Anta Firmly Sits On The Throne Of China'S First Sporting Goods Company, Concentrating Its Investment Logic.

Such a company is really surprising.

Up to now, its market value It has been sitting on the throne of China's first sporting goods company, which is equivalent to 6 Lining (02331), 11 XTEP and 20 361 degrees.

At the same time, one of the most famous brands in the history of world sports is a centenary store: the FILA (Fei Le), founded in Italy in 1911, is actually a brand of this company.

Its name is Anta.

Perhaps you will be shocked: WTF! This name has always been the low-end brand in mind. It feels much weaker than Lining. How can it be so fierce?

Yes, it's so fierce. It is China's largest sporting goods company and its market value has exceeded 100 billion Hong Kong dollars. Go directly to the data and feel it:

In 2014 -2017, revenues were 8 billion 923 million yuan, 11 billion 126 million yuan, 13 billion 346 million yuan, and 16 billion 692 million yuan respectively; net profit was 1 billion 733 million yuan, 2 billion 88 million yuan, 2 billion 445 million yuan and 3 billion 159 million yuan respectively; net cash flow from operating activities was 1 billion 686 million yuan, 1 billion 903 million yuan, 2 billion 468 million yuan and 2 billion 468 million yuan respectively, and gross profit rates were respectively 1 billion 903 million, 1 billion 903 million, and 2 billion 88 million respectively.

I do not know until now, seeing such performance data, what would be the feeling of the young Ding Shizhong who founded Anta in that year?

In the 80s of last century, Ding Shizhong, a 17 year old teenager in Jinjiang, Fujian, who had just graduated from junior high school, took 600 pairs. shoes Set foot on the North drift train. At that time, he would never have imagined the appearance of Anta today.

In 1991, Anta started in Fujian. Jinjiang 。 Here, once a small fishing village, but now it is called "China Shoes Capital". Dozens of sports brands such as Anta, XTEP, precious birds, 360 degrees (HK Stock 01361), del Hui, Xi Dalong, Jordan and so on are born.

The CCTV sports channel has been advertising in Jinjiang for a long time. It has been dubbed "Jinjiang sports channel" by insiders.

Jinjiang, Fujian, is the sporting goods industry in China, just like Zhejiang and Tonglu in China's express industry. Here, several villagers from different townships have created the most famous names in the history of Chinese sporting goods.

Ding Shizhong founded Anta, Ding Shuibo founded XTEP, Ding Wu created 361 degrees, Ding Mingliang founded del Hui, Ding Si Qiang founded Meck, Ding Guoxiong founded Jordan...

Jinjiang, a county with an area of only 649 square kilometers, has a population of about 2 million people. But it once had thousands of shoe factories and hundreds of sports shoes brands.

This industry has experienced the financial crisis in 2008 and the stock crisis in 2012. In the end, the names of del Hui, Xi De long, Jin Lei Ke and so on have fallen, but Anta has become the first to break out of the tight encirclement from fierce competition.

How did all this happen in 25 years?

Today, we start from the case of Anta to analyze the investment logic and financial characteristics behind the sporting goods industry.

01 the whole shoemaking industry is actually condensed into four words: functional attributes.

The history of Chinese shoemaking dates back to the Paleolithic age 5000 years ago. According to textual research, people began to wear straw sandals as early as four thousand years ago in the Xia Dynasty.

Shoes are collectively referred to as shoes, shoes and clogs. The earliest shoes were made of animal skins to protect their feet, to catch up with others, or to carry out tribal warfare. You see, the appearance of shoes is actually related to sports and has strong functional properties.

In the spring and Autumn period, the poem "Wei Feng Ge Ge" began to record the shoes: "rectify the dispute."

　　 Boots As a special category of shoes, it can be said to be a great invention in human history, which runs through the cold weapon era of thousands of years.

　　 China's boots originated from the Warring States period. 。 Sun Bin was punishable by Pang Juan. He was trained to practice 100 thousand elite soldiers and made boots suitable for battle.

