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Disclaimer
The presentation is prepared by ANTA Sports Products Limited (the “Company”) and its subsidiaries (the “Group”) and is solely for thepurpose of corporate communication and general reference only. The presentation is not intended as an offer to sell, or to solicit an offer tobuy or to form any basis of investment decision for any class of securities of the Company in any jurisdiction. All such information should notbe used or relied on without professional advice. The presentation is a brief summary in nature and does not purport to be a completedescription of the Company, its business, its current or historical operating results or its future business prospects.
This presentation is provided without any warranty or representation of any kind, either expressed or implied. The Company specificallydisclaims all responsibilities in respect of any use of or reliance on any information, whether financial or otherwise, contained in thispresentation.
This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business ofthe Group. These forward-looking statements represent the Company’s expectations or beliefs concerning future events and involve knownand unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed orimplied in such statements. Certain statements, such as those that include the words “potential”, “estimated”, “expects”, “anticipates”,“objective”, “intends”, “plans”, “believes”, “estimates”, and similar expressions or variations on such expressions may be considered“forward-looking statements”.
Forward-looking statements involve inherent risks and uncertainties. Readers should be cautioned that a number of factors could causeactual results to differ in some instances materially, from those anticipated or implied in any forward-looking statement. Forward-lookingstatements speak only at the date they are made, and it should not be assumed that they have been reviewed or updated in the light ofnew information or future events. Trends and factors that are expected to affect the Group’s results of operations are described in thesections of “Financial Overview”, “Business Overview” and “Prospects”.
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FINANCIALOVERVIEW
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2017 2016 Changes
Revenue (RMB million) 16,692.5 13,345.8 25.1%
Gross profit (RMB million) 8,241.1 6,459.0 27.6%
Profit from operations (RMB million) 3,988.7 3,203.4 24.5%
Profit attributable to equity shareholders (RMB million) 3,087.8 2,385.5 29.4%
Basic earnings per share (RMB cents) 117.01 95.36 22.7%
Free cash inflow (RMB million) 2,662.2 1,897.0 40.3%
Gross profit margin 49.4% 48.4% 1.0p.p.
Operating profit margin 23.9% 24.0% 0.1p.p.
Margin of profit attributable to equity shareholders 18.5% 17.9% 0.6p.p.
Total dividends per share (HK cents) 98 76 28.9%
Interim dividend per share (HK cents) 41 34
Final dividend per share (HK cents) 41 34
Special dividend per share (HK cents) 16 8
Dividend payout ratio 70.5% 73.2% 2.7p.p.
Financial Highlights
Revenue by product2017 2016 Changes
(RMB million) (% of revenue) (RMB million) (% of revenue) (%)
Footwear 7,048.8 42.2 6,000.8 45.0 17.5
Apparel 9,116.1 54.6 6,885.7 51.6 32.4
Accessories 527.6 3.2 459.3 3.4 14.9
Overall 16,692.5 100.0 13,345.8 100.0 25.1
% in revenue > % in order value of 2017 trade fairs for ANTA products as announced before mainly due to:
➢ Stronger pace of growth in other businesses
Revenue 25.1% to RMB16.69 billion
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Revenue
GP margin 1.0p.p. to 49.4%
GP & GPM by product
2017 2016 Changes
GP (RMB million) GP margin (%) GP (RMB million) GP margin (%) (%) (p.p.)
Footwear 3,290.5 46.7 2,778.4 46.3 18.4 0.4
Apparel 4,742.5 52.0 3,509.7 51.0 35.1 1.0
Accessories 208.1 39.4 170.9 37.2 21.8 2.2
Overall 8,241.1 49.4 6,459.0 48.4 27.6 1.0
in GP margin due to:
➢ Expansion of retail operations and the effort of stringent cost control
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Gross Profit Margin
A&P expenses %* 0.8p.p. to 10.6%, due to:
➢ Notable growth in revenue
Staff costs %* 0.7p.p. to 12.0%, due to:
➢ Headcounts and recruitment of experienced management talent amid the Group’s fast expansion
R&D costs %# 0.6p.p. to 5.7%, due to:
➢ Continuous enhancement of the Group’s overall R&D capability
* In terms of revenue # In terms of cost of sales
OP margin 0.1p.p. to 23.9%, due to:
➢ Selling and distribution expenses and administrative expenses as a result of the expansion of retail operations
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Operating Expenses and Operating Profit Margin
Margin of profit attributable to equity shareholders 0.6p.p. to 18.5%, due to:
➢ Net finance income
Effective tax rate 0.5p.p. to 26.7%
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Effective Tax Rate and Margin of Profit Attributable to Equity Shareholders
Average inventory turnover 14 days to 75 days, due to:
➢ Intentionally deferred product delivery to stores, to meet the sales of Chinese New Year in February 2018
Average trade receivables turnover 2 days to 41 days
Average trade payables turnover 7 days to 51 days
➢ The Group’s average trade receivables and payables turnover days remained at relatively normal levels
