Anta Earnings: Guidance Cut Doesn't Derail Double-Digit Growth Outlook; Shares Undervalued

Narrow-moat Anta’s first-half earnings mildly exceeded our expectations, but the company nudged down its 2024 revenue guidance by about 3% due to slowing macroeconomic conditions affecting Fila’s sales in China. This cut shouldn't be a surprise, given that peers have also lowered their guidance recently. Despite this adjustment, Anta is still on track to achieve double-digit revenue growth in the latter half of the year, supported by its diversified brand portfolio, which helps mitigate temporary headwinds affecting individual brands. Overall, we maintain Anta’s fair value estimate of HKD 131 per share, as the better-than-expected performance in the first half balances out the cut in guidance for the second half. We think shares are very undervalued, trading at just 14 times our estimated 2024 earnings, versus the historical average of 20-plus times.