Soldiers can use their boots to protect their legs and feet, across mountains, grass, and piercing rivers, and are suitable for riding to protect their legs. Boots in the military equipment, greatly enhance the field of war.

It may be hard for you to think that Sun Bin was later regarded as the ancestor of shoemaking by Chinese shoemaker, just like Guan Yu was regarded as the God of wealth.

Since then, leather shoes have evolved slowly, and a new product form has begun to emerge: clogs. The Japanese clogs are actually Chinese inventions. The reason for having teeth is that it is a function that is worn on rainy days and can be applied to mud.

In the Eastern Jin Dynasty, Xie Lingyun, a famous poet, invented the "Xie Gong Cai" suitable for mountaineering. He had teeth on the bottom of the clogs and pioneered the invention of early climbing shoes.

Once these shoes are launched, they are loved by all walks of life. Li Bai, a friend of the Tang Dynasty, also went on display in this kind of mountaineering shoes. He wrote a poem in the dream of heaven and grandmother's farewell, saying: "thank you for your feet. The half wall sees the sea day, the sky sniff the day chicken.

　 A kind of By the Tang Dynasty, the shoemaking industry was quite developed. A kind of

At that time, there was a kind of explosive shoe type, called "Yun tou Jin shoes", which had both fashionable and functional attributes. Brocade production and front end had a warped head. The shoe is warped generally with the sole, one can extend the service life, two can prevent the body, three can drag the skirt robe, does not fall.

　　 You see, the whole shoemaking industry has two main points: first, functional, followed by fashion Degree.

From then on, we gradually evolved all kinds of shoe making products: thousands of layers of cloth shoes, sports shoes, high-heeled shoes, Ma Dingxue, sandals, Oxford shoes, Baroque shoes...

In 1853, the founder of modern cloth shoes, Zhao Ting, founded shoe store in Beijing. At first, he made his boots. In 1876, Shanghai opened the first domestic leather shoes factory in China.

In 1860, sewing machines came out; in 1940, the gluing process of shoemaking appeared. Modern footwear industry moved from individual manual operation to mechanical batch production.

In 1911, FILA brothers founded the FILA brand in the town of Biella at the foot of the Alps in Italy, originally a family textile enterprise.

In 1920, in the history of human shoemaking industry, it is a significant node. In those days, Adidas (Adidas) was founded in the town of heto root in Germany, and the Dallas brothers opened up a sports shoe kingdom.

In 1936, at the German Berlin Olympic Games held by Hitler, the whole world recognized the importance of sports shoes for competitive sports. Jesse Owens, an African American athlete, was stunned by the sports world in his 4 running gold medals at the same time.

In 1948, the Dallas brothers broke up, and Puma, Germany (Puma) was founded.

In 1964, Nike (Nike) was founded.

With the continuous evolution of functional attributes, there have been several major changes in the technological process of the shoe making industry.

Sewing technology (mostly used for traditional shoemaking), gluing process (the most widely used, suitable for mass production), hot vulcanization process (mainly for sole, upper manufacture), injection molding technology (mostly for sports shoes), molding technology (mostly for labor shoes, military shoes).

　　 A kind of To study China's shoemaking industry, we must study a place: Jinjiang, Fujian. A kind of

1983 is a major turning point. At that time, Jinjiang made its first pair of sports shoes, made by Lin Shiqiu's shoes and hat factory. In the same year, the earliest predecessor of 361 degrees, Huafeng shoe factory was established.

In 1987, XTEP was founded by Sanxing company.

This year, Ding Shizhong, a small Jinjiang businessman who graduated from junior high school, came to Beijing with 600 pairs of sneakers. In those days, he was only 17 years old. At first, he ran to the shopping mall every day, and he made a shopping mall to let him try it. I didn't expect to sell 100 pairs of shoes on the first day.

But Ding Shizhong felt that he could not enter the mall by mere mouth, and he could not make big money. He soon discovered the wholesale market, and rented a counter in the wholesale market, specializing in wholesale Jinjiang shoes. After finding the knack, he was not idle, and began to think of how to put Jinjiang shoes into the shopping malls.