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Working Capital Management
2017 2016
(RMB million) (RMB million)
Year ended 31 Dec
Net operating cash inflow 3,181.5 2,467.6
Capital expenditures (585.0) (627.6)
Others 65.7 57.0
Free cash inflow 2,662.2 1,897.0
As at 31 Dec
Cash and cash equivalents 6,967.6 5,830.0
Fixed deposits held at banks with maturity over three months 2,436.4 1,492.4
Pledged deposits 150.0 194.6
Bank loans (147.9) (937.7)
Bills payable - (600.0)
Net cash position 9,406.1 5,979.3
Net operating cash inflow 28.9% to RMB3.18 billion,
which represents strong cash generation capability of the Group
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Liquidity and Financial Resources
Business Review
Market Review
China’s economy in transition, moving from high-speed to high-quality growth
China’sEconomy in2017
According to the National Bureau of Statistics of China:
➢ GDP +6.9%, reaching RMB82.7 trillion
➢ The total retail sales of consumer goods +10.2%,reaching RMB36.6 trillion
➢ Excluding the price effect, the urban and rural per capita disposable income +6.5% and +7.3% respectively
China’sSports Industry
➢ The stable growth of the Chinese sportswear industry remained relatively solid, supported by a number of
factors, including a rise in disposable income, preparations for certain large sporting events, policy support, a
growing passion for sports amongst the general public, and the increasing trend among Chinese to pursue a
healthy lifestyle.
➢ According to the “Consumer Market Development Report 2018“ published by the China Council for the
Promotion of International Trade Academy, the total sales of domestic consumer products is expected to
exceed RMB40 trillion in China by 2018 with an annual nominal growth rate of 10%.
➢ As the China market is unique in its growing appetite for “athleisure” fashion, the demand for “functional”,
“differentiated” and “premium” sportswear products is becoming stronger.
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Unique Business Model and Key Strategies
Unique business model + “Single-Focus, Multi-Brand, and Omni-Channel” strategy
= Full coverage of consumer channels and retail channels
Full Coverage➢ Catering to consumers’ demands for sportswear from
different groups through multiple brands
Omni-Channels➢ ANTA stores are mainly street stores, but its retail network is
expanding its presence in shopping malls and department stores➢ FILA, DESCENTE and the newly added KOLON SPORT and
KINGKOW stores mainly located in high-end shopping malls anddepartment stores
➢ Leveraging online and offline retail channels to boost sales for allbrands
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ANTA Continues to Strengthen its Leading Position in China’s Mass Market
➢ We sponsored 24 Chinese national teams within the four major sporting management centers and the Chinese Rowing Association,including winter sports, boxing and taekwondo, gymnastics and weightlifting, and wrestling and judo.
➢ We once again started two Olympic cycles of partnership with the COC and CSD, and became the official sportswear partner for theBeijing 2022 Olympic and Paralympic Winter Games. ANTA will provide high quality sportswear products and will take the opportunity tohelp promote the positive image of China to the world.
➢ During the recent PyeongChang 2018 Olympic Winter Games, not only did ANTA’s sportswear shine alongside the Chinese nationalteams during the games, but ANTA also provided high-quality ANTA equipment to the International Olympic Committee.
ANTA’s brand equity and favorability experienced an uplift from its unconventional
marketing campaigns that utilized both online and offline channels
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ANTA is a Value-for-Money Functional Sportswear Brand
ANTA provides consumers with value-for-money and professional
sportswear across a diverse range of categories, from running, cross-
training, basketball and soccer to professional and niche sports
➢ We launched A-Livefoam technology running shoes, ANTAUNI,
and A-Flashfoam running shoes, as well as held the “Run For A
Life” campaign.
➢ Renowned boxers Zhou Shiming and Manny Pacquiao became
ANTA brand endorsers, while ANTA featured female actress
Zhang Li wearing its women’s cross-training series. These cases
exemplify ANTA’s ability to make every use of the impact
endorsers can have to improve our branding.
➢ We continued to work in partnership with NBA Championship
player Klay Thompson to develop the highly functional and well-
designed KT2 and KT3 basketball shoes, as well as launch the
“Shock The Game” marketing campaign in China.
➢ ANTA also launched its ANTA Lion II football shoes during the
year. ANTA brand ambassador Zheng Zhi, the current captain of
China’s national soccer team, unveiled this newly upgraded
product to the general public.
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ANTA KIDS
ANTA KIDS has chosen “Grow Up with Fun” as its slogan, which reflected the desire
for children to enjoy sports and to grow up healthily and happily. This helped to
establish its sporty, energetic, interesting and inspiring brand image
➢ Following the implementation of the two-child policy by the Chinese
government, it is widely expected that growth in the kids market
segment will accelerate.
