Press Releases

Download PDF Version

ANTA Sports Announces 2010 Interim Results, Keep Moving to Deliver Remarkable Results

Continuous Growth with Strong Financial and Operating results , Assembled Strongest Sporting Sponsorship and Endorsement Resources

(16 August 2010, Hong Kong) ANTA Sports Products Limited ("ANTA Sports" or the "Company", stock code: 2020) is pleased to announce the interim results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2010 (the "period").

Results Highlights
 
  Six months ended 30 June  
  2010
2009 Change
  RMB million RMB million  
Turnover 3,453.1
2,817.0 +22.6%
Gross profit 1,509.8 1,169.1 +29.1%
Profit from operations 894.8 682.9 +31.0%
Profit attributable to equity shareholders 760.2 608.3 +25.0%
Free cash inflow 735.5 537.3 +36.9%
       
  RMB cents
RMB cents  
Basic earnings per share 30.50
24.43 +24.8%
       
  HK cents HK cents  
Interim dividend per share 20.0 12.0 +66.7%
       
Gross profit margin 43.7% 41.5% +2.2% pts
Operating profit margin 25.9% 24.2% +1.7% pts
Margin of profit attributable to equity shareholders 22.0% 21.6% +0.4% pts
 
 
● Robust Financial Performance
  •  Turnover increased by 22.6% to RMB3,453.1 million (2009 1H: 2,817.0 million), attributable to the increase in average selling prices ("ASP") and sales volume, enhanced product offerings and the expansion of distribution network
  • The Group's gross profit margin increased 2.2 percentage points to 43.7% (2009 1H: 41.5%) as a result of strong brand equity, diversified product portfolio and effective cost control
  • In view of outstanding performance during the period, the Board of the Company proposed an interim dividend of HK20 cents per share (2009 1H: HK12 cents), making a payout ratio of 57.2 % of the 2010 1H profit attributable to equity shareholders to sustain a better return to shareholders
● Solid working capital management and strong cash flow
  • Average inventory turnover days: 38 days (2009 1H: 43 days)
  • Average trade receivables turnover days: 17 days (2009 1H: 15 days)
  • Average trade payable turnover days: 37 days (2009 1H: 32 days)
  • Free cash inflow increased by 36.9% to RMB735.5 million (2009 1H: 537.3 million) as a result of remarkable working capital management and outstanding operating performance
● Significant ASP and volume growth
  • Footwear: ASP (wholesale) increased by 2.0% to RMB96.9 (2009 1H: RMB95.0); volume increased by 9.3% to 18.0 million pairs (2009 1H: 16.4 million pairs)
  • Apparel: ASP (wholesale) increased by 7.1% to RMB49.6 (2009 1H: RMB 46.3); volume increased by 26.4% to 32.5 million pieces (2009 1H: 25.7 million pieces)
● Distribution network expansion and sales floor area optimisation
  • Number of ANTA stores across China increased to 7,052 compared to 6,591 at the end of 2009, representing a net increase of 461 stores
  • Total sales floor area increased by 9.9% to 776,000 sq. m. compared to 706,000 sq. m. at the end of 2009
  • Average sales floor area per store increased by 2.8% to 110 sq. m. compared to 107 sq. m. at the end of 2009
 
Business Review
 
Strong brand equity and effective brand management strategy
 
During the period, the Group has further integrated our exclusive endorsement and sponsorship resources, interactive promotion campaigns and outstanding store image as well as quality products to bolster brand value and sustain business growth. The Group has entered into exclusive sponsorships with elite athletes, influential sports associations and top-tier leagues to enhance our professional brand image and customer loyalty. The strategic partnerships with the Chinese Olympic Committee (the "COC") and Chinese Sports Delegation (the "CSD") are good examples of how the strategy has advanced our brand differentiation, particularly in associating ANTA as "the representative of China's sports industry".
 