He began to discuss with the major shopping centers for trial sales, sold the accounts and sold out the refund. With the secret of "diligent, sweet mouthed and thick skinned", less than two years later, Ding Shizhong conquered most of the shopping malls in Beijing, including the most difficult Wangfujing, Xidan and so on, and sales volume quickly doubled.

After that, Ding Shizhong began to think about the types of consumers and pay more attention to what kind of shoes have a bigger market. It is found that all the shoes made in Jinjiang are sold in the name of 100 yuan, and only 20 yuan for them.

I wonder what I want to understand because of this important thing -- brand moat.

In 1989, PEAK's predecessor, Feng Deng shoe factory was established. Two years later, the brand was renamed "PEAK PEAK".

The following 90s, all kinds of domestic sports brands sprung up in Jinjiang, and the first batch of shoe companies in the first time launched their own sports brands. Such as golden lake, Lu You, Xi De long, etc.

In 1991, Ding Shizhong returned to Jinjiang with 200 thousand yuan earned from Beijing, and Ding Shizhong decided to build his own brand. At that time, the shoe factory was run by his father Ding Hemu and his brother Ding Shijia. Since then, the Ding family has founded Anta, meaning "to start a business at ease, and to be down-to-earth."

Two years later, Ding Shizhong gained the lead of family business. At that time, Anta mainly made OEM for foreign brands, and sales were not the focus. Not only is Anta, but the whole Jinjiang is basically doing overseas OEM.

Ding Shizhong has always felt anxious: relying on overseas orders is not reliable. While doing foundry, he was thinking about opening up stores and expanding his distribution channels. Soon, Anta promoted the agent distribution mode across the country, with the first batch of distributors.

You see, this is another major decision - from overseas OEM low-end foundry to brand manufacturers. As a result, in 1997, Southeast Asian financial crisis, overseas orders were gone. The shoe factory of Jinjiang once fell half. And Anta stands out.

At that time, Anta opened 2000 franchised stores nationwide, but its popularity was very weak.

What to do? In order to win fame, Ding Shizhong is determined to gamble.

In 1999, Anta gamble 800 thousand, hired pingpong Kong Linghui as spokesperson, and spent 3 million in CCTV advertising. At that time, it was the most prosperous period of TV commercials.

Later, Kong Linghui won the Olympic Games in Sydney in 2000. Since then, the popularity of Anta has started, and sales revenue has soared all the way.

In 2000, Anta will move business from a single sports footwear product to a special integrated sports product. In 2001, the first Anta store opened in Beijing and began large-scale national brand promotion. In 2002, Anta signed a contract with NBA star Battelle, making Anta the first Chinese sports brand worn by NBA players abroad. And start selling clothes.

In 2005, when CBA was just starting to seek sponsorship from sports brand, Ding Shizhong accepted that CBA players should play basketball with Anta's basketball shoes.

However, who knows, it was boycotted by the players at that time because Anta shoes were not comfortable to wear, and their functions were not as good as Nike and ADI.

I rely on! Send money, send shoes to others, they even do not want. Ding Shizhong was very angry and his stubborn heart came up: all shoes are made by Nike. Why can't we do it? We have to burn money, we must burn high-tech shoes.

In the same year, Anta founded the first sports science laboratory in China, which cost 30 million yuan.

5 years later, 99.5% of the CBA players wore Anta shoes. At present, Anta has 300 authorized patents, including 42 invention patents and 73 utility model patents.

In 2007, Anta shares went public.

In 2012, domestic brands' inventory crisis broke out and small businesses went bankrupt. As early as the stock crisis, Ding Shizhong had begun to spanform from brand wholesalers to brand retailers, and to reorder orders, reduce and control orders. Therefore, Anta is least affected by inventory crisis.

In the stock crisis, Jinjiang brand launched a "price war". At the same time, with the growth of 234 line urban residents' income, Nike and Adidas's product market sinks and rob the low-end market of Chinese brands.

