Anta’s Further Globalization: Amer Sports Debuts on the NYSE

Consumer Staples Author: EqualOcean News, Jiahui Liao Editor: Yiru Qian Feb 02, 2024 03:15 PM (GMT+8)

Amer Sports raised over USD 1 billion in its U.S. IPO.

Anta

Amer Sports (AS:NYSE), a sports equipment company with internationally renowned brands, was officially listed on the New York Stock Exchange on the evening of February 1, 2024, Beijing time.

Amer Sports plans to issue 105 million common shares in this IPO at a price of USD 13 per share. Based on the issue price, Amer Sports raised over USD 1.3 billion through this IPO excluding the Green Shoe Option.

This signifies that Amer Sports has become the first Chinese concept stock to raise over USD 1 billion in a US IPO since Didi Global Inc.'s listing on the NYSE on June 30, 2021. It is also the largest US IPO so far in 2024. Based on the issue price, Amer Sports' market value is approximately USD 6.3 billion.

As a global sports and outdoor brand group, the brands Amer Sports currently owns including Arc’teryx, Salomon, Wilson, Atomic, and Peak Performance, offering sports equipment, apparel, footwear, and accessories in categories such as tennis, badminton, golf, American football, and soccer.

In fact, in recent years, Amer Sports has streamlined its brand portfolio, divesting the cycling brand Mavic in 2019, the fitness equipment brand Precor in 2021, and the smartwatch brand Suunto in 2022, to focus more on core brands with significant market opportunities and growth potential in niche markets.

Currently, Arc’teryx, Salomon and Wilson are Amer Sports' three core brands. As of September 30, 2023, Arc’teryx operates 138 company-owned retail stores globally, Salomon operates 114, Wilson operates 9.

Financial data shows that from 2020 to 2022, Amer Sports' revenues were respectively USD 2.446 billion, USD 3.067 billion, and USD 3.549 billion, with a compound annual growth rate of 20.4%; gross profit margins were 47.0%, 49.1%, and 49.7%; adjusted EBITDA was USD 311 million, USD 417 million, and USD 453 million, with a compound annual growth rate of 20.6%.

According to Amer Sports, its full-year revenue for 2023 is expected to range between USD 4.353 billion and USD 4.363 billion, with a year-on-year growth rate expected to range between 22.7% and 23.0%; adjusted EBITDA is expected to range between USD 597 million and USD 607 million, with a year-on-year growth rate expected to range between 31.8% and 34.0%.

When initially entering the Chinese market, Amer Sports' brands received a lukewarm response. However, following Anta's acquisition of Amer Sports in 2019, Arc’teryx and Salomon rapidly gained traction in the domestic high-end outdoor market, becoming symbols of middle-class status. This not only closely correlates with the growth of domestic sports consumption and shifting consumer perceptions but also benefits from Anta's channel advantages and operational experience.

Anta executives have stated that the greatest synergistic effect following Amer Sports' acquisition lies in China. The prospectus shows that from 2020 to 2022, Amer Sports' revenue saw a compound annual growth rate of 20.4%, while the gross profit margin expanded from 47% to 49.7% during the same period, confirming the positive impact of the acquisition on Amer Sports.

Presently, the Chinese market has become the most important source of growth for Amer Sports. As of September 30, 2023, Amer Sports operated 63 Arc’teryx company-owned retail stores in Greater China, accounting for nearly half of the global total store count, along with 30 Salomon company-owned retail stores and 67 distribution stores, far surpassing the 13 stores in 2019.

From 2020 to 2022, Amer Sports' revenue in the Greater China region increased from USD 202 million to USD 524 million at a compound annual growth rate of 60.9%, with its revenue share in the region rising from 8.3% to 14.8%.

In the first three quarters of 2023, Amer Sports' revenue in the Greater China region increased by 67.6% year-on-year to USD 593 million, surpassing its full-year 2022 revenue in the region. Its revenue share further increased to 19.4%.

From a brand perspective, Amer Sports attributes its rapid growth in China primarily to Arc’teryx, which, as of September 30, 2023, had over 1.7 million members in the Greater China region, compared to 14,000 in 2018.

Additionally, due to synergies among its various brands, unnecessary duplicate costs have been reduced. For instance, Salomon's revenue in the Greater China region grew by 72% in 2022 compared to 2021.

Amer Sports points out that with the introduction of more retail stores and increased penetration on e-commerce platforms, there is still significant room for growth in the Greater China region.

In this IPO issuance, Anta, Anamered Investments, and Tencent have all increased their investments as cornerstone investors, demonstrating their confidence in the long-term value of Amer Sports.

In recent years, Anta has frequently acquired international brands in the sports sector. Its intention is clear: besides gaining market share, the primary objective is to leverage these acquisitions to propel the Anta brand into the international market, laying the groundwork for further international expansion.

Shizhong Ding, the founder of Anta, once said that within 30 years of Chinese enterprises, almost no one can operate an international brand like Amer Sports.

While China's manufacturing capabilities are currently robust, and Chinese products are ubiquitous globally, Chinese domestic brands primarily have significant influence in markets such as Africa, Southeast Asia, and India. The competitive edge of Chinese brands in mainstream markets such as Europe and the United States is still not prominent enough. Amer Sports' listing on the New York Stock Exchange may contribute to Anta's international expansion efforts.

As of press time, Amer Sports closed at USD 13.4 apiece, with a market capitalisation of USD 6.3 billion.