Anta’s Shares Down on Norway Wealth Fund Announcement; Shares Undervalued As Fundamentals Are Intact

Narrow-moat Anta's shares fell 8% following Norway's sovereign wealth fund, or NBIM's, announcement to exclude close peer Li Ning from its investment portfolio due to "unacceptable risk that the company contributes to serious human rights violations." With Li Ning shares down 11% and Anta down 8%, there are growing fears of more investors adopting similar exclusion measures on other Chinese apparel firms like Anta. Since today's decline in share price doesn't reflect changes to Anta's business fundamentals, we would treat volatility in the stock as an opportunistic entry point. The firm's shares are trading at a 50% discount to our HKD 171 fair value estimate, and we still believe the firm will continue to deliver strong earnings growth ahead thanks to its strong portfolio of premium sportswear brands.