➢ ANTA KIDS is committed to offering fashionable, protective and
comfortable products for children up to the age of 14.
➢ We launched a series of crossover collection products, featuring popular
characters from movie series such as Minions, Hello Kitty and
Despicable Me.
➢ We also launched a series of marketing campaigns across China,
including “Sports Day” and “McHappy Run”, with McDonald’s. We also
cooperated with Tuniu.com to launch a wonderful snow trip for families.
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FILA and FILA KIDS
FILA maintains its “Live Your Elegance” brand promise by
combining stylish and sporty fashion
➢ FILA has collaborated with famous Chinese actress Gao
Yuanyuan and actor Chen Kun on its advertisement
campaigns and promotional events.
➢ Targeting different customer segments, FILA has
successfully launched several series, including many
cross-over series with famous brands and designers, in
order to enhance awareness of FILA’s brand.
➢ Aside from first and second tier cities in China, FILA has
also expanded into other potential cities, opening fashion
shops to further enhance its brand differentiation.
➢ FILA opened its first store in Singapore at the ION
ORCHARD shopping mall, reaching yet another milestone
as it grows in the region.
➢ FILA KIDS was launched in China in 2015 and has gained
appeal among high-end consumers in the kids fashion
market.
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DESCENTE
Leveraging on its unique branding position as a functional sportswear, DESCENTE has quickly established itself as a high-end and professional sports brand in China
➢ In 2017, DESCENTE held its first fashion show in Shanghaiand launched its “AWAKEN!” campaign with the aim ofraising awareness of its sports and beauty brands among itstarget audiences in China.
➢ Since the formation of the joint venture in 2016, DESCENTEhas been active in expanding its retail footprint in the high-end segments of the Chinese sportswear market, becomingthe brand of choice for skiing, cross-training and runningenthusiasts.
➢ We are confident that DESCENTE can grasp businessopportunities arising from ANTA Sports becoming the officialpartner of the Beijing 2022 Winter Olympics and to becomeone of the most successful sportswear brands in China.
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SPRANDI
➢ Established in 1995, SPRANDI is a footwear and clothing brand that focus on city running.
➢ In 2017, we began to expand its business by opening more physical stores and e-commerceplatforms, targeting the middle-class smart-causal sportswear market.
➢ Renowned Chinese celebrity Olivia Wang became a SPRANDI endorser and was featured inadvertising campaigns in China, strengthening awareness of the brand among young consumers.
SPRANDI continues to enhance its core competencies by increasing design originality and innovation in product technology
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Distribution Network Management
Improved retailers’ competitiveness, store efficiency and responsiveness to the ever-changing market and optimized distribution networks including street stores, department stores, shopping malls, outlet
stores and e-commerce platforms
ANTA+ANTA KIDS
in China
FILA+FILA KIDS
in China, Hong Kong, Macao and Singapore
DESCENTE
in China
Key market tiers 2nd, 3rd and lower tier cities 1st and 2nd tier cities 1st and 2nd tier cities
Store formats* predominately
➢ Street stores*➢ Shop-in-shop➢ Outlet store➢ Online shop
➢ Shop-in-shop*➢ Street store➢ Outlet store➢ Online shop
➢ Shop-in-shop*➢ Online shop
Number of stores by 31 Dec 2017
9,467(End of 2016: 8,860)
1,086
(End of 2016: 802)
64
(End of 2016: 6)
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E-commerce Business
Our e-commerce business will support our omni-channel and multi-brand development
➢ We have delivered record-breaking results during the
‘‘Double 11’’ promotion period in 2017, showcasing our rapid
development in the e-commerce space.
➢ We launched special versions of our products online.
➢ We have collaborated with various renowned e-commerce
platforms, including Tmall, JD, Vipshop and others. The
business also made a breakthrough in the integration of
online and offline channels.
➢ We optimized our e-store interface, improved product
descriptions and presentations, and enhanced our product
search and cataloging functions.
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Product Innovation and Supply Chain Management
Technological innovation and effective supply chain management are keys for sustainable development
➢ We became the only local sportswear company in China that has received license to use Teflon EcoElite™ to promote our
products
➢ We formed a strategic alliance with Noble Biomaterials, Inc., which has provided us with XT2® Technology
➢ We implemented high-speed production lines, which have a daily shoe manufacturing capacity of 3,000 pairs with only 30
workers.
➢ We integrated self-production with outsourcing. The proportion of self-produced footwear and apparel of ANTA accounted for
37.8% and 15.5%, of the total sales quantities respectively in FY17 (FY16: 42.9% and 16.7%)
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Prospects
Keep Moving and Build upon Our Phenomenal Growth over the Coming 10 Years
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