Core Contradiction: The Difference Between Outstanding Revenue and Market Concerns
On March 19, 2025, Anta Sports (2020.HK) released its 2024 financial report, with full-year revenue increasing by 13.6% year-on-year to 70.826 billion yuan, and net profit surging by 52.4% to 15.596 billion yuan. If the revenue of 37.26 billion yuan from its subsidiary Amer Sports is included, the total revenue of the "Anta Group" will exceed the 100 billion mark (108.086 billion yuan) for the first time, making it the world's third largest sporting goods group. However, the capital market reacted coldly to this. After the release of the financial report, the stock price once plummeted by more than 7%, and finally closed down 3.93% to HK$97.90 per share, and the total market value shrank to HK$274.8 billion.
Behind this contrast, the market reflects the concerns about Anta's core growth momentum and long-term profitability. The following is a multi-dimensional analysis of the deep reasons for the stock price plunge:
The growth of core brands has slowed down, and the "dual-wheel drive" is insufficient
Anta's revenue structure relies on "dual-wheel drive" - the main brand (Anta) and FILA, which together contribute 87.9% of total revenue (Anta 47.3%, FILA 37.6%). However, the growth rates of both brands in 2024 are weak:
- Anta's main brand: revenue of 33.522 billion yuan, a year-on-year increase of 10.6%, a significant slowdown from the high growth rate of 52.5% in 2021;
- FILA brand: revenue of 26.626 billion yuan, a year-on-year increase of only 6.1%, far lower than the growth rate of 73.9% in 2019, and gross profit margin fell by 1.2% to 67.8%, and operating profit margin fell by 2.3%.
As a former "profit cow", FILA's growth stall is particularly critical. In the past decade, FILA contributed nearly half of Anta's profits, but the growth rate has continued to decline in recent years (even negative growth in 2022), coupled with a double decline in gross profit margin and operating margin, which has caused the market to question its brand competitiveness and premium ability.
Decline in profitability indicators: gross profit margin and operating margin both declined
Despite significant growth in revenue and net profit, the decline in two core profitability indicators has become the direct fuse for the market sell-off:
- Gross profit margin: The overall gross profit margin is 62.2%, a year-on-year decrease of 0.2%. Among them, Anta brand, FILA, and other brands decreased by 0.4%, 1.2%, and 0.7% respectively. Although FILA's high gross profit (67.8%) is still at the forefront of the industry, the continued downward trend has exacerbated the market's concerns about its profitability sustainability.
- Operating margin: The overall operating margin is 23.4%, a year-on-year decrease of 1.2%. FILA's operating margin fell by 2.3%, the main brand fell by 1.2%, and only other brands increased by 1.5 percentage points.
Cost pressure (such as rising e-commerce channel costs) and intensified brand competition (rivals such as Nike and Adidas are increasing their investment in the fashion sports field) are the main causes. In addition, Anta's strategy of "focusing on marketing and neglecting R&D" has also been criticized - marketing expenses in 2024 will be 25.647 billion yuan, which is 12.8 times the R&D expenses (2 billion yuan), while Nike and Adidas' R&D share has long remained above 7%.
The "long tail dilemma" of multi-brand strategy
Anta has built a multi-brand matrix through the acquisition of Amer Sports (including Arc'teryx, Salomon and other brands), Descente, Kolon, etc. In 2024, other brands will have revenue of 10.678 billion yuan (up 53.7% year-on-year), and operating profit will increase by 61.7% to 3.05 billion yuan. However, these brands only account for 15% of total revenue, and it is difficult to replace the pillar status of FILA and the main brand in the short term. The market's concerns about the multi-brand strategy are:
- Integration risk: International brands such as Amer Sports need long-term investment to open up the Chinese market, while FILA's adjustment cycle has dragged down the overall strategic rhythm.
- Pressure to achieve goals: FILA once proposed a revenue target of 40-50 billion yuan in 2026, but only achieved 26.6 billion yuan in 2024, with a growth rate far below expectations.
Market sentiment and external environment disturbances
Anti-corruption measures impact confidence: Anta has recently strengthened internal anti-corruption, announced a list of "never cooperative entities" and severely punished corrupt employees. Although it is good for governance in the long run, it has caused market concerns about the stability of the supply chain in the short term 3.
- Uncertainty in international expansion: Anta plans to enter the North American direct sales market in 2025, but global economic fluctuations and geopolitical risks may slow down its pace of globalization.
- Intensified industry competition: The sports fashion track is crowded, and brands such as New Balance and Lululemon divert consumers through joint ventures and functional innovations, weakening FILA's differentiated advantages.
Outlook: Adjustment period and strategic breakthrough
Anta management emphasized "rational growth" and global layout in its financial report, but it needs to deal with three major challenges in the short term:
- Restart FILA's growth engine: Reshape brand appeal through product innovation (such as strengthening professional sports attributes) and channel optimization (reducing inventory cycles).
- Balance R&D and marketing investment: Improve technical barriers to cope with international brand competition, such as increasing the proportion of sports technology (such as cushioning materials) in R&D.
- Accelerate internationalization: The success or failure of the North American and Southeast Asian markets will determine whether it can upgrade from a "Chinese giant" to a "global brand".
Conclusion
Anta's financial report data shows its scale advantage, but the stock price plunge reveals the capital market's higher requirements for growth quality and sustainability. In the "post-FILA era", Anta needs to prove that its multi-brand strategy can not only "increase" revenue, but also "strengthen" profitability. If adjusted properly, the current stock price fluctuations may provide layout opportunities for long-term value investors.
*Disclaimer: The content of this article is for learning only, does not represent the official position of VSTAR, and cannot be used as investment advice.
