China Sportswear Giant Anta Jumps on Buyback Plan, Stronger Profit

By Kimberley Kao

Shares in Anta Sports Products jumped after the Chinese sportswear giant announced a share-buyback plan of up to US$1.28 billion and posted a 17% rise in first-half net profit.

The company's Hong Kong-listed shares climbed as much as 12% before paring gains to trade 5.4% higher at 75.50 Hong Kong dollars early Wednesday. Its American depositary receipts advanced 7.1% overnight.

Anta, the largest shareholder of Wilson tennis-racket maker Amer Sports, said Tuesday that it will repurchase up to 10 billion Hong Kong dollars of shares, equivalent to US$1.28 billion, over the next 18 months. The company plans to use its cash reserves to fund the buyback.

The board has "full confidence" in the company's business development and outlook and believes the current share price is below its actual value, Anta said.

For the first half of the year, the sportswear maker reported higher net profit as revenue climbed 14% from a year earlier, supported by a rise in sales across its brands, including Anta and Fila.

Analysts mostly viewed the share-buyback plan as an ambitious but positive move by the company. The weaker consumption environment appeared to remain a concern, with Nomura and Jefferies trimming their target prices while retaining buy ratings on the stock.

Anta's share buyback will support its share price, analysts at Nomura said in a research note. However, they trimmed their 2024 earnings forecast for the company and lowered the target price to HK$115.00 from HK$125.10, pointing to continued soft consumption and strong competition in the sportswear sector.

Jefferies analysts said the company's lowered annual retail sales target for its Fila brand and unchanged guidance for its Anta brand give investors a mixed picture.

The concerns and debate over consumer demand remain, they said in a note. Jefferies reduced its target price on the stock to HK$120.00 from HK$135.00.

Analysts at Daiwa Capital Markets saw the lack of a significant guidance cut as a positive outcome that reaffirms the company's resilience in a challenging macroeconomic environment. Anta's first-half results also clearly beat consensus estimates for both revenue and core net profit, they wrote in a note.

Yet uncertainties remain, Citi research analysts said, referring to the outlook for the second half of the year. The company's cautious remarks about its Anta retail-sales targets despite maintaining its guidance likely reflect a much weaker retail environment in China over July and August, they said in a note.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

August 28, 2024 00:13 ET (04:13 GMT)

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