Anta bought a single building on Nanjing Road in Shanghai for 299 million yuan. How far is it?

Wen| Investor Network Jordan

On Nanjing Road Pedestrian Street in Shanghai, a land where every inch of land is precious, a single-family property named Sunshine Commercial Building located at No. 580 Nanjing East Road was sold for 299 million yuan.

According to Alibaba Auction, the construction area of the commercial building is 7,252.43 square meters, and the converted average floor price is about 41,000 yuan/square meter. The buyer, Anta Sports (02020.HK), quietly completed a strategic slot in this seemingly low-key auction.

The subject matter of this transaction belongs to Jiangyin Jindi Wool Textile Co., Ltd., which originally belonged to Jiangsu Sunshine Group, which was deeply mired in debt crisis. Due to Jiangsu Sunshine Group’s overdue repayment of a loan of 197 million yuan from Ping An Bank, the collateral Sunshine Commercial Building was forcibly auctioned. As the only bidder, Anta won the bid at a 30% discount on the evaluation price. According to the announcement, the annual rental income of the property exceeds 30 million yuan. If calculated based on the transaction price, the rental return rate exceeds 10%, which is a good deal.

Enterprise investigation shows that the shareholder of Jiangyin Jindi Wool Textile Co., Ltd. has changed to Anta Sports, with a shareholding ratio of 100%. The first shareholding date is January 2, 2025.

However, Anta’s calculations go far beyond rental income. The 1st-5th floors of the main building have been leased by Anta’s brands. After this acquisition, Anta not only converted the rental cost into the appreciation of its own assets, but also locked in long-term traffic entrances in the core business district. Nanjing Road has an average daily passenger flow of nearly 2 million passengers, providing a natural venue for brand exposure and high-end strategies.

Behind low-priced acquisitions: The collapse of the Sunshine System and Anta’s expansion against the trend

The change of ownership of Sunshine Commercial Building reflects the fate of the two clothing companies.

Jiangsu Sunshine was once a woolen textile giant. Lu Keping, the actual controller, once controlled four listed companies, but in recent years, it has been violently hit due to insider trading and delisting crises. In 2024, Jiangsu Sunshine delisted due to its share price falling below 1 yuan/share. Wind shows that two other listed companies, Hairun Photovoltaic and Weichuang, have also delisted. As of 2024, Sunshine Group has only one listed company, Sihuan Biotech, and the company is also in trouble.

Anta, on the other hand, has made great progress and has gradually begun to match the scale of Nike China. Wind shows that in the first half of 2024, the revenue of Nike China and Anta Sports was 37.5 billion yuan and 33.735 billion yuan respectively. Anta Sports ‘revenue increased by 13.8% year-on-year, while Nike China’s revenue increased by 8% year-on-year. Although Nike China still maintains a leading position in absolute terms, Anta Sports ‘revenue is growing faster.

In terms of market value, as of the close of noon on February 14, Anta Sports ‘market value was HK$245.9 billion. Although it has been revised back from the phased peaks of HK$345.7 billion in January 2023 and HK$300 billion in October 2024, it still leads the China sports shoe and apparel industry with absolute advantages.

In comparison, the market value of Li Ning (02331.HK) is approximately HK$42.5 billion, and the market value of Xtep International (01368.HK) and 361Degrees (01361.HK) is approximately HK$14.6 billion and HK$8.25 billion respectively; In the A-share market, the market value of Sanfu Outdoor (002780.SZ) and Pathfinder (300005.SZ) has shrunk to 1.75 billion yuan and 6.09 billion yuan.

Although market fluctuations have caused periodic pressure on Anta’s market value, its scale is still equivalent to 3.5 times the total of the above-mentioned companies, and the oligarchic pattern in the industry continues to strengthen.

Anta’s bucking growth is inseparable from its combination of acquisitions and agency operations. Since winning FILA in 2009, ANTA has successively included brands such as Desant, Archaeopteryx, and Salomon, and has successfully achieved differentiated operations of the brand matrix. The acquisition of yoga apparel company Maiya in 2023 and the auction of Nanjing Road Property in 2024 are the epitome of its extension to market segments and channel control.

FILA’s hidden concerns and multi-brand collaboration problems

Despite Anta’s strong momentum, it still faces development problems.

The first to bear the brunt is the FILA brand. FILA revenue will drop for the first time in 2022, and growth will slow down again in 2024. Wind shows that the revenue of the FILA brand in 2022 will be 21.52 billion yuan, a decrease of 1.4% from 21.82 billion yuan in 2021. This is the first time that the FILA brand’s annual revenue has declined since Anta acquired FILA’s China business. In the first half of 2024, FILA’s revenue was 13.056 billion yuan, a year-on-year increase of 6.8%.

Personnel turmoil adds to the uncertainty. Former president Yao Weixiong retires. Can her successor Jiang Yan continue FILA’s fashion and sports positioning? How can sub-brands such as FILA ICONA, ATELIER, Fusion, Kids, and GOLF avoid internal friction? These problems test the refined operation capabilities of Anta and Jiang Yan.

The bigger challenge lies in multi-brand collaboration. Anta’s main brand is positioned in the mass market, FILA targets the mid-to-high-end, and outdoor brands such as Disant and Kelong benchmark professional segments. But how to balance resource investment and avoid fighting between left and right?

Anta once proposed at the investor conference held in 2023 to build Disant and Kelon into the third tens of billions of brands, but the current scale of the two is still less than 5 billion yuan, and growth depends on channel expansion and category innovation.

Financial risks under aggressive acquisitions

Although Anta’s acquisition strategy has brought growth, it has also raised hidden concerns. Wind shows that when the Anta consortium acquired Amer Sports in 2019, Anta assumed 800 million euros of floating-rate debt and 1.3 billion euros of guarantees, pushing up its debt sharply from 7.854 billion yuan in 2018 to 20.157 billion yuan.

Amafen Sports itself has a large amount of debt, including approximately US$4 billion in shareholder loans and nearly US$1.8 billion in loans from financial institutions. The interest costs generated by these debts have further increased the financial pressure on ANTA and Amafen Sports.

Although the amount of Nanjing Road acquisition is not large, it reflects Anta’s asset-heavy tendency. In December 2024, it won a 100,000-square-meter plot of land in Xiamen for 980 million yuan, and plans to spend 4 billion yuan to build a new operation center; it plans to open 1000 Olympic-themed stores in the next five years, with a single store area of more than 500 square meters. Although the asset-heavy model can strengthen brand barriers, large-scale capital expenditures may increase cash flow pressure in the context of weak consumption recovery.

From a small factory in Jinjiang to the world’s third largest sports group, Anta’s rise can be regarded as a model for a counterattack by China brands. The low-price acquisition of single-family and additional commercial real estate on Nanjing Road is a reflection of its channel control and capital operation capabilities. However, FILA’s growth bottlenecks, multi-brand collaboration problems, and financial pressure brought by acquisitions are still hanging swords.

As the scale dividend gradually peeks, Anta needs to prove that it can not only expand its territory through buying, buying, but also build lasting competitiveness based on refined operations. After all, there is never a shortage of dark horses in the business world. The difficulty is to be evergreen. (Produced by Thinking Finance) ■