Competition in this market is more and more tragic. There are countless grass mud horses running in Ding Shizhong's mind. What should I do?

The solution is to acquire mature foreign high-end brands, take multiple brands and collectivize routes, and enter the high-end camp.

In 2009, Anta acquired FILA, an old sports leisure brand in Italy. In 2013, it bought Quanzhou globe. Note that you may be hard to imagine that FILA is actually a brand of Anta. This brand is truly a century old shop. It is also one of the representative brands in the history of human sports apparel. It has always ranked the top ten in the world sports brand, and is mainly engaged in sports related products such as tennis, skiing, golf, yoga, racing cars and so on.

In 2014, Anta surpassed Lining and became the leader of China's sporting goods industry.

In 2015, Anta acquired Spandi (sprandi), breaking billions of curse and becoming the first Chinese enterprise with over 10 billion revenue in the whole industry. In 2016, Anta and Japan's high-end sports brand Desanto (Descente). In 2017, KOLON SPORT of Korea joined Anta.

　 　 Throughout the development path of Anta, it has been able to rise and surpass.

1) brand strategy: from overseas OEM to brand wholesale, and then to brand retailing.

2) R & D technology: a large number of R & D, catch up with technology giants.

3) product line: through the acquisition of high-end brand enterprises, develop multiple brands, expand the scale and iron out risks.

02 Anta never stops and sees its business pattern.

Anta sports (02020), its main business is the design, manufacture and sale of branded sports shoes, clothing and accessories. Its products include Anta, FILA, Desanto (Descente), and Spandi (sprandi). The real controller is Ding Shizhong, and the Ding family owns 62%.

Its upstream is polymer, plastic, cotton, packaging materials, etc. Raw material Supplier.

There are two kinds of downstream customers, one is the distributor, the other is the consumer. Anta has a weak voice in the face of distributors. Its accounts receivable increased year by year, at 2 billion 207 million yuan, 2 billion 641 million yuan and 3 billion 733 million yuan respectively, accounting for 19.84%, 19.79% and 22.36% of the total revenue, but the account age was less than 1 years.

In the face of the consumer group, the right to speak is stronger.

Directly on Anta's performance data:

In 2014 -2017, revenues were 8 billion 923 million yuan, 11 billion 126 million yuan, 13 billion 346 million yuan, and 16 billion 692 million yuan respectively. Net profit was 1 billion 733 million yuan, 2 billion 88 million yuan, 2 billion 445 million yuan and 3 billion 159 million yuan respectively, and the net cash flow of operating activities was 1 billion 686 million yuan, 1 billion 903 million yuan, 2 billion 468 million yuan, and 2 billion 468 million yuan respectively.

Among them, the income of footwear was 4 billion 111 million yuan, 5 billion 74 million yuan, 6 billion 1 million yuan, and 7 billion 49 million yuan respectively, accounting for 46.07%, 45.6%, 44.96% and 42.23% respectively, and the gross profit rates were 46.4%, 46.2%, 46.3% and 46.3% respectively.

The income of clothing was 4 billion 451 million yuan, 5 billion 592 million yuan, 6 billion 886 million yuan and 9 billion 116 million yuan respectively, accounting for 49.88%, 50.26%, 51.6% and 54.61% respectively, and the gross profit rates were 44.5%, 47.8%, 51% and 51% respectively.

As of the first half of 2017, there were a total of 9041 Anta stores, a total of 869 FILA brands, and a total of 21 Descente brands.

　　 To study its main brands and cover the crowd:

Anta: located in the middle and low income groups, mainly for cost-effective sports products.

FILA: located in the 20-45 year old middle class, sports fashion, involving golf, tennis, skiing and other sports.

Sprandi: located in the middle and low income groups, leisure fitness.

Descente: located in high income groups, professional outdoor sports - ski suit.

Kolon: located in the middle and high income group, outdoor fashion outfit.

You see, several brands cover different strata of the crowd. In addition, according to the characteristics of consumers of different brands, the layout of their shops is also very different.

