[ET Net News Agency, 14 September 2018] UBS Global Research lowered its target price
for Anta Sports Products (02020) to HK$35.71 from HK$42.8, and maintained its "neutral"
rating.
The research house views the proposed Amer acquisition as a low-return deal. It thinks
earnings contributions are likely to be offset by debt financing costs, while the group's
net gearing ratio could increase to 63% from the current net cash position, leading to a
potential cut in dividends.
UBS feels Anta's expertise will be limited in terms of branding and product development,
as Amer's brand portfolio focuses on the outdoor and ball game segments.
With Pou Sheng's (03813) revenue growth decelerating to 17% in August (versus 19% in
January-July 2018), UBS expects sportswear industry end-demand to further decelerate in
4Q, especially due to a high base. UBS cut its earnings forecasts by 5-9% for 2018-20,
mainly due to its lower revenue forecasts. (KL)