ANTA Sports Products Limited

Investors, ladies and gentlemen, good afternoon. Welcome to Enter Sports 2025 Interim Results presentation. Let me introduce to you our management. They are Board Chairman and Executive Director, Mr. Ding Shizhong. Executive Director and Co-CEO, Mr. Lai Shixian. Executive Director and Co-CEO, Mr. Wu Yonghua. Executive Director, Mr. James Zhang. Executive Director and CFO Mr. Bi-Ming Wei and Vice President Mr. Lin Wei. In this event, it will be conducted in a purely online format so that global investors and analysts can take part more easily. And we can also reduce carbon emission in this way so that we can discharge our sustainability promise. For convenience sake, on the Zoom platform, please state your real name for the Q&A session. We have just announced the 2025 interim results. Our revenue and profits achieved record high, and the leading advantage continues to expand. Even though there are a lot of uncertainties in external environment, through multiple brand advantage and strong operating capability, we continued to achieve high quality growth. Today, Mr Lai will review our business performance and then Mr Bee will present our financial performance. Then Mr Lai will talk about our outlook. Finally, in the Q&A session, the chairman and the management team will take your questions. Let's invite Mr Lai to present our company's results. Investors, ladies and gentlemen, good afternoon. Let me report to you our first half business and operation results. In the first half of the year, despite significant market challenges, the group demonstrated its strategic and operational strengths, with all brands continue to outperform the market. In the first half, group revenue was up 14.3% year-on-year to $38.54 billion, expanding its leading position in the Chinese market. Our operating profit margin was 26.3%, up 0.6% year-on-year, maintaining high operational efficiency. Excluding the one-time gain from last year's AmosBot listing, profit attributable to shareholders was up 14.5% year-on-year to 7.03 billion RMB. The group maintained stable operations and consistent cash flow generation, with net free cash flow reaching 7.55 billion RMB. We will pay interim dividend of 1.37, representing a 16.1% increase year-on-year while maintaining dividend payout ratio above 50%. In first half 2025, the Chinese economy achieved growth and stability. GDP rose 5.3% year-on-year. Total retail sales of consumer goods was up 5%. June Consumer Confidence Index was 87.9, showing a slight recovery from same period last year, but still it was at a relatively low level. We believe that China's sports market will retain substantial long-term growth potential with short-term growth rates continuing to outperform the broader consumer sector, especially within the outdoor segment, which remains in the early stages of growth cycle. So it will continue to show good growth. We also observed the following characteristics in the consumer market in the first half of the year. First, consumers have elevated their expectations for quality. In the high-end market, consumers have shifted from merely paying for logos to prioritizing functionality, technology, and expertise, benefiting niche brands like Descente and Collinsports. In the mass market, Consumers now demand high quality even from affordably priced markets or products favoring high quality domestic brands such as Anta. Second, consumers are willing to pay a premium for emotional value, novel experiences, and lifestyle offerings. This benefits mid to high-end fashion and niche brands focusing on niche sports like golf, tennis, and outdoor activities such as filler, dissonance, and call-in sports. Besides, there are the following characteristics in the industry. First, offline retail has entered a saturated competitive landscape with a slowing foot traffic, declining conversion rates and more revenue falling short of previous level. In this environment, integrated or general brands face greater pressure, while outdoor and niche brands with sustained demand growth have room to accelerate store expansion. Second, in the online market, live streaming platforms continue to expand their user base by attracting younger users, accelerating the capture of incremental growth opportunities. While traditional platforms experience stagnant traffic growth, they deepen their focus on high-end customers, where mid- to high-end brands and niche categories demonstrate competitive advantages. Next is a business review for various brands. Anta Brand continues to advance its core strategy of mass market positioning, breakthroughs in performance bonds, brand transformation and upgrades. So we use technology empowerment to create good products across all categories from mass sports to specialized vertical sports. So we strengthened our leadership position in the Chinese market while actively expanded into international markets. Enterbrand's new business formats and store models maintained strong growth, with contributions to high-tier markets steadily increasing. The Enterbrand's IP portfolio also yielded results in the first half of the year. running shoes like PG7, C family and MAC series and then for basketball shoes there is Owen and also apparel lines reaching very good sales results for PG7 in only half a year's time sales volume reached 2 million pairs so this was outstanding performance for Answer Kids in the first half online business maintained double digit growth outperforming the industry for products. We introduced the running shoes, ARC Pro running shoes designed for children's foot structure and featuring pioneering dynamic footbridge technology, making