Anta storefront is mainly composed of two or three line cities, which operate in the form of street stores. The stores of FILA and Descente are located in the first and second tier cities, with retail and department stores as the main retail channels.

　　 Oteri J and online channels are Anta's way to clear goods.

Therefore, Anta's operation mode is mainly based on distribution mode + affiliate mode. Distributors receive goods from the company, resell them to the next franchisee, and finally sell in the franchised stores.

It signed a one year distribution agreement with distributors and renewed each year. If the distributor fails to reach the target and violates the distribution agreement, he will terminate his contract extension. While FILA and Descente are mainly direct battalions, a small number of distributors are involved.

　　 To study Anta, we must consider: what steps do we need to take as a sports brand business?

1) product design and development

2) Order

3) production and inspection.

4) shipment

Next, we follow this step and analyze them one by one.

03 sporting goods companies, product performance concerns R & D costs.

　 　 A kind of The first step is product design and development. Yes A kind of For sporting goods, the core of the product is functional: lightweight, breathable and comfortable.

　　 Anta really did a lot of work on R & D. Its cost is 30 million, specializing in sports science labs, and the performance of sports products. At present, Anta has 300 authorized patents, including 42 invention patents and 73 utility model patents.

Today, the importance of R & D can be seen from the R & D cost of financial statements.

In 2014 -2017, the cost of R & D activities of Anta was 211 million yuan, 308 million yuan, 351 million yuan and 479 million yuan respectively, accounting for 2.36%, 2.77%, 2.63% and 2.87% respectively.

During the reporting period, Anta's R & D costs were presented. Upward trend 。 Looking back on the R & D expenses of colleagues, the following are the following:

Lining (02331) -- in 2014 -2016, R & D expenditure was 165 million yuan, 132 million yuan and 126 million yuan respectively, accounting for 2.73%, 1.86% and 1.57% respectively.

XTEP (01368) -- in 2014 -2016, R & D expenditure was 106 million yuan, 121 million yuan and 138 million yuan respectively, accounting for 2.22%, 2.29% and 2.56% respectively.

Nike and Andrew annual report did not disclose details of R & D costs.

A rough contrast between R & D investment and the importance of technology is immediately apparent.

04 sporting goods enterprises focus on stock sales.

After completing the first step of research and development, the next second step is ordering, the third step is production, and then to the fourth stage shipment.

In the whole process, from ordering, production to delivery, Anta and distributors are following the way of "selling products": according to the number of orders submitted by dealers, products are produced; after completion, shipment is made.

Therefore, in these steps, you need to focus on one important subject -- inventory.

During the reporting period, Anta's inventory included raw materials, products and finished products. Among them, the finished products are the main products.

In 2014 -2017, Anta's inventory was 867 million yuan, 1 billion 16 million yuan, 1 billion 295 million yuan, and 2 billion 155 million yuan respectively. Among them, the finished products were 668 million yuan, 796 million yuan, 1 billion 6 million yuan, and 1 billion 842 million yuan respectively, accounting for 77.05%, 78.35%, 77.68% and 85.48% respectively. Inventory turnover rates were 6.29, 6.31, 5.96 and 4.9 respectively.

　　 Note that the proportion of Anta's inventory products increased year by year, and the inventory turnover rate showed a downward trend.

See here, you may think: turnover rate is declining, goods do not sell well, this company still has the look of wool?

But if you think so, you probably miss a very important thing. This is a bit contrary to the theory of traditional financial textbooks, which is worth pondering.

In this case, a lot of stocks and a decline in turnover rate are not necessarily bad things. They are caused by special business models.

Note that Anta and downstream distributors are producing products according to the way of production. Therefore, Anta is producing according to the needs of distributors.

According to this mode of production, if Anta's products are not sold, dealers will no longer make orders to Anta. Without a dealer's order, Anta's stock will be reduced, but in the earnings report, it will be shown as follows: less inventory and better turnover of inventory.

Therefore, if you want to study Anta's "sales quotas" company, the inventory turnover rate will be distorted and can not reflect the real situation. At the same time, you should look at the absolute value of inventory. The better the business, the more likely it is.

