The magnificence of 2019 earnings data does not seem to make Anta happy. Instead, it has to face a lot of practical problems from the market.
The latest financial data show that in 2019, Anta group achieved a revenue of 33 billion 930 million yuan, an increase of 40.8% over the same period last year. The net profit attributable to the listed company reached 5 billion 340 million yuan, an increase of 30.3% over the same period last year, and its performance was very good. The official press release also mentioned a sensitive figure: Anta group currently holds 18 billion yuan in cash and equivalents. Anta seems to release a signal to the outside world: Anta's cash flow is very abundant, there is no pressure and problems of funds.
However, affected by the epidemic and the postponed one year's Olympic Games, Anta's stock price continued to fall, from the peak price of nearly HK $80 to the lowest level of HK $55 in recent years, and the market value of the shares dropped by 45%, even though the results of the financial reports could not boost Anta's sluggish share price. Worse still, with the announcement of the Tokyo Olympic Games postponed to July 23, 2021, the overall marketing plan of Anta, the sponsor of the Chinese delegation, will be disrupted. The sports products produced in advance will be in danger of inventory. In addition, last year only a large sum of money to buy the amamin sports, will also become a drag on Anta, so that its capital chain encountered unprecedented pressure.
Disrupted Olympic marketing
As the largest sports equipment manufacturer in China, the rise of Anta is closely related to sports marketing. Anta was the first sporting goods company to put television advertisements on CCTV sports channel, and the first to employ sports stars as spokesmen. In 1999, Kong Linghui, the world champion of table tennis, served as the first spokesman for Anta. However, after entering the new millennium, the relationship between Anta and the Olympic Games is becoming more and more closely related.
In the past 20 years, Anta has hardly missed any Olympic Games. Especially in the 2008 Beijing Olympic Games, Anta launched a series of Olympic advertisements such as the Olympic preparation series, the Olympic gold medal series and the Olympic future series, thus forming a complete series of advertisements for Anta Olympic Games, creating the first Chinese advertising history in the history of "using sports resources most" and "putting the longest time".
Since 2009, Anta has launched a comprehensive Olympic marketing plan, becoming the partner of the 2009-2024 Olympic Committee of China and the Beijing Winter Olympic Games in 2022. Apart from providing the champion with the award dress and the full set of living equipment for the Chinese delegation, Anta also joined hands with the Chinese Olympic Committee to establish a Chinese home; launched Olympic marketing with International Olympic Committee and the 2012 Olympic Committee of China; and launched a series of Olympic Museum products with International Olympic Committee.
For the future Olympic Games, Anta has also invested heavily. In October 2019, Anta became an official sportswear supplier of International Olympic Committee. By the end of 2022, Anta will provide clothing, shoes, accessories and other equipment for the 2020 Tokyo Olympic Games, the Beijing Winter Olympic Games in 2022, the Lausanne Youth Olympic Games in 2020 and the Dakar Youth Olympic Games in 2022.
However, the sponsorship strategy was disrupted by a sudden outbreak of coronavirus. On March 30th, the Tokyo Olympic Organizing Committee announced at a news conference that the Tokyo Olympic Games after the rescheduling will be held from July 23, 2021 to August 8th. This is the first Olympic Games postponed in the 100 years Olympic history. It is also the most expensive Olympic Games sponsored by the sponsors. 63 local sponsors spend 3 billion 100 million dollars on sponsorship.
"The extension of the Tokyo Olympic Games means that the sponsorship programs sponsored by sports marketing sponsors are being disrupted, and the brand itself will also face huge retail losses." The key way is Zhang Qing, founder of sports consulting company.
But for Olympic sponsors such as Anta, it is not necessarily a bad thing. Zhang Qing feels that there are advantages and disadvantages in every aspect. Although the Olympic marketing plan is disrupted, it is equal to more than one year's Olympic rights and interests for Anta. If it is used well, it is not a good thing. According to the written information provided by the public relations department of Anta group, Anta has prepared several plans for the Tokyo Olympic Games, which will be flexibly implemented according to a set of business plans and final time determined by the Tokyo Olympic Games.
A more serious epidemic than the Olympic Games postponed
The delay of the Olympic Games is bound to affect Anta's brand promotion plan. As an official sportswear supplier of International Olympic Committee, Anta group has prepared a complete marketing plan for the 2020 Tokyo Olympic Games. Postponed hosting will have a certain impact on Anta's Olympic marketing, but the overall impact may not be too great. In Zhang Qing's view, in fact, the greater impact is the impact of the consumption side brought by the epidemic.