The outstanding performance of the CSD in the Vancouver 2010 Winter Olympics, in particular our endorsed athletes, offered excellent exposure for ANTA's sportswear at victory ceremonies and celebration events held in the "Home of China". The positive market feedback to the "Support China Altogether" advertising and marketing campaign for the event has consolidated ANTA's symbolic role for China's sports industry. Moreover, the alliance with the COC and its online media partner, Sina, in forming the "ANTA • China Sports" channel provides an excellent opportunity for ANTA to maximise our marketing effectiveness and brand equity through a better cultivation of the COC's sponsorship rights.

The Group has strategically focused marketing resources on 3 core product segments: basketball, tennis and running, employing effective marketing strategies such as athletes' endorsement and sponsorship of influential sports leagues, to enhance the brand association with the key sports. During the period, we have rolled out eye-catching events, including the "I Love CBA" marketing campaign, Luis Scola's China tour as well as the television commercials ("TVC") featuring A-Jelly running shoes to boost popularity of relevant sports and sales of featured performance-based sportswear products.

ANTA Sports is renowned for integrating sports sponsorship resources and events with different promotion channels to maximise exposure to target audience. In addition to the use of creative TVC and advertisements, the Group also leverages the rising popularity of Internet marketing and brand website to establish closer links with consumers. Furthermore, the Group has strengthened our in-store marketing events and activities capabilities to reinforce the interactions with consumers and our leading position in various local markets.
 
Strategically expanded distribution network and refined network management system
 
The Group has expanded the nationwide distribution network to over 7,000 ANTA stores with a strategic focus on second and third tier cities to tap the tremendous market potential. We managed the nationwide distribution network through over 50 regional distributors. Meanwhile, Sports Lifestyle series stores and ANTA Kids stores have been expanding to extend our reach to diversified segments. Furthermore, the Group has launched the official online flagship store at taobao.com to capture the potential growth of e-shopping.
 
During the period, the Group has continued to refine our distribution network management system and work closely with our distributors to monitor and enhance store efficiency and profitability. We have also organised various interactive activities at key ANTA stores and provide standardised point-of-purchase advertising ("POP") materials to ensure that our branding activities can be effectively translated into prominent retail performance. Through continuous efforts, ANTA Sports is the top seller of travel and sports shoes in terms of market share for the ninth year in China.
 
  30 Jun 2010 31 Dec 2009 Net increase
ANTA stores      
     Eastern region 2,598 2,451 +147
     Southern region 2,128 1,991 +137
     Northern region 2,326 2,149 +177
Total number of ANTA stores 7,052 6,591 +461
       
Sports Lifestyle series stores 495 343 +152
Kids series stores 300 228 +72
 
 
R&D innovation and creative product design
 
The Group identifies innovation and technology as our key to differentiate from others. During the period, we have continued to strengthen our internal R&D team and collaboration with external professionals to enhance our competitive edge in R&D. We have further improved our A-Jelly technology and other existing technologies to offer more value-added sportswear products. In support of a low carbon life concept, the Group has made use of organic, chemical-free cotton as raw materials for our apparel products and enhanced the "ergonomic 3-dimensional cutting technology" to improve the body hugging feature on our apparel products. In addition, the Group continues to expand our product portfolio. During the period, we have introduced more than 1,700 new styles to footwear products, 2,000 to apparel and 1,000 to accessories, to meet the different tastes of customers.
 
Prospects
 
The Chinese government is expected to continue to drive economic growth by spurring domestic consumption. Wage rises and a better welfare system will also help boost the purchasing power and brand awareness of Chinese consumers. Moreover, urbanisation is likely to bring in tremendous business opportunities, particularly in second and third tier cities. These have given rise to optimism for the Group in our outlook for China's domestic market and the sportswear industry in particular.
 
The CSD's favourable response on the sportswear for the Vancouver 2010 Winter Olympic Games has stood us in good stead for providing even better gear in the Guangzhou 2010 Asian Games and the London 2012 Olympic Games. In November, the Asian Games will be held in Guangzhou. It is expected that the outstanding performances of Chinese athletes will provide significant exposure opportunities for ANTA's sportswear in victory ceremonies. The Group will roll out corresponding TVC and POP series and strengthen the "COC licensed product corner" in key ANTA stores across the country to boost the awareness of the Games as well as sales. In addition, the Group will launch various interactive events to enable the public to experience the Games more fully.
 
Basketball is a popular sport in China. That is why the Group has made the sport one of our key development priorities. On 1 August, the Group has added to the endorsement list a renowned NBA superstar, Kevin Garnett, who was named the NBA Champion, NBA Most Valuable Player and NBA Defensive Player of the Year. After joining ANTA Sports as an endorsed basketball player, he embarked on a China tour visiting major cities of the country. We will launch a new "KG" basketball sportswear series together with a marketing blitz of TVC and POP. In the coming NBA season, Kevin Garnett will be competing in basketball shoes tailor-made by ANTA Sports, which will help enhance our brand reputation and creditability. The Group is the sponsor of national top-tier leagues, CBA and CUBA as well as popular TV program, "HOOPARK". With Kevin Garnett joining Luis Scola and other CBA endorsers, the Group has assembled the strongest portfolio of top-tier basketball sponsorship and endorsement resources in China to support our sustainability in long run.

It is expected that the Chinese government's further push on domestic consumption and urbanisation will drive the expansion of population in lower tier cities. Our distribution network is well established in second and third tier cities. The Group will continue to cooperate with our regional distributors to explore new markets with high growth potential for penetration and expansion. By the end of 2010, the Group plans to expand our retail network to 7,400 ANTA stores, 600 Sports Lifestyle series stores and 350 Kid series stores. We will provide more effective retail management and ordering training to further improve store efficiency and retail performance so as to enhance the profitability and competitiveness of our distributors and franchisees. Moreover, we will expand the Fila business in the PRC to reach the high-end market through new product launches, network expansion and marketing campaigns. By the end of 2010, around 200 FILA stores will be in operation in China's first and second tier cities. We believe that the Fila business in the PRC will become another growth driver for the Group.
 
Mr. Ding Shizhong, Chairman and CEO of ANTA Sports said, "Looking ahead, the long term development of China's sportswear industry is likely to benefit from the Chinese government's economic stimulus package and its sports industry invigoration plan. In view of strong demand continues to drive the growth of the mass sportswear market, we will further enhance our brand and product differentiation by leveraging our sponsorship resources, initiating marketing campaigns and offering better quality and value-added products. With our strong fundamentals, clear expansion strategy and effective execution capability, the Group's competitive advantages and leading position in the mass market will be further strengthened and ultimately gain a bigger market share and continue to create higher value and return for our shareholders."
 
~ End ~
 
About ANTA Sports Products Limited
As one of the leading branded sportswear enterprises in China, ANTA Sports Products Limited primarily designs, develops, manufactures and markets sportswear, including sports footwear, apparel and accessories. The Group has established an extensive distribution network and nation-wide retail outlets throughout China under the management of the distributors. The Group places great emphasis on branding by integrating the resources from sponsorship of sports leagues, placement of advertisements, online interaction with consumers and endorsement of elite athletes with featured products in order to enhance brand and product differentiation. For the past nine years, ANTA's footwear has been enjoying a leading position in the composite index on market shares in China.
 
For further information, please contact:

ANTA Sports Products Limited
Investor Relations Department
Tel:        (852) 2116-1660   
Fax:        (852) 2116-1590   
E-mail:    ir@anta.com / ir@anta.com.hk

Hill & Knowlton Asia Limited

Gary Li       
Tel:        (852) 2894 6239 / 9652 9002   
E-mail:    gary.li@hillandknowlton.com.hk

Carol Mak
Tel:        (852) 2894 6283 / 6126 5261
E-mail:    carol.mak@hillandknowlton.com.hk