　 Ha ha, the more stocks, the better business. Is this logic overturning three views? Yes, that's right.

Let's look at the stock situation in our peers.

Lining (02331) - in 2014 -2016, the inventory was 1 billion 289 million yuan, 960 million yuan, and 965 million yuan respectively.

Nike (NKE.N) -- in 2014 -2016, the inventory was 26 billion 541 million yuan, 31 billion 829 million yuan and 34 billion 694 million yuan respectively.

XTEP (01368) -- in 2014 -2016, the inventory was 569 million yuan, 398 million yuan, and 460 million yuan respectively.

Andemar (UAA.N) -- in 2014 -2016, the inventory was 3 billion 284 million yuan, 5 billion 85 million yuan and 6 billion 365 million yuan respectively.

After careful consideration of the data, the data itself will speak.

In addition, in the delivery of manufacturers and distributors, the risk of falling prices will also shift. If the stock is not sold, the loss is the dealer's own back. Similarly, if the manufacturer's products are not booked according to the order, the goods will be hoarded, and the loss will be borne by the manufacturer.

　　 Therefore, while paying close attention to inventory, we should pay special attention to another point -- stock price depreciation preparation. The subjects in Hong Kong stock earnings report are: inventory reduction. 。

In 2014 -2017, the stock of Anta was 58 million 679 thousand yuan, 9 million 815 thousand yuan, 7 million 269 thousand yuan and 14 million 92 thousand yuan respectively, accounting for 6.77%, 0.97%, 0.56% and 0.65% respectively.

Note that the proportion of Anta's inventory provision for impairment reduction has dropped significantly during the reporting period.

Under the mode of production with fixed production, the ratio of the depreciation allowance can be compared with the absolute value. The conclusion is that instead of overloading, it is more popular.

Let's just grab a few colleagues to compare.

Lining (02331.HK) -- in 2014 -2016, the inventory was 1 billion 289 million yuan, 960 million yuan and 965 million yuan respectively, and the inventory reduction was 264 million yuan, 170 million yuan and 143 million yuan respectively, accounting for 20.48%, 17.7%, 14.82% respectively.

XTEP (01368.HK) - in 2014 -2016, the inventory was 569 million yuan, 398 million yuan and 460 million yuan respectively, and there was no reduction in stock during the reporting period.

Andemar (UAA.N) -- in 2014 -2016, inventories were 3 billion 354 million yuan, 4 billion 894 million yuan and 5 billion 734 million yuan respectively, and the inventory prices were 51 million 476 thousand and 900 yuan, 75 million 74 thousand and 100 yuan and 97 million 195 thousand and 700 yuan respectively, accounting for 1.53%, 1.53%, 1.7% of inventory.

Nike (NKE.N) -- in 2014 -2016, the inventory was 27 billion 106 million yuan, 30 billion 238 million yuan and 31 billion 594 million yuan respectively, and the inventory prices were 710 million yuan, 898 million yuan and 1 billion 143 million yuan respectively, accounting for 2.62%, 2.97% and 3.62% of the stock.

Note that in the above data, there is a very important financial code. If you want to extend your thinking, you can understand a lot. We combine the absolute value of inventories with the preparation of stock price depreciation to form a "four quadrant model of the inventory analysis of the excellent school", which is as follows:

Situation 1: hoarding of goods by enterprises leads to an increase in stocks and a rise in stock prices.

Situation 2: inventories are decreasing, but the increase in inventory depreciation is a reflection of the fact that business products are not sold and business is bad.

Situation 3: inventory reduction, inventory decline in preparation for a fall, enterprises strictly control the volume, to sell the product.

Situation 4: inventory growth, inventory decline in price preparation, reflecting the company's product orders, business is good.

The model is not necessarily 100% correct. It mainly puts forward a way of analysis. After looking at the above four situations, you can try to compare the data of several companies to see who has a better basic quality.

