IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/amer-sports-inc" target="_blank" data-smartkarma-citation="entities:21751:1" rel="noopener">Amer Sports (AS US)</a> is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.</li>
<li>In <strong><em><a href="https://www.smartkarma.com/insights/amer-sports-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:124040" rel="noopener">Amer Sports IPO: The Bull Case</a></em></strong>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on ball &amp; racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.</li>
</ul>



Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
In Amer Sports IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on ball &amp; racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/amer-sports-inc" target="_blank" data-smartkarma-citation="entities:21751:1" rel="noopener">Amer Sports (AS US)</a> is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.</li>
<li>In 2019, a consortium of <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>, FountainVest, Anamered Investments and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> acquired Amer at an EV of €5.5 billion.  </li>
<li>The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile. </li>
</ul>



Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
In 2019, a consortium of Anta Sports Products (2020 HK), FountainVest, Anamered Investments and Tencent (700 HK) acquired Amer at an EV of €5.5 billion.  
The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile. 


HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>Amer Sports, 52.7% owned by <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>, has finally filed a US IPO registration. This is positive for Anta Sports as it can realise Amer's value.</li>
<li>Reported losses at Amer have increased YoY for 9M23 due to higher finance cost. But, its gross, operating, and adjusted EBITDA margins have all recorded solid improvements. </li>
<li>Assuming Amer is listed at the sector's average FY23 P/S of 1.6x, Anta Sports may book deemed disposal gain of HK$13.5bn, or about 6.8% of its market capitalisation.</li>
</ul>


Amer Sports, 52.7% owned by Anta Sports Products (2020 HK), has finally filed a US IPO registration. This is positive for Anta Sports as it can realise Amer's value.
Reported losses at Amer have increased YoY for 9M23 due to higher finance cost. But, its gross, operating, and adjusted EBITDA margins have all recorded solid improvements. 
Assuming Amer is listed at the sector's average FY23 P/S of 1.6x, Anta Sports may book deemed disposal gain of HK$13.5bn, or about 6.8% of its market capitalisation.


Anta Sports (2020 HK): An Updated Look at Implications of Amer Sports' IPO

<ul>
<li>
<a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> achieved a decent 3Q23 with sales performance of major brands outperformed. With a low comparison base, 4Q23 sales will be even more impressive. </li>
<li>Indications are that sales for the Golden Week are satisfactory and "double-11" sales are optimistic. The acquisition of MAIA ACTIVE will further add to its product portfolio.</li>
<li>Amer's IPO is another catalyst and reports are that this has been filed in the US. Anta Sports' stake may be valued at US$4bn, almost 12% of its market cap.</li>
</ul>



Anta Sports Products (2020 HK) achieved a decent 3Q23 with sales performance of major brands outperformed. With a low comparison base, 4Q23 sales will be even more impressive. 
Indications are that sales for the Golden Week are satisfactory and "double-11" sales are optimistic. The acquisition of MAIA ACTIVE will further add to its product portfolio.
Amer's IPO is another catalyst and reports are that this has been filed in the US. Anta Sports' stake may be valued at US$4bn, almost 12% of its market cap.


Anta Sports (2020 HK): Bucking the Challenging Trend

<ul>
<li>The new share placement of <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> has caught the market by surprise, but we think long-term story for the company should not be affected.</li>
<li>With proceeds to be used for repayment of outstanding debts, expansion in China and pursuing SE Asia markets, we should not overlook the benefits to be generated. </li>
<li>An IPO of Amer Sports is clearly brewing and this represents an important catalyst. Anta's 26.4x and 20.9x FY23 and FY24 PERs do not look stretched relative to earnings growth. </li>
</ul>


The new share placement of Anta Sports Products (2020 HK) has caught the market by surprise, but we think long-term story for the company should not be affected.
With proceeds to be used for repayment of outstanding debts, expansion in China and pursuing SE Asia markets, we should not overlook the benefits to be generated. 
An IPO of Amer Sports is clearly brewing and this represents an important catalyst. Anta's 26.4x and 20.9x FY23 and FY24 PERs do not look stretched relative to earnings growth. 


Anta Sports (2020 HK): Our View After Placement

China

Sinoer Men's Wear Company Limited designs, manufactures and markets suits, shirts and other apparel products. The Company sales its products through outlets, franchises, group orders, original equipment manufacturers and direct sales.

Jiangsu lianfa textile Co.Ltd. Manufactures and sell woven fabric, apparel and textile.  The Company's products include pure cotton fabric, cotton yarn, special fiber, and shirt.

Goldleaf Jewelry Co Ltd is a jewelry company based on China. Its main business is investing in gold mining and juwelry retail sales.

Zhejiang Aokang Shoes Co. Ltd. manufactures shoes. The Company develops, designs, and produces leather shoes for men, women, and children, as well as offers custom-made shoes. Zhejiang Aokang Shoes also manufactures and sells leather belts, wallets, suitcases, and other leather products.

Zhejiang Bangjie Digital Knitting Share Company Limited develops, produces and sells seamless garments. The Company's main products include seamless underwear, sportswear, casual wear, and suits.

Zhejiang Golden Eagle Co., Ltd. manufactures and sells a variety of textile products, including spun silk and linen products.  The Company also designs and produces apparel and textile machinery.