Although Anta has revealed that the complex power of domestic factories has reached 100%, the recovery rate of outsourcing factories has been restored to more than 90%, and the stores under the group have basically resumed business. But that does not mean that sales can be restored to pre epidemic levels. Affected by the epidemic, consumption will not be affected too much, but consumption in other areas will be greatly suppressed, especially in high-end consumption.
For the impact of the epidemic, Anta group for the first half of the performance forecast is not optimistic, estimated that the overall performance will decline 10% - 15%. This is just the Anta group's own relatively optimistic expectations, the actual sales decline may be far greater than this figure. After all, in the first quarter of 2020, especially in the two months from late January to early March, Anta stores were basically closed.
Sales are almost stagnant for two months, and Anta's inventory will be a great challenge. Earnings data showed that as of December 31, 2019, Anta group's inventory had reached 4 billion 400 million yuan, an increase of 52.3% over 2018, and the average stock cycle also rose from 81 days in 2018 to 87 days now. In order to reduce inventory, Anta group launched full marketing, and tens of thousands of employees have used their social networking to promote Anta products on social networks.
In comparison, FILA has become the most dazzling brand of Anta group in the past two years, and also the main source of profit for Anta group. Sales revenue from FILA exceeded 17 billion yuan in 2019, reaching 17 billion 450 million yuan, exceeding Anta's parent brand. The number of FILA stores has reached 1951, and the growth rate is very fast.
However, with the impact of the epidemic, FILA, which has always been the main player in high-end positioning, may be more affected by the market. Consumers with low incomes expect to make thousands of FILA products at a fixed price or extend the decision-making process, or even consider more choices. FILA, the main fashion sports route, may be abandoned by consumers. More fatal is that FILA's brand stores are all direct stores. Anta group has invested heavily in the expansion of FILA channels. The store rents, staff salaries and marketing promotion are all undertaken by Anta. Obviously, without the buffer of distributors, the sharp decline of terminal sales and the increase of inventory will directly impact Anta's capital chain and cash flow.
The acquisition of yamamin became a hot potato?
In 2019, Anta group announced that the acquisition of international famous sporting goods group, amamin sports, has become the most important news event in the domestic sports industry. The international merger of up to 4 billion 660 million euros (about 37 billion 100 million yuan) will create a new record for Chinese companies to acquire international companies and become the largest international merger and acquisition case in China. In Zhang Qing's view, this is a milestone event in the sports industry, because no matter from the volume, importance or potential of the bid, it is unprecedented.
According to public information, amamfin sports was established in 1950, and began to enter the sports industry in 1974. In 1977, it officially landed on NASDAQ and officially changed its name to Amer Sports in 2004. At present, it has 13 brands. Wilson, eulogy, Salomon, song Tuo and Atomic are the first brands in tennis, outdoor products, mountaineering shoes, outdoor watches and ski equipment.
Obviously, if Anta can smoothly get the sports revenue of amamin, Anta can truly become a global sporting goods group, covering all the subdivision areas of sports products and the high and low end market. In the international sports territory, the power from Asia will have more voice.
But the acquisition of amamwin sports is not an easy thing, and the biggest problem is capital. About 37 billion 100 million yuan of acquisition funds, obviously Anta group's own funds can not be achieved. It is reported that in order to complete the acquisition, Anta combined with several consortia and loans from banks before finally mobilizing huge funds to complete the acquisition. Ding Shizhong, chairman of the board of directors of Anta group, admitted in a letter to all the staff that he had been asleep all night for the purchase, and that the pressure was enormous.
Due to the acquisition of amamin sports, Anta's assets and liabilities increased significantly, from the previous 7 billion 800 million yuan to 20 billion 100 million yuan, asset liability ratio soaring, and other international brands bought before buying and buying strategy, relying on a round of international mergers and acquisitions, Anta's snowball growth, but in addition to the success of the FILA brand incubation, several other acquisitions. Brands such as Desanto, Spandi, kirong, Xiao Xiao cattle are all unsatisfactory and their performance is not satisfactory.
However, the most difficult part of amawin sports was a net loss in 2019, with a loss of up to 1 billion 200 million yuan. According to the shareholding ratio, Anta needs to bear 630 million of its losses. With the spread of the epidemic in the world, the performance of yamamin sports in Europe and the United States will inevitably be hit, and the deficit will be significantly increased. For Anta, the seemingly perfect acquisition will eventually become a hot potato.
By buying and buying the powerful Anta group, how can we get ahead in the case of increasing asset liability ratio?