Disclaimer
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These presentation slides have been prepared by ANTA Sports Products Limited (the "Company") solely for use during its presentation held in connection with its results for the 6 months ended 30 June 2015 and may not be taken away, reproduced or redistributed. In particular, these presentation slides should not be transmitted into the United States or distributed in the United States, and they should not be distributed to any U.S. person (as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act")). The shares of the Company have not been, and will not be, registered under the Securities Act or the Securities Laws of any state of the United States or other jurisdiction and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any applicable state or local securities laws. These presentation slides are only addressed to and directed at persons in member states of the European Economic Area who are "qualified investors". In addition, in the United Kingdom, these presentation slides are being presented only to, and is directed only at persons (i) who have professional experience in matters relating to investments, or (ii) to whom it may otherwise lawfully be communicated (all such persons in the United Kingdom who are also Qualified Investors being referred to as "relevant persons"). These presentation slides must not be acted on or relied on by persons who are not "relevant persons" and persons who are not Qualified Investors. The distribution of these presentation slides into other jurisdictions may be restricted by law. By attending this presentation you represent, warrant and undertake that: (i) you are agreeing to be bound by the foregoing restrictions; (ii) you will treat and safeguard as strictly private and confidential these presentation and its contents and any comments made during the presentation and (iii) you will not at any time have any discussion, correspondence or contact concerning the information in these presentation with any person. This presentation is not a prospectus and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation of any offer to purchase or subscribe for any securities of the Company nor shall it (or any part of it), or the fact of its distribution, form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company. This shall not constitute and offer to buy or sell any securities of the Company within the United States or to "US Persons", as defined in Regulation S promulgated under the Securities Act. The information contained herein is for discussion purposes only and does not purport to contain all the information that may be required to evaluate the Company or its financial position. If you are considering engaging in investment activity, you should seek appropriate independent financial advice and make your own assessment. These presentation slides (and any subsequent discussion arising thereon) may contain certain projections and forward looking statements with respect to the financial condition, results of operations and business of the Company and certain plans and objectives of the management of the Company which involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such projections or forward looking statements. Such forward looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the political and economic environment in which the Company will operate in the future. The information contained in these presentation slides has not been independently verified. Some of the information is still in draft form and will only be finalised at the time of publication of the Company’s report for the year ended 31 December 2015. The information and opinions in these presentation slides are provided as at the date of this presentation and are subject to change without notice. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company nor any of its directors, affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of these materials.
FINANCIAL OVERVIEW
Lin Qingfeng (left), Lu Xiaojun (middle) &
Liao Hui (right), Olympic Weightlifting Champions
Financial Highlights
2015 1H 2014 1H Changes
(RMB million) (RMB million) (%)
Revenue 5,109.8 4,121.9 24.0
Gross profit 2,382.0 1,860.0 28.1
Profit from operations 1,266.9 986.1 28.5
Profit attributable to equity shareholders 965.3 802.8 20.2
Free cash inflow 952.5 824.8 15.5
(RMB cents) (RMB cents) (%)
Basic earnings per share 38.65 32.17 20.1
(HK cents) (HK cents) (%)
Interim dividend per share 30 25 20.0
(%) (%) (p.p.)
Gross profit margin 46.6 45.1 1.5
Operating profit margin 24.8 23.9 0.9
Margin of profit attributable to equity shareholders 18.9 19.5 0.6
Dividend payout ratio 62.8 61.9 0.9
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Revenue
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Revenue by product
2015 1H 2014 1H Changes
(RMB million) (RMB million) (%)
Footwear 2,400.5 2,009.5 19.5
Apparel 2,471.5 1,939.4 27.4
Accessories 237.8 173.0 37.5
Overall 5,109.8 4,121.9 24.0
in revenue > in order value of 2015 1H trade fairs for ANTA products as
announced before because:
Growth of other businesses are relatively strong
Revenue by product
2015 1H 2014 1H Changes
(% of revenue) (% of revenue) (p.p.)
