2 Things Anta Sports Investors Should Know

Last week, I wrote about why I think investors can be bullish on Li Ning Co Ltd (SEHK: 2331) following its latest earnings report.

This time, I thought it would be worth looking at the other major local Chinese sportswear company; ANTA Sports Products Ltd (SEHK: 2020). Anta is a well-known sportswear brand in China that also owns other brands including FILA.

The company had also acquired Finnish sports brand Amer Sports last year in a €4.6 billion (US$5 billion) deal.

With that, here are two things investors should know about its latest results.

1. FILA drives revenue growth

Anta managed to post impressive year-on-year growth in revenue. In 2019, the company saw a 40.8% year-on-year rise in revenue to RMB 33.92 billion(US$4.8 billion). Its profit attributable to equity shareholders also rose, advancing 30.3% year-on-year in 2019 to RMB 5.34 billion.

However, this was overshadowed by the overwhelming success of FILA in 2019. Anta acquired the brand’s business in Mainland China, Hong Kong, and Macau back in 2009.

More recently, it has been marketing FILA aggressively to the younger generation in China.

It has clearly had an impact as FILA saw a 73.9% year-on-year jump in its branded goods, contributing RMB 14.77 billion to the top line.

2. Dividend cut

Although Anta had been growing its earnings per share (EPS), its dividend per share (DPS) has fallen for the second consecutive year. The company paid out a total DPS of HK$0.78 in 2018 but in 2019 the DPS fell over 10% to HK$0.67.

What’s more, the dividend payout ratio also dropped significantly. Whereas the company paid out 44.8% of its profits as dividends in 2018, in 2019 the dividend payout ratio was only 30.7%.

At first glance, this doesn’t look so great given its significant increase in both revenues and profits. Although it does give management the breathing space to raise the dividend in 2020 (in what no doubt will be a tough year earnings-wise), the previous payout ratio was not prohibitive.

This is something shareholders, or anyone considering investing in Anta, should monitor going forward.

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