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From Followers To Leaders: Anta'S 100 Billion Market Capitalization

2020/3/30 10:11:00 0

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In 1999, a Anta advertising film endorsed by Kong Linghui, Prince of table tennis, appeared in CCTV 5. Since then, "Anta" has officially entered the vision of the whole nation and has been advancing all the way. Besides table tennis, Anta continues to voice in sports such as running, basketball and football. Someone said, "99% men's first pair of shoes are from Anta". Slogan, which never stops, brings its own voice into the auditory memory of a generation.

In March 24th, Anta announced its annual results for 2019. In 2019, Anta ushered in a bumper harvest year. The results showed that Anta's annual revenue was 33 billion 930 million yuan, an increase of 40.8% over the same period, and a net profit of 5 billion 340 million yuan, an increase of 30.2% over the same period last year.

In addition, in 2019, Anta group's operating profit and gross profit reached 8 billion 640 million yuan, 18 billion 660 million yuan and gross margin respectively 55%.

"This is a year of excellent performance since Anta went public." In March 24th, Anta's 2019 earnings conference online conference, Anta group executive director, group CFO Lai Shixian said.

China's sports industry started relatively late. In terms of the internal structure of the industry, the development level of sports goods industry is obviously higher than that of sports service industry, and the trend of industrial cluster development is mainly concentrated in southeast coastal areas such as Fujian, Guangdong and Jiangsu. On the ownership structure, the sporting goods manufacturing industry is mainly a non-public economy. Domestic enterprises are mostly lack of R & D capability, mostly starting from OEM and imitation, and gradually embark on standardization and normalization.

From the beginning of 1994 to the establishment of the first Anta store in 2001, and the financing of HK $3 billion 168 million to Hongkong in 2007, Anta confirms the development of Chinese grass-roots private enterprises.

Like most factories of Chen Di shoe cluster in Jinjiang, Fujian, Anta was established in the process of global industrial transfer, and accumulated capital through overseas orders. The difference is that Anta focuses on the domestic market from the beginning. In the early stage of development, Anta avoided the international high-end brands such as Nike and Adidas, and did not form a positive conflict with them. Consumers mainly concentrated on 234 line and 14-29 year old young people.

In the list of "2019 of the world's most valuable TOP50 apparel brands" released by the British brand assessment agency Brand Finance, Anta ranked twenty-first in the list with the brand value of $3 billion 870 million, ranking third in the world. In 2019, nearly 34 billion yuan of revenue also created a new record in the history of China's sporting goods.

   01 Anta's "fine penetration"

Anta has divided its development into four stages: 1 factory manufacturing started; 2 through CCTV5+ sports star endorsement marketing mode on the branding road; 3 from brand wholesale to brand retail transformation, requiring dealers to carry out retail management according to Anta standard; 4 stage is multi brand development.

Many people may say that the brand promotion mode of "sports stars + CCTV advertising" is the inducement of Anta's success. Ding Zhizhong, the president of Anta, is probably the first entrepreneur with brand awareness in Jinjiang. In 1999, Anta signed the world champion Kong Linghui of the table tennis world at the cost of 800 thousand yuan per year, and produced 5 million yuan that almost equivalent to the profit in the first half of the year, putting advertisements on CCTV sports channel, which was an astonishing move at that time.

In 2000, Kong Linghui won the men's singles champion of table tennis at the Sydney Olympic Games. At the same time, he shouted "I choose, I like" slogan on TV, and Anta almost fired. In 2000, Anta's sales exceeded 300 million yuan, 6 times that of 1997.

This legendary case is said to have been incorporated into the MBA case library of the business school.

But Anta's winning magic weapon is still a strong sales network. Marketing expert Ye Shuangquan once said: "Anta's great strength is its wide coverage, and the one or two or three tier cities will not let go." In the early days, Anta took advantage of the rapid upgrading of its brand and perfected the entire sales system. In 2001, Anta's first store was established in Beijing, and a large-scale nationwide promotion plan was launched. The franchised store has adopted two modes of direct operation and franchise, which has been strongly supported by the original distributors, and 500 brand stores have been established in one year.

By the end of 2019, Anta group's main brand Anta has reached 10516 stores nationwide, especially in two or three line cities. This is the main factor that Anta leads its peers and is able to compete with Nike, Adidas and other famous brands abroad in terms of cost performance.

