Anta: Not Bad Money To Expand New Business

The central government takes the expansion of domestic demand as the primary task to achieve stable and relatively fast economic growth.

In October 2008, one of the goals of the Third Plenary Session of the CPC was to double the per capita net income of farmers by 2020, which will expand domestic demand and raise the level of consumption in the long run.

Since Anta sports business is concentrated on more economical footwear and clothing products, the expansion of the public and rural market in the mainland will benefit Anta.

Anta had 3 billion 300 million yuan in cash at the end of the first half of 08, and there was no bank loan. Its internal resources were sufficient to fund the company's expansion plan.

We have 3 billion 300 million yuan in cash. Because Anta's performance in the first 9 months of 08 is better than our expectation, and we expect stable demand in the mass market, we have adjusted the profit forecast for 08 years and 09 years to 45% and 32% respectively.

Our target price for the unit is 5.16 yuan, equivalent to 11 times the estimated 09 year earnings ratio.

In the global economic recession, the mainland government has distributed vouchers to low-income families to revitalize consumption in the mainland.

The Hangzhou and Chengdu governments have separately distributed 1 billion yuan and 37 million 900 thousand yuan of shopping coupons.

In Hangzhou, the average value of consumption vouchers and consumption is 1:1.

However, in 4 major shopping malls in Hangzhou, consumption accounts for 3.6 times the value of shopping vouchers.

Adjust the product mix to cater for demand. As Anta slightly adjusted its product mix to cater to the changing market demand, its sales in the first 9 months of 09 increased by 20% compared with the same period last year, but the average selling price fell slightly.

However, the price of raw materials is falling, and the decline in average selling price means that more consumers have the ability to undertake more economic products, which will benefit Anta's gross profit and market demand.

In order to grasp the strong personal consumption advantage in the mainland, Anta aims to have 5400 branches at the end of 08, and the company has 5193 branches in the first half of 08.

The global economic slowdown has made Anta more focused on the development of the mainland market and delayed its overseas business promotion plan.

In the first half of 08, Anta's international sales accounted for only 0.6% of the company's total turnover.

The sales of mainland sportswear are still far lower than those of developed countries.

A number of international sporting events will be held in the mainland, including the 2009 East Asian Games, the 2010 Asian Games and the 2011 World University Games. This will help promote the sales of sports and sportswear.

In addition, Shanghai Disney and the planned Beijing Universal Studios theme park are expected to boost retail sales in the Shanghai and Beijing markets, which will also benefit Anta in the long run.

Wang Xiaonan: editor in charge