According to the analysis, the IPO of Amalfen Sports may help Anta enhance its international reputation and further achieve its globalization goals.
Punctuation financial researcher Dong Lin.
"Archaeopteryx", "Salomon" and "Anta", what do you associate with the three keywords in series?
At the beginning of 2024, the most eye-catching events in the capital market are Arc'teryx, Salomon parent company, Anta Sports (hereinafter referred to as Anta, 2020).hk、anpdy.OO) is a subsidiary of AMERSPORTS, Inc(hereinafter referred to as Amalfen Sports) IPO place.
On January 5, Anta announced that its joint venture company, Amer Sports Holdings (Cayman) Limited (hereinafter referred to as "AS"), a non-wholly-owned subsidiary of Amalfen Sports, has formally submitted F-1 documents to the U.S. Securities and Exchange Commission (SEC) to be listed on the New York Stock Exchange. Goldman Sachs, Bank of America, JPMorgan Chase, Morgan Stanley, Citigroup and UBS served as the joint lead underwriters for the IPO of Amalfen Sports, and more than 10 investment banks, including CICC, HSBC and BNP Paribas, participated in the issuance.
Punctuation financial researchers noticed that as of now, Amalfen Sports has not made a significant contribution to Anta's profits. According to the financial report data, from 2019 to 2021, the net loss of Anta's joint venture company AS Holding was RMB109.2 billion yuan, 11400 million yuan, 15.4 billion yuan, with a total loss of nearly 2.4 billion yuan. In 2022, AS Holding turned losses into profits, enabling Amalfen Sports to contribute about 28 million yuan in profits to Anta for the first time.
As of September 30, 2023, Amalfen Sports' total liabilities were 81$3.8 billion, of which the largest liability was $40US$1.3 billion from related party loans. For the purpose of the IPO fundraising, Amalfen Sports said that it plans to use the net proceeds from the issuance to repay all outstanding borrowings of existing shareholder loans, two joint venture loans and co-investment loans, as well as part of the outstanding borrowings of the revolving loan. Although the company did not disclose the number of ** to be issued and the unit price per share in the prospectus, market analysis predicts that the amount of funds that Amalfen Sports plans to raise this time may be between 1 billion and 3 billion US dollars, and the company's valuation may reach 10 billion US dollars (about 70 billion yuan) after listing.
Huatai ** Research Report predicts that after the successful listing, Amalfen Sports will effectively reduce the level of debt and interest expenses, and increase its profits, which is expected to become a catalyst for Anta's stock price in the short term.
Who benefits from the proposed listing of Amalfen Sports?
Domestic consumers may be relatively unfamiliar with Amalfen sports, but when it comes to the "urban three-piece suit" - Arc'teryx's jacket, Salomon's sneakers and lululemon's yoga pants - consumers are familiar with it. Among them, Amalfen Sports accounts for two.
According to the data, Amalfen Sports was founded in 1950 and is a Finnish sporting goods company headquartered in Helsinki, Finland. Up to now, Amalfen Sports has 11 brands such as Arc'teryx, Salomon and Wilson, and its products are used in outdoor, skiing, tennis, golf and other sports fields. As of September 30, 2023, Amalfen Sports has more than 330 self-operated retail stores in 24 countries around the world.
In 2019, Anta partnered with Fountainvest SPV (FountainMind Capital), Anamered Investments (an investment company held by Lululemon founder Chipwilson), and Tencent Holdings (0700hk、tcehy.oo) and other consortiums, spending 46600 million euros (about 36 billion yuan) acquired Amalfen Sports. It is also the largest cross-border acquisition in China's sporting goods industry to date. According to the prospectus, the shareholders holding more than 5% of Amalfen Sports include Anta, FountainEst Capital, Anamered Investments, and Tencent Holdings. According to Anta's financial report for the first half of 2023, its current equity interest in Amalfen's parent company, As Holding, accounts for 527%。
As for the reasons for the independent listing of Amalfen Sports in the United States, some analysts in the industry believe that, on the one hand, the previous huge acquisition used leverage, and Amalfen Sports has been losing money in the past few years, and Anta has a certain amount of debt pressure; On the other hand, Amalfen Sports' brands such as Arc'teryx have just opened up the market in China, and Anta needs funds for the next step of expansion.
