Analyst Note| Ivan Su |
Narrow-moat Anta delivered strong retail sales numbers for the fourth quarter of 2021. The group also announced preliminary full-year earnings coming above our estimate, suggesting that the company did not give away profitability to achieve growth. We continue to feel comfortable about the business's long-term position. There is a risk that sales growth will slow over the near term, but that scenario will most likely be caused by macroeconomic factors in China instead of the company's own mis-steps. We fine-tuned our near-term forecasts but maintained our fair value estimate for the firm at HKD 171. After the recent share price pullback, Anta's valuation multiple has returned to the prepandemic level, trading at just 25 times 2022 Pitchbook consensus earnings. We see this as a good opportunity to buy shares of this long-term winner in China's fast-growing sportswear market.