Anta reported a relatively solid 1Q25 retail sales value YoY growth (mid-teens at group level), exceeding market expectations slightly. Anta also announced a plan to acquire Jack Wolfskin, a German outdoor wear and equipment maker, for a consideration of US$290m. Although this is a company with an expected revenue size of EUR325m (c.RMB2.63bn) in 2025, we expect the actual financial impact to Anta, if acquired and to be consolidated in late 2025, will be close to neutral (1% negative to our original 2026 NP forecast). We expect this deal could be a milestone for Anta’s internationalisation, and create further growth driver for the company. This may even offset the impact of US tariff on Amer Sports. Reiterate BUY as we view Anta relatively safe from the geopolitical risks.
　　Key Factors for Rating
　　1Q25 retail performance a slightly beat. In 1Q25, the retail sales value
　　(RSV) of Anta/Fila/other brands recorded a YoY growth of HSD/HSD/close to 70%, so group level recorded a mid-teens RSV growth, slightly above market expectations despite a rather soft March performance under unfavourable weather. Most operating metrics also remained largely stable or improved, except for Fila where offline retail discount level deteriorated 1-2ppts YoY to 26%. However, given the relatively resilient RSV performance of Fila while the brand is also under revamp under its new CEO, we see the performance benign, reflecting solid execution of Anta.
　　Acquiring German outdoor brand Jack Wolfskin. On 10 Apr, Anta also announced it will acquire Jack Wolfskin from Topgolf Callaway Brands (MODG US, NR) for an all-cash consideration of US$290m. The Germany-based brand derived 72% of revenue from Europe and 28% from China. Topgolf Callaway originally projected the brand to achieve a revenue of EUR325m (c.RMB2,625m) and an adjusted EBITDA of EUR12m (c.RMB97m) in 2025. The deal is expected to be completed in late 2Q25 or early 3Q25.
　　Limited negative impact in short term, and a long term positive. Assuming the deal is to be completed in July 2025, we expect Jack Wolfskin will boost 2025/26 revenue by 1%/3%, but lower NP by 0.4%/0.9% due to low margins and one-off costs. However, given the strong track record of Anta (such as Fila/Descente/Kolon), we see the acquisition will be long term positive on these fronts: (1) getting European sales network instantly; (2) acquiring technologies such as “Texapore” group of materials and consolidating supply chain, and (3) revamp the brand in China and create another growth driver by offering more affordable products than Kolon Sports. We also do not see the deal as a major drag to liquidity, given strong cash on hand (>RMB30bn by end of 2024 when short term deposits are also counted).
　　Key Risks for Rating
　　Downside risks: (1) weaker-than-expected retail discounts offered; (2) deteriorated retail sell-through for key brands; (3) unexpected spike in promotional spending and other expenses, (4) higher store closure, and (5) changes in sports event sponsorship deals.
　　Valuation
　　We maintain our earnings forecast unchanged at this moment since: (1) the deal of Jack Wolfskin is still subject to uncertainty, and (2) relatively limited financial impact to the earnings in 2025-26E.
　　Our TP of HK$111.7 is based on 20x 2025 P/E and HKDCNY rate of 0.94.