05 advertising and publicity expenses

We analyzed before. Over the past 20 years since its establishment, Anta has undergone four major evolution: overseas OEM, brand wholesale, brand retailing, and now multi brand portfolio development.

If the functionality of the product is available, consumers will be willing to try it on. But how to make consumers willing to buy your products? Besides technology, there is another important factor: brand. When the product quality and function are the same, the louder the brand is, the stronger the purchase intention of consumers is.

However, How to quickly upgrade the brand of a product? The most simple and crude way is to endorse stars and smash money to advertise.

Such expenses are included in the advertising and publicity expenses of Anta Hong Kong stock market.

In 2014 -2017, advertising and publicity expenses were 1 billion 71 million yuan, 1 billion 279 million yuan, 1 billion 521 million yuan and 1 billion 769 million yuan respectively, accounting for 12%, 11.5%, 11.4% and 10.6% respectively.

The promotion of several peers is:

Lining -- in 2014 -2016, advertising and publicity expenses accounted for 20.3%, 14.3% and 12.3% respectively.

In 2014 -2016, advertising and publicity expenses accounted for 13.1%, 14.7% and 11.8% of revenue respectively in XTEP.

Andrew - in 2014 -2016, advertising and publicity expenses accounted for 10.8%, 10.54% and 9.9% respectively.

In 2014 -2016, advertising and publicity expenses accounted for 10.9%, 10.5% and 10.12% of revenue respectively in Nike.

There is little difference here except Lining. Behind this data, you should be able to see why Lining's brand always feels more high-end than Nike. In fact, the difference between technology is not real, the emphasis is on advertising investment.

In addition, brand promotion, in addition to advertising endorsement, there is a way to open up new brands, or buy high-end brands to complete.

06 sporting goods enterprises, which is worth tracking for a long time?

Before and after 2012, sales of sports shoes and clothing in China declined, and the industry as a whole was at a low ebb. In 2014, after two or three years of adjustment, the channel inventory basically digested, and the major sports brands began to enter the recovery phase. In 2016, sales of sports shoes and clothing in China were 186 billion 600 million yuan, up 11.8% over the same period last year.

Several key companies, we compare them separately.

　　 1) performance

Anta (02020.HK) -- in 2014 -2016, revenues were 8 billion 923 million yuan, 11 billion 126 million yuan and 13 billion 346 million yuan respectively; net profit was 1 billion 733 million yuan, 2 billion 88 million yuan and 2 billion 445 million yuan respectively; net cash flow from operating activities was 1 billion 686 million yuan, 1 billion 903 million yuan and 2 billion 468 million yuan respectively.

Lining (02331.HK) -- in 2014 -2016, revenues were 6 billion 728 million yuan, 7 billion 90 million yuan and 8 billion 15 million yuan respectively; net profits were -7.44 billion yuan, 62 million yuan and 701 million yuan respectively, and net cash flow from operating activities amounted to -3.94 billion yuan, 687 million yuan and 995 million yuan respectively.

XTEP (01368.HK) -- in 2014 -2016, revenues were 4 billion 778 million yuan, 5 billion 295 million yuan and 5 billion 397 million yuan respectively; net profit was 486 million yuan, 637 million yuan and 573 million yuan respectively; net cash flow from operating activities was 95 million yuan, 787 million yuan and 346 million yuan respectively.

Nike (NKE.N) -- in 2014 -2016, revenues were 187 billion 266 million yuan, 213 billion 2 million yuan and 235 billion 754 million yuan respectively; net profit was 20 billion 29 million yuan, 24 billion 737 million yuan and 29 billion 100 million yuan respectively; net cash flow from operating activities was 28 billion 640 million yuan, 20 billion 369 million yuan and 24 billion 982 million yuan respectively.

Andemar (UAA.N) -- in 2014 -2016, revenues were 18 billion 873 million yuan, 25 billion 736 million yuan and 33 billion 473 million yuan respectively; net profits were 1 billion 273 million yuan, 1 billion 510 million yuan and 1 billion 783 million yuan respectively; net cash flow from operating activities was 1 billion 340 million yuan, -2.86 billion yuan and 2 billion 112 million yuan respectively.

