[ET Net News Agency, 21 June 2018] UBS Global Research assumed coverage of Anta Sports
Products (02020) with a "neutral" rating from "buy", based on valuation, and slightly
lowered its price target to HK$44.15 from HK$45.
The research house expects higher revenue contributions from direct sales (the online
channel and self-owned retail) to lead to higher working capital investment. Anta's 68%
ROIC in 2017 topped peers' 16-44% by UBS's estimate. Apparel made up 61% of Anta's revenue
growth from 2013-17 and accounted for 58% of total revenue in 2017 versus 39% and 41% for
Nike and Adidas, respectively.
The highly competitive apparel market suggests increased earnings volatility for Anta,
based on UBS's analysis of global apparel companies' historical earnings. It believes the
stock is now fairly valued at 22x 2019 PE versus the three-year historical range of
14-21x. (KL)