Xinlong Holding (Group) Co., Ltd. manufactures and markets nonwoven fabrics and other products. The Company's operations include spunlace and thermal bond nonwovens, electrolutic copper, cellular phone, and other products.

Xinlong Holding (Group) Company Ltd (000955 CH)

Best Pacific International Holdings Limited, through its subsidiaries, provides lingerie materials. The Company manufactures elastic fabrics, webbing and lace.

Best Pacific International Holdings (2111 HK)

Zhejiang Giuseppe Garment Company Limited manufactures and sells business suits, men's and casual wear. The Company's main products include men's and women's suits, trousers, vests, skirts, shirts, jackets, and windbreakers.

Sou Yu Te Fashion Company Limited mainly engages in sale of garments,footwear, textiles and leather products. It also provides services in Internet retail, trade brokerage, warehouse and catering.

TSUTSUMI JEWELRY CO., LTD. designs, manufactures, and sells wholesale and retail jewelry.  The Company sells mainly rings, necklaces, and bracelets.  Tsutsumi Jewelry operates directly managed stores based in Saitama prefecture.

MORITO CO., LTD., founded in 1908 is a distributor primarily handling footwear, apparel, and wide-use materials.  The Company designs, manufactures, and distributes products such as apparel accessories, shoes materials, auto interior parts, and camera related products. The company also operates business in Europe, America, China, and Southeast Asia countries.

Nitin Spinners Ltd. manufactures yarns and knitted fabrics. The Company produces yarns for terrycloth towels, denims, furnishing fabrics, carpets and industrial fabrics, and knitted fabrics for the apparel industry.

Shinsung Tongsang Co., Ltd. designs, manufactures, and sells ladies' and men's garments.  The Company's products include shirts, sweaters, jackets, suits, pants, and skirts.  Shinsung Tongsang markets its products under the brand names such as Union Bay, Olzen, and Ziozia and supplies them to JC Penney, Sears, and Target. In addition, the Company operates construction business.

Magni-Tech Industries Berhad is an investment holding company which provides management services. Through its subsidiaries, the Company manufactures and distributes flexible plastic packaging materials, inner packaging boxes, fiberboards, cartons, and boxes for industrial and commercial uses.

Hong Ho Precision Textile Co., Ltd. manufactures a variety of fabrics and clothes.

Handsome Co., Ltd. manufactures and retails women's and men's apparel, furs, and accessories.  The Company provides its products to domestic department stores.

Sinotop Holding Bhd manufactures textiles and apparel. The Company manufactures customized woven fabrics from cotton and synthetic and mixed yarns, and apparel for men and children.

Sabina PCL manufactures women's underwear.  The Company produces panties, brassieres, and lingerie.

Tah Hsin Industrial Corp manufactures raincoats, garments, plastic wardrobes, leather products, bags, corrugated boards, folders, and shoes.  The Company markets its products under the CARRY, PRO RAINER, RED LEDGE, and OIA brand names.  Also, Tah Hsin Industrial operates as a distributor to sell the ECCO, REGAL, and MADRAS shoes.

China Dongxiang Group Co Ltd retails sportswear apparel products.

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China Dongxiang (3818 HK)

Amer Sports IPO: The Bear Case

The bear case rests on ball and racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership,...

Arun George

Amer Sports IPO: The Bull Case

The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor...

Arun George

Anta Sports (2020 HK): An Updated Look at Implications of Amer Sports' IPO

Amer Sports, 52.7% owned by Anta Sports, files for US IPO. Despite increased losses for 9M23, Amer's margins have improved. Anta Sports could gain...

Osbert Tang, CFA

Anta Sports (2020 HK): Bucking the Challenging Trend

Anta Sports had a solid 3Q23, with major brand sales outperforming. 4Q23 sales are expected to be even better. Acquisition of MAIA ACTIVE and...

Osbert Tang, CFA

Anta Sports (2020 HK): Our View After Placement

With proceeds to be used for debt repayment, expansion in China and pursuing SE Asia markets, we should not overlook long-term benefits. News flow...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Amer Sports IPO: The Bear Case

The bear case rests on ball and racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership,...

Arun George

Amer Sports IPO: The Bull Case

The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor...

Arun George

Anta Sports (2020 HK): An Updated Look at Implications of Amer Sports' IPO

​Amer Sports, 52.7% owned by Anta Sports, files for US IPO. Despite increased losses for 9M23, Amer's margins have improved. Anta Sports could gain...

Osbert Tang, CFA

Anta Sports (2020 HK): Bucking the Challenging Trend

​Anta Sports had a solid 3Q23, with major brand sales outperforming. 4Q23 sales are expected to be even better. Acquisition of MAIA ACTIVE and...

Osbert Tang, CFA

Anta Sports (2020 HK): Our View After Placement

With proceeds to be used for debt repayment, expansion in China and pursuing SE Asia markets, we should not overlook long-term benefits. News flow...

Osbert Tang, CFA

Amer Sports, 52.7% owned by Anta Sports, files for US IPO. Despite increased losses for 9M23, Amer's margins have improved. Anta Sports could gain...

Anta Sports had a solid 3Q23, with major brand sales outperforming. 4Q23 sales are expected to be even better. Acquisition of MAIA ACTIVE and...