Anta Sports: The Second Half Of The Year'S Spending Rate Climbed.

Summary of performance:

Core brand Anta grew by more than 20.9% annually.

With the increase of the average price of products and the expansion of sales volume, the mid term revenue of Anta brand increased by 20.9% in the year 10, exceeding the increase of the order volume (+17%).

The average price of footwear and clothing increased by 2% and 7.1% respectively, and sales increased by 9.3% and 26.4% respectively.

With the strong sales performance of Anta brand, the overall mid term revenue of the company increased by 22.6% to 3 billion 453 million 100 thousand yuan per year, accounting for 48.3% of our annual forecast.

The income of sports leisure series, children's sports series and Fila (Fei LE) increased by 54.8% year on year, but the proportion of total income remained 6.5%.

Gross profit margin widened by 2.2 percentage points.

In the first half of 10, 44.8% of total footwear sales were self factory production, and the proportion was higher than 35.5% in 2009.

With the expansion of the economy, the average production cost of footwear has been reduced by 4.6%, plus the average price of the product increased by 2%, which has prompted the gross margin of the business to expand by 3.8 percentage points.

On the other hand, due to the expansion of design team and product line upgrade, the average cost of clothing has increased by 5.4%.

But it is good for product design improvement and product structure optimization.

The tax rate increased by 6.5 percentage points, but net profit increased by 24.5% annually.

After the termination of preferential tax treatment, the effective tax rate of Anta increased to 20.7%, while sales and general administrative expenses increased by 0.4 percentage points in the first half of 10.

However, driven by the widening of gross margin, the company's net profit in the interim increased by 24.5% a year.

Prospects:

Anta brand added 461 stores in the first half of 10, accounting for 83.8% of our annual forecast.

We believe that the pace of expansion of stores will speed up the growth of the company's revenue in the second half of the year.

Management refers to the growth rate of same store sales in 7 and August over 10%, and plans to achieve the same store sales growth rate with high number of units in 10.

However, the expenditure on advertising and promotion of Guangzhou Asian Games and the cost of sponsorship of NBA star Garnett will be recorded in the second half of the year, so the ratio of advertising and promotion expenses in the first half of the year is 12% lower.

Management refers to the annual advertising and promotional expenditure ratio of 14%, so it is estimated that the advertising and promotion expenditure ratio in the second half of this year may reach 16% to 17%, and will also be a drag on the company's profitability in the second half of the year.