Footwear 47.0 48.7 1.7
Apparel 48.4 47.1 1.3
Accessories 4.6 4.2 0.4
Overall 100.0 100.0
Accessories
Footwear Apparel
GP Margin
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GP by product
2015 1H 2014 1H Changes (%) GP (RMB million)
Footwear 1,099.5 944.6 16.4
Apparel 1,192.8 850.1 40.3
Accessories 89.7 65.3 37.4
Overall 2,382.0 1,860.0 28.1
GP margin by product
2015 1H 2014 1H Changes (p.p.) GP margin (%)
Footwear 45.8 47.0 1.2
Apparel 48.3 43.8 4.5
Accessories 37.7 37.7 -
Overall 46.6 45.1 1.5
GP Margin 1.5p.p. to 46.6%
in footwear GP margin due to:
Strategically launched more value-for-money high-performance footwear products
Offsetting by FILA’s better retail discounts
in appeal GP margin due to:
Petrochemical prices
FILA’s better retail discounts
Operating Expenses
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A&P expenses %* 0.2p.p.
to 11.0% due to:
Sponsorship activities
Staff costs %* 0.5p.p. to
11.1% contributed by:
Operational efficiency
R&D costs %# 1.0p.p. to
5.2% due to:
More R&D investments on functional products with advanced technologies
* In terms of revenue
# In terms of cost of sales
Operating Expenses Ratios
Profit Margins
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OP Margin 0.9p.p. to 24.8% Margin of Profit Attributable to Equity Shareholders 0.6p.p. to 18.9%
OP margin < GP margin due to:
Advertising & sponsorship activities
Impact of provision for doubtful debts
Margin of profit attributable to equity shareholders due to:
Net finance income
Effective tax rate
Effective Tax Rate
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Effective Tax Rate
Effective tax rate 1.2p.p.
to 26.4% due to:
Certain subsidiaries achieved stronger business growth during the financial period & their profits are taxed at standard income tax rate
Working Capital Management
2015 1H 2014 1H Changes (days) In 181 days In 181 days
Average inventory turnover days 57 59 2
Average trade receivables turnover days 33 38 5
Average trade payables turnover days 42 69 27
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Average inventory turnover days 2 days
Average trade receivables turnover days 5 days
Average trade payables turnover days 27 days
Represents a better managed cash generating process & a healthy operating cash inflow
Assets/Liabilities Turnover Days
Liquidity & Financial Resources
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2015 2014
(RMB million) (RMB million)
6 months ended 30 June
Operating cash inflow 1,146.9 983.0
Capital expenditures (194.4) (160.9)
Others - 2.7
Free cash inflow 952.5 824.8
As at 30 June
Cash & cash equivalents 4,453.1 4,401.3
Fixed deposits held at banks with maturity over 3 months 1,625.0 1,170.0
Pledged deposits 210.4 215.5
Other current financial assets 350.0 535.0
Bank loans (1,032.9) (1,023.2)
Net cash & cash equivalents as at 30 June 5,605.6 5,298.6
Operating cash inflow > profit attributable to equity shareholders
Represents effective cash generating process
BUSINESS OVERVIEW
Rajon Rondo (left) & Chandler Parsons (right), point guard & small forward with the Dallas Mavericks of the NBA, respectively
Market Review
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China’s GDP maintained steady growth
To maintain economic growth momentum,
the Chinese government has continued its
economic reforms & implemented measures
to drive consumption & urbanisation
We leverage our strengths to win amid industry consolidation & to capture market opportunities
China’s economy in 2015 1H Sportswear industry - opportunities
China’s policymakers adopt measures to
accelerate the development of the sports
industry & to boost sport-related consumption
Stronger sportswear brands are expected to
gain market share amid improving livelihoods
& the growing popularity of sports in China
ANTA is positioned as a functional sportswear
brand that focuses on popular sports in the
mass market, including basketball, running &
cross-training
In addition to building brand loyalty among
children through the ANTA Kids sportswear
series, we also launch “ANTA-NBA” co-
branded adult & kids products to cater to the
tremendous demand from NBA fans
Brand & Product Portfolio
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We diversify our brand & product portfolio to tap market potential
We leverage FILA’s high-end sports fashion brand position & differentiated products to tap potential in the high-end market
Brand Management
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ANTA represents China’s sports essence through the sponsorship of the COC, CSD, 24 China national teams & renowned Chinese athletes
Launched new advertising campaign for ANTA
cross-training product series
Named one of the "Best China Brands 2015"
for the 6th consecutive year by Interbrand
Kicked-off “RUN WITH ME” marketing
strategy & supported ultra-marathon runner
Chen Penbin in the “Challenge 100” event
ANTA’s “Challenge 100” functional running