it the top choice for student physical fitness tests. In overseas markets, Southeast Asia nearly doubled our sales with most growth driven by same store increase. New contributions from the US offline business and Middle East business during the period propelled overseas revenue. to grow over 150% year-on-year in the first half. Fila Villa focused on professional sports and also at leisure, fashionable sports and also kids. These are the four categories. And for different segments and niches, we have introduced high quality products. In the first half, we continue to reshape our image and also upgrade our management culture and our other core capabilities. We refined our retail operation capability to enhance our ability to face up to economic volatility. As a result, we achieved stable growth, outperforming the industry in growth rate. Filler strives to create an image of one filler so a high-end ad leisure is our positioning so for the original customer segments we focus more on medium or middle tier consumers then we would like to have innovations and go deep in our operation so we focus on product development innovation to achieve technology and design combination So for Fila core brands in running shoes and other categories, we have created best-selling products in this period. So these are the two main contributors for Fila Fusion. We emphasized on product design. And then there are outdoor styles as well, which have attracted young consumers. So we have upgraded the fashion elements of the brand. For Fila Kids, so we continued our brand DNA. It is positioned towards the middle high-end kids market. So we reinforced our product matrix and also product line structure. And then our tennis line also performed well in terms of channel building. Fila focused on different stores to reshape its retail standard. So we went for upgrades and also new format store introduction. At the same time, we focused a lot on stores for vertical customer segments. We enhanced differentiation and characteristics. Resources are focused on high productivity stores to enhance single store productivity. For Descente, it is a premium professional sportswear brand. So by continuous product innovation and establishment of high-efficiency store model, we have achieved satisfactory growth. In the first half, Descente's store productivity rose from nearly 2.3 million to around 2.7 million this year. A number of stores achieving annual productivity of 50 million increased from 16 last year to 33. Desson's online revenue grew by over 50% in the first half of the year, with regular-priced sales accounting for over 80%. An average discount rate was 10%, achieving high-quality, high-growth online performance. During the period, Desson's core products, including polo shirts, jackets, running shoes, and golf apparel, Exceeded sales targets and achieved high sell-out rates Premium running shoes sales exceeded 100,000 pairs Gaining recognition among high-end consumers And then for outdoor lifestyle brand Collins Sport, it capitalized on the consumption upgrade trend in China's outdoor market. Focusing on hiking and camping as its two primary outdoor scenarios, the brand demonstrated robust growth momentum, emerging as the fastest growing brand within the group during the first half of the year. Colin achieved store productivity exceeding 2 million in first half, with offline revenue growth surpassing 80%, mostly driven by same-store sales growth. Online growth also neared 80%, maintaining high-quality expansion with discounts above 15% off. So originally Colin operated well in Northern and Northeast China, but this year Colin achieved breakthrough in other regions with store productivity growing over 50% year-on-year. In the first half, Colin rapidly elevated brand awareness, doubling its presence on red notes year-over-year and strengthened its positioning in the minds of target customers, especially female users. So there is big enhancement in that mindshare. In terms of retail network, the group continued to optimize our channel network, focusing on store upgrades and efficiency improvement. As of the end of June, Adult stores total 7,187. For answer kit 2,722. Filler core brand 1,266. Filler kits 590. Filler fusion 198. Descente 226. Collinsport 199. Maya 50 stores. For online business, e-commerce contributed 34. 0.8% of total revenue in the first half of the year, up 17.6% year-on-year. Our online business maintains a leading position within the industry. During the 618 Shopping Festival in the first half, Fila achieved the highest transaction volume on Tmall and Douyin. Among the top 10 brands in the sports, footwear and apparel category, our groups Fila, Anta and Descente secured the top three positions. In terms of digitalization, the group is steadily embedding AI technology applications into our systems. This includes establishing an AI technology platform, integrating mature AI models, and providing intelligent tools to support all departments. These efforts enhance management decision-making, production efficiency, and end consumer experiences. For example, while serving China's national teams, we utilized digital motion capture systems and multi-dimensional sensors to collect athletic data. enabling us to customize personalized training and competition gear for athletes. In design of products, we introduced AI-assisted design systems to rapidly generate multiple design proposals, completing exterior design and order placement in as short as four days. This significantly boosts efficiency compared to traditional design, which requires three to six rounds of physical prototyping. and takes at least one month. For operations management, we launched the industry's first automated retail solution, Anjun Wu You System, enabling AI-driven automated store operations. And then for marketing, we integrated member data with store merchandise characteristics through AI analytics to establish an end-to-end customer monitoring system, enhancing consumer experience and conversion rates. Next, I would like to share our latest progress in sustainability for the first half of the year. In order to strengthen consumer awareness of sustainability, our brands have launched various sustainable products. These include items featuring carbon capture technology fabrics, fluorine-free waterproof and breathable materials, recycled PET bottle materials, and FSC-certified eco-friendly packaging. Sales of these products alone have exceeded 1 million units. This is a truly remarkable achievement. We have also extended sustainability principles to retail operations. ANTA Zero Carbon Emission Store celebrated its first anniversary, achieving emissions reductions across design, fixtures, building materials, equipment and energy consumption. Filler stores are rolling out comprehensive smart energy management systems to optimize resource usage through technology, driving green and low-carbon practices. We have established a clear roadmap for replacing high-risk chemicals, becoming China's first sports brand to proactively commit to phasing out PFAS in alignment with international market standards. Furthermore, our inclusion in the Hang Seng ESG50 Index last Friday confirms our position among Hong Kong's top 50 listed companies for ESG performance, underscoring our outstanding achievements and leadership in... ESG Practices. Thank you. Thank you, Mr. Lai. So the groups have single focus, multiple brand and internationalization strategy. So we're able to give full play to our advantages to achieve high quality growth. So now let's turn to Mr. B. Good afternoon, everyone. Now let me present our financial performance. First, overall group revenue, 38.54 billion, up 14.3% year-on-year, with all brands achieving steady growth in revenue. Enterbrand, in the first half, revenue was $16.95 billion, up 5.4% year-on-year. D2C strategy continued to deepen, with online sales growing 10% for Enterbrand. For Filabrand, in the first half, revenue was $14.18 billion, up 8.6% year-on-year. Online sales of Fila also achieved double-digit growth. And then other brands including Descente and Collinsport generated revenue of 7.41 billion RMB for the first half year. Through premium quality and differentiated brand positioning, they enhanced consumer experience and maintained robust growth, achieving a growth rate of 61.1%. Gross profit margin. The group's overall gross profit margin was 63.4%, down 0.7 percentage point year-on-year. Gross profit margin of Enterbrand was down 1.7 percentage point year-on-year, primarily due to increased Investment in certain specialized product categories and mindshare product categories and the continued rise in the proportion of online business where discounts are lower, so leading to a structural decline in GP margin. GP margin of filler brand was down 2.2 percentage points year-on-year mainly due to slightly lower online discounts year-on-year coupled with increased online sales share while offline full-price stores maintained comparable discount levels. and we took the initiative to increase proportion of footwear products which carried a slightly lower GP margin. Other brands, gross profit margin increased 1.2 percentage point due to favorable discount performance. Operating expenses. Staff costs ratio, this year it's 15.7%, up 0.2 percentage point year on year. The group in the first half of the year intentionally increased the budget for compensation and benefits of retail staff. So that's why there was an increase. A&P expense ratio 6.6% down 0.9 percentage point year-on-year. Last year, it was a major sports year. So A&P expenses was high. This year, A&P expenses were stable and normal as in normal years. Overall revenue also increased, so that's why A&P expense ratio came down. R&D ratio 2.6%, more or less the same as last year. In the first half, we invested $1 billion in product R&D and innovation, advancing forward-looking scientific research in new materials, technologies and processes. This yielded multiple proprietary technological achievements and also our competitive advantage. Operating profit margin, overall speaking, 26.3% for the group, up 0.6 percentage point year-on-year. For our answer brand, OP margin, 23.3%. up 1.5 percentage point year-on-year, primarily achieved through refined operations and optimized resource allocation to reduce costs and enhance efficiency. Filler brand OP margin was 27.7%, down 0.9 percentage point year-on-year. So this was primarily due to a decline in GP margin for filler brand, partially offset by improved operational efficiency and reduced expense ratio. So Fila operating profit margin was down 0.9 percentage point. Other brands operating profit margin was 33.2% up 3.3 percentage point, primarily driven by the rapid growth of Descente and Collinsport brands, which boosted gross profit margins. So there are economies of scale. Net profit margin attributable to shareholders including Amersport's profit sharing was 18.2%, maintaining more or less the same level as last year. Since 2021 to 2025, in this five-year period, this is the best level. In 2024, Amer Sports returned 200 million RMB positive profit to shareholders in first half 2025. This number rose to 430 million RMB with expectation of even more robust profit return for the full year. Interim Dividend 137 Hong Kong cents representing a 16% year-on-year increase with payout ratio of 50.2% delivering sustained and stable long-term returns for shareholders Working Capital Management Inventory Turnover Days In the first half was 136 days In this period, there was acquisition and consolidation of Wolf Claw, leading to a year-on-year increase in inventory, excluding this impact. Inventory turnover days rose by 18 days. And for all channel inventory... is up 22 days. Inventory to sales ratio remains at a healthy level of about five. The group maintains real-time visibility into all channel inventory across all brands. We track monthly inventory reduction progress and utilize OTB purchasing model to guide new merchandise orders. So overall inventory is still at a healthy, reasonable level. Receivable turnover days, 52 days. Payable turnover 19 days more or less the same as same period last year Cash flow Our net cash inflow from operating activities in the first half 10.9 billion An increase of 2.4 billion year-on-year Operating Cash inflow up 29% Sellout rate or cash collection rate 99% Reflecting exceptionally robust working capital management capabilities Free cash flow $7.548 billion More or less the same as last year As of 30th June For cash and deposits The total amount was $55.5 billion. Interest bearing liabilities, $24 billion. Net cash, $31.5 billion. Maintaining a highly sound financial position. Every year, the group continuously refines our multi-brand, differentiation, dynamic management model to drive overall high quality growth for the group. So we test our operating efficiency and we invest into the future. And also we make sure robust profitability. And this year, our revenue and operating profits achieved double digit growth. for ANTA and Fila, two main brands. Cost and also online business share increased, so GP margin decreased. However, by doing strong budgets management, refined operation, and also improvement of operating efficiency cost reduction, we achieved a continuously stable operating capability. In terms of operational health, in the first half of the year, net operating cash flow was up 29% year on year, demonstrating robust cash generation. Inventory turnover days increased this year. However, we very quickly adjusted our procurement model So overall speaking, all channel inventory was at a five-time level, which is quite healthy. And then for investments in the first half, R&D investment exceeded 1 billion in the first half, dedicated to creating consumer favorite products. We intensified channel investments in premium venues. So in 300 core malls in China, based on our data, same store sales of our multiple brands and also store productivity are at leading level in the industry. And we continue to implement our globalization strategy. Southeast Asia, in the first half, completed the budget targets. And in the Middle East and the US, we have started to make our plan and deployment. So through our multi-brand differentiation dynamic management model, we steadfastly execute our strategies to drive high quality growth. So that's all for financial performance. Thank you. Thank you, Mr. B. In the first half, various indicators have exceeded expectation. Looking into the future for ANTA and AMR Sports under the leadership of these two listed companies, we will continue to walk on our very unique pathway. So now we will ask Mr. Lai to talk about future prospects. Looking into the second half of the year, we'll continue to uphold our single-focus, multi-brand, and also globalization strategy, steadfastly driving sustainable development through a long-term perspective as we advance steadily in a market environment full of both opportunities and challenges. In the second half, our two major brands, Ansa and Fila, will continue their winning campaigns. For Ansa, we have to achieve breakthrough in the new retail format, and Fila will continue its high-quality growth. The group will invest in product innovation, striving to build technological barriers and enhance product competitiveness. For anti-brand, we will deepen innovation transformation, incubate diverse innovative formats and vertical specialty stores, and create differentiated shopping experience. Fila will further deepen its presence in tennis, fully leverage premium brand resources to consolidate core competitiveness, and vigorously build and strengthen core categories and bestseller portfolio. At the same time, it will strategically deploy new store formats to more precisely respond to consumer demand. Descente, Collinsport and Meijer will continue to maintain high growth rates, incubate promising premium products and continue to expand. across channels to provide robust support for the group's multi-brand strategy and diversified development. For the newly acquired business, we have already built a team, a joint management team, and will formulate a three to five-year revitalization plan within this year, focusing on reshaping its product and brand systems around its core values. For organizational and talent development, our group will empower our brands to strengthen autonomous decision-making capabilities, fostering innovation and maintaining operational agility, while building a diversified specialized talent pipeline. For digitalization, the group continues to strengthen the integration of the three core elements, people, goods and venues. to drive high-performance material R&D and disruptive process innovation. We have initiated an AI strategic layout and will increase investment in AI technology to promote its application across all levels of the group in the coming five years. Thank you all.