　　 Compared with the performance, Nike of the US stock company is the leader without controversy.

However, here is a small detail: Anta and Lining have different strategies. Anta relies on technology research and development to enhance product performance, follow the pro democracy route, and buy high-end brands to enter the high-end camp, while Lining directly focuses on high-end and fashion.

　　 2) market value

Anta (02020.HK) has a market value of 85 billion yuan; Lining (02331.HK) has a market value of 14 billion yuan; XTEP (01368.HK) has a market value of 7 billion 740 million yuan.

Andemar (UAA.N) has a market value of 225 billion 900 million yuan, and Nike (NKE.N) has a market value of 678 billion 700 million yuan.

In terms of market value, Nike is the largest, followed by Andemar.

　　 3) inventory

Anta (02020.HK) -- in 2014 -2016, the inventory was 867 million yuan, 1 billion 16 million yuan and 1 billion 295 million yuan respectively, and the inventory reduction was 58 million 679 thousand yuan, 9 million 815 thousand yuan and 7 million 269 thousand yuan respectively, accounting for 6.77%, 0.97%, 0.56% respectively.

Lining (02331.HK) -- in 2014 -2016, the inventory was 1 billion 289 million yuan, 960 million yuan and 965 million yuan respectively. The write off of inventory was 264 million yuan, 170 million yuan and 143 million yuan respectively, accounting for 20.48%, 17.7% and 14.82% respectively.

Nike (NKE.N) -- in 2014 -2016, the inventory was 27 billion 106 million yuan, 30 billion 238 million yuan and 31 billion 594 million yuan respectively. The depreciation of inventory was 710 million yuan, 898 million yuan and 1 billion 143 million yuan respectively, accounting for 2.62%, 2.97% and 3.62% of inventory.

XTEP (01368.HK) -- in 2014 -2016, the inventory was 569 million yuan, 398 million yuan and 460 million yuan respectively. No stock was cut during the reporting period.

Andemar (UAA.N) -- in 2014 -2016, the inventory was 3 billion 284 million yuan, 5 billion 85 million yuan and 6 billion 365 million yuan respectively. The depreciation of inventory was 51 million 476 thousand and 900 yuan, 75 million 74 thousand and 100 yuan and 97 million 195 thousand and 700 yuan respectively, accounting for 1.53%, 1.53% and 1.7% of inventory.

According to the four quadrant model mentioned earlier, Anta is in "situation 4", which is a good case, followed by Nike.

　　 4) R & D expenses

Anta (02020.HK) -- in 2014 -2017, the proportion of R & D activities costs accounted for 2.36%, 2.77%, 2.63% and 2.87% respectively.

Lining (02331.HK) - in 2014 -2016, R & D expenditure accounted for 2.73%, 1.86% and 1.57% of revenue respectively.

XTEP (01368.HK) - in 2014 -2016, R & D expenditure accounted for 2.22%, 2.29% and 2.56% of revenue respectively.

Nike and Andrew annual report did not disclose details of R & D costs. In the remaining three, the proportion of R & D expenditure of Anta increased year by year, and accounted for a higher proportion than peers.

　　 5) brand effect

Anta (02020.HK) -- in 2014 -2016, the proportion of advertising and publicity expenses in revenue was 12%, 11.5%, 11.4% and 10.6%, respectively, and the stock was 867 million yuan, 1 billion 16 million yuan and 1 billion 295 million yuan respectively.

Lining (02331.HK) - in -2016 2014, the proportion of advertising and publicity expenditure accounted for 20.3%, 14.3% and 12.3% respectively; the stock was 1 billion 289 million yuan, 960 million yuan, and 965 million yuan respectively.

XTEP (01368.HK) - in 2014 -2016, the proportion of advertising and publicity expenditure accounted for 13.1%, 14.7%, 11.8%, and the stock was 569 million yuan, 398 million yuan, and 460 million yuan respectively.

Andemar (UAA.N) - in -2016 2014, the proportion of advