline business segments achieved different levels of progress while different other brands of the Company also recorded impressive results in terms of sales performance. Our revenue increased 40.8% to RMB33.93 billion (2018: RMB24.10 billion), while profit from operations increased 52.5% to RMB8.69 billion (2018: RMB5.70 billion). Profit attributable to equity shareholders increased 30.3% to RMB5.34 billion (2018: RMB4.10 billion). Not only did all three financial indicators hit record highs, but this year was also the sixth consecutive year of double-digit growth.

RE-CONSTRUCTION OF BUSINESS THOUGHTS, HIGH QUALITY GROWTH

In 2019, while facing the changes in the industry, the concept of “Re-Construction” became extremely important. Facing such a market environment, all elements of the industry were required to undergo “Re-construction”, including customers, stores, consumer preferences, and products. We re-formed our strategy accordingly, boldly making breakthroughs against conventional ways of thinking. The Company made “Re-construction” adjustments to its business strategies and tactics, mindsets, and business logic.

Among these, “Understanding Growth” is a key aspect of the “Re-construction” business philosophy. We focus on highquality growth in order to build up our capacity across different market cycles. We place importance not only on our sales growth, but also on the quality of development and operation. We attribute our core competitiveness to our nurturing of “Brand + Retail”, benchmarking the Company’s business capacity with both advanced enterprises in China and around the world in areas such as retailing capacity, digital capacity, and supply chain capacity, among others. By doing so, we will be able to achieve progress and see improvements in our operational platforms.

At the same time, “Brand + Value” is also a key element of the “Re-Construction” philosophy. As consumer preferences reflect the quality of a brand, we made detailed plans for each of the brands, striving for a dual increase in both sales performance and brand preference. We are dedicated to being “ConsumerCentric” by exploring brand value and introducing a compelling brand story to the consumers, driving sustainable growth of the business. Through “Understanding the Business” and “Understanding the Brand”, we strengthened the position of our brands in our consumers’ hearts.

IMPLEMENT GLOBALIZATON PLAN AND COMPLETE MULTI-BRAND SYNERGISTIC PLATFORM

After 70 years of development, the People’s Republic of China has made significant achievements by powering its way through relentless waves of difficulties and challenges. The rise in the comprehensive national power of China can be likened to a bugle call that rallies Chinese enterprises forward, including ANTA Sports. Our vision is to become a world-class multi-brand sportswear group. Therefore, with China as our core market, we will continue to promote globalization and expand into the international market. As the traditional Chinese proverb says: “It takes a good blacksmith to make steel”. Likewise, with unprecedented concentration and responsibility, we will strengthen our brands and make it capable of competing with international enterprises. We will also continue to improve our multibrand synergistic platform, allowing us to open up new spaces in the international market in terms of sales channels and international brand operations.

During the year, based on our analysis and judgement of the market situation and review of the trends, as well as the status of the business, we made the most important decision since the establishment of our business with confidence and strength. Together with other investors, we set up an investor consortium and completed the largest overseas acquisition in the history of the Chinese apparel industry and the Chinese sportswear industry: the acquisition of Amer Sports. Soon after the acquisition, a future growth plan was set by investor consortium, in order to promote value recognition and cultural integration. These methods aligned the Company’s development goals together and helped it to take an important step towards globalization.

To live out a dream and pursue it to the fullest. In order for ANTA Sports to become a truly ‘Great Brand’, every colleague must dedicate themselves from whatever position they are in, to understand and implement the philosophy of “Epiphany”, “Awareness” and “Awakening”, and integrate the strategy of “Synergistic Incubation to Achieve Value Retailing and globalization”. By providing more professional, highvalue and international products to customers, the Company can then transform from “an affordable brand” to “a desirable brand”.

On behalf of the Board of Directors, I would like to express my sincere gratitude to all shareholders for their support, and to express our gratitude to the staff who have contributed to the Company. Going forward, we will strive to ensure that our supply chain partners, brand partners, distributors and franchisees will continue to grow steadily while creating greater value for our shareholders.