shoes received an overwhelming response
Brand Management (cont’d)
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Enriched our portfolio of “ANTA-NBA” co-
branded series products by introducing the
2015 NBA All-Star Game and Finals editions
ANTA is a functional sportswear brand focusing on the mass market
Signed Golden State Warriors star shooting
guard & NBA Champion Klay Thompson
Tailor-made the designated “KT FIRE”
basketball shoe for Klay Thompson to help
him win his 1st NBA title
Kids Sportswear Series
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Our Kids sportswear series is well-received & well-positioned to maintain market leadership due to its good credibility & affordability
Offer stylish, protective & comfortable Kids
sportswear series featuring our advanced
technologies for children aged 3-14
“ANTA-NBA” co-branded shoes and accessories
have been added to our Kids product portfolio
Number of Kids sportswear series stores
stood at 1,334 by the end of June 2015 (end
of 2014: 1,228)
E-commerce Business
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Allow outstanding offline distributors to
operate webstores so as to maximise mutual
benefits between online & offline stores
Launch more online exclusive products to
prevent product cannibalisation
Our e-commerce business serves as a new, interactive platform that generates additional sales by promoting our brand & innovative value-
for-money products to both online & offline shoppers
Set up official online flagship store
(www.anta.cn) & operate self-owned webstores
on leading e-commerce platforms in China
Some webstores are managed by 3rd party
online retailers under our stringent control &
unified sales policies
Fila Business in the PRC
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Enhancing FILA’s awareness through celebrity
seeding, e.g. “Where Are We Going, Dad?”
Number of FILA stores stood at 544 in China,
Hong Kong & Macao by the end of June 2015
(end of 2014: 519), including Hong Kong’s
newly-opened flagship store at iSQUARE
We continue to enhance FILA’s brand desirability, product offerings & store image to tap the promising potential in the high-end market
Launched 2 new product lines, FILA GINNY &
FILA RED as well as 2 new sub-brands, FILA
KIDS & FILA INTIMO
FILA’s new ambassador Chris Evans has
joined Shu Qi to promote FILA’s trendy
lifestyle brand image & stylish products
Distribution Network Management
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As store efficiency > store no., we have consolidated smaller, less
efficient stores while continuing to open bigger & more attractive stores in prime locations across China
End of Jun 2015
End of Dec 2014
Half-year Change
SSSG (2015 1H)
No. of ANTA stores 7,340 7,622 282 / 3.7% High single-
digit
2015 1H (in 181 days)
2014 1H (in 181 days)
Change
Average trade receivables turnover days 33 days 38 days 5 days
No. of ANTA stores while maintaining growth momentum in SSSG, which
means store profitability is improving
AR days shows our distributors are maintaining healthy cash flow
Product Innovation
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Launched “Challenge 100” functional running
shoes for professional runners, which are
selling at only RMB499
Introduced A-Web 3.0 technology, which
provides better cooling and ventilation
compared to A-Web 2.0
We provide innovative, high-quality & value-for-money sportswear products to customers & athletes
Introduced over 770, 1,540 & 640 new styles
of footwear, apparel & accessories,
respectively, in 2015 1H
ANTA’s footwear ranked as the top seller of
travel & sports shoes in China for 14th
consecutive year
Supply Chain & Production
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Responsive to market conditions & changes in
consumer preferences through our strategic
mix of in-house & outsourced production
Self-production ratios in 2015 1H: footwear
47.6% & apparel 15.2% (2014 1H: 54.3% &
15.9%)
We maintain flexibility & efficiency in our supply chain to stay responsive to market changes & to better meet unforeseeable demand
Adjust production schedules & fulfill
replenishment orders in a timely & cost-
effective manner
Continue to strengthen our supply chain to
shorten production lead time
Support our supply chain partners to enhance
quality controls & workflow efficiency
PROSPECTS
Chen Penbin, Chinese ultra-marathon runner
Future Development
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Strengthen our brand influence with effective
marketing strategies, sponsorships & endorsers
Bolster sales through innovation e.g. launch of
A-Strata & expansion of potential businesses,
e.g. FILA, ANTA Kids, e-commerce, etc.
We are well-prepared to gain market share & to tap mid-to-long-term growth potential to achieve sustainable growth
Optimise our retail-oriented measures,
operations & supply chain to stay competitive
Targeted store numbers for 2015: 7,200-7,300
(ANTA); 1,400-1,500 (Kids); 550-600 (FILA)