Punctuation financial researchers noted that if Amalfen is successfully listed in the United States, in addition to the possibility of optimizing financial data, it is more important for Anta to help Anta gain more influence and popularity in the international market and further achieve its globalization goals.
It is worth mentioning that in January 2023, Anta underwent its largest management change in 16 years. Ding Shizhong, the former head of ANTA, stepped down as CEO and remained as Chairman of the Board to directly manage the Group's internal audit and oversight functions and mergers and acquisitions, while Zheng Jie, an Executive Director of ANTA, stepped down as President of the Group and CEO of the Outdoor Sports Brand Group, and was responsible for related businesses in his capacity as CEO of Amalfen Sports.
From 2020 to 2022 and the first three quarters of 2023, the main accounting data of Amalfen Sports(US$ millions).
Data**: Company prospectus.
The three core brands accounted for more than 90% of the revenue, with the fastest growth rate in Greater China
In terms of performance, Amalfen Sports' revenue has continued to increase in recent years. According to the prospectus, from 2020 to 2022, the company's revenue was 24$4.6 billion, $30$6.7 billion and $35$4.9 billion, with a compound annual growth rate of 204%；Gross margins were: 1% and 497%；In the first three quarters of 2023, the company's revenue increased by 299% to 305.3 billion US dollars, and the gross profit margin also exceeded 50% to 522%。
In terms of profitability, Amalfen Sports has been in a state of loss. From 2020 to 2022, the company's net loss was 2$3.7 billion, 1$2.6 billion and 2$5.3 billion, adjusted EBITDA of 3.3 billion$1.1 billion, 4$1.7 billion and 4$5.3 billion, with a compound annual growth rate of 206%。In the first three quarters of 2023, the company recorded a net loss of 1$1.4 billion, still unprofitable, adjusted EBITDA up from 2.0 percent in the same period in 2022US$6.2 billion, an increase of 613% to 4$2.2 billion.
According to the prospectus, Amalfen Sports divides its 11 brands into three categories: technical apparel, outdoor performance and ball &racquetsports'Teryx, Salomon and Wilson are the core leading brands in the above three categories. The data shows that the ARC in the first three quarters of 2023'The three major brands of Teryx, Salomon and Wilson achieved revenue of 9$4.1 billion, 9$4.9 billion, $8US$6.6 billion, with revenue as a percentage of the total. 4%, accounting for more than 90% in total.
From a regional point of view, Amalfen Sports sales are mainly in overseas markets. According to the prospectus, in the first three quarters of 2023, the company achieved revenue of 12$2.6 billion, a year-on-year increase of 193%, accounting for about 40% of total revenue; Revenue in the EMEA area for the same period was 9$9.9 billion, a year-on-year increase of 226%, accounting for about 33% of revenue, ranking second; In the fastest-growing market, revenue in Greater China was 5$9.3 billion, a year-on-year increase of 676%, accounting for about 19% of revenue.
In fact, the rapid expansion of revenue in Greater China is not limited to 2023. Under the impact of shrinking consumer demand, the company's revenue in Greater China still increased from 2.2% in 20200.2 billion US dollars, which increased to 5$2.4 billion, with a CAGR of 609%；The percentage of total revenue increased from 83% to 148%, and the operating margin exceeded the company's overall business margin.
Punctuation financial researchers noticed that Amalfen Sports was able to achieve rapid growth in Greater China'Teryx Archaeopteryx is indispensable. In the first three quarters of 2023, Arc'teryx Greater China's revenue increased by 61% year-on-year8% to 4With US$5.3 billion, the revenue of Greater China alone contributes nearly half of the global revenue of Amalfen Sports Arc'teryx, which is the largest market deservedly. According to the prospectus, ARC'Teryx's loyalty program has more than 1.7 million members in Greater China, up from just 140,000. At the same time, the Salomon brand also continues the marketing strategy of Arc'teryx in Greater China, which is described in the prospectus as "developing a repeat strategy".
As of September 30, 2023, Amalfen Sports has 63 Arc'teryx self-operated retail stores in Greater China, more than North America and Europe, accounting for nearly half of the total number of stores in the world, and Salomon has 67 distribution points (including 30 self-operated retail stores and partner stores) in Greater China, compared to only 13 in 2019.
In 2022 and the first three quarters of 2023, the revenue of the three core brands of Amalfen Sports and the proportion of each region(US$ millions).
Data**: Company prospectus.