In 2019, Anta group encountered many short selling of short selling organizations, all pointing to Anta's distributor system. Muddy water short report that Anta's dealers are not independent third party entities, and Anta high level control; and Anta through the transfer of costs to distributors, to maintain profits "virtual high".

Anta has revealed in its annual report that Anta's brand Anta and Anta children sell wholesale products to wholesalers and distribute them in wholesale form. After the establishment of the partnership, Anta has the responsibility to ensure that distributors understand the company's operations and other requirements, and provide enough resources to enable the development of distributors to keep pace. If the distributors fail to meet the standards, they will need to be reformed before participating in the assessment until they meet the standards. In addition, every shop needs to use electronic systems.

And muddy water shorting, from the stock price, did not cause too much impact on Anta. Since 2019, Anta's share price has risen by nearly one hundred percent.

   02 Anta, the 100 billion market capitalization of "buy"

Affected by the 2019 annual report, as of March 24th closing, Anta sports shares rose 8.27%, to close at HK $53.65 / share, the market value rose to HK $145 billion.

Looking at the rising share prices and market capitalization, Ding Shizhong has reason to congratulate the 10 years ago on the merger strategy of counter trend. In addition to Anta's own brand, FILA, Kolon, Sprandi, Descente and Kingkow have been acquired over the past 10 years.

Anta's acquisition began in 2009. In August of that year, Anta announced the use of FILA trademark and franchise in China at a price of about HK $600 million. The Italy brand was sold by BELLE international and began to make profits in 2014.

This is considered to be the beginning of the high-end transformation in Anta transformation.

With the acquisition of Anta group, its positioning has also expanded from the mass market to the high-end market, from the low tier cities to the second tier cities. In the domestic sports market, the Anta channel has achieved a relative balance in the distribution of the second tier cities and the sinking market.

According to Anta group's 2019 earnings report, in addition to the main brand Anta, the FILA revenue acquired in 2009 amounted to 14 billion 770 million yuan, accounting for 43.53% of the total revenue, gross margin reached 70.4%, while the main brand Anta's gross profit was only 41.3%. The number of stores has reached 1951, which has increased by more than 50% over the past 5 years.

The multi brand strategy of Anta group has constituted a super strong combination. The participation in the market competition has also formed a multi-dimensional and multi-storey level, which is basically a full coverage. This is a very unique advantage. At the same time, most of the brands purchased by the group locate the high-end consumer market, providing space for the premium of group elevation.

   03 no worries are not Anta's.

For enterprises, "no fall" is sometimes more important than "running fast".

Risks and opportunities always exist side by side.

For apparel enterprises, inventory has always been their Achilles heel. With the expansion of Anta group, its inventory pressure is also increasing. In 2019, Anta group reported that the average inventory turnover days of Anta group reached 87 days, which was 36 days in 2010, that is to say, ten years, this figure has increased two times.

Besides inventory, what kind of dilemma is Anta facing? From the brand positioning, in the early days of Anta's development, Nike and Adidas were seen by Anta as learning objects, not competitors. In recent years, Anta, which wants to make the world, has just started Nike and Adidas.

Anta, the main brand, has always been in the middle and low end line, but the two big brands of Nike and Adidas have long planned to expand the price range. For example, in the past has always dominated the "best selling shoes" list of Nike "carry a handle" - Roshe One/Tanjun. 499, the price of RMB, almost no one will refuse to buy a pair of Nike at such a cheap price.

From the perspective of R & D investment, is Anta willing to abandon its own brand investment? This is another major concern outside the acquisition. In 2019, Anta group completed a historic acquisition. Anta and other investors' consortia completed the acquisition of AMER SPORTS (amamin sports).

At the previous performance meeting, whether Anta's main brand had a ceiling was an important issue for investors to toss to the management of the company. Although Anta President Zheng Jie explained that Anta's main brand is still growing, it will promote its sustained growth through commodity innovation.

But according to the results of the financial report, in 2019, Anta's R & D expenses accounted for only 2.3% of revenue and 2.5% in 2018.

From followers to leaders, Anta took nearly 20 years. Standing at the starting point of the next ten years, the capital market is more urgent for the future. Especially for Anta, who has just swallowed amamin sports, the acquisition is just the beginning. How to operate the international sports group with "Fujian experience" will be the key to Anta Sports Group's overall development in the next five years.

Anta will be at the center of the storm in its present position. "Becoming the world's Anta", there will also be various difficulties and obstacles waiting to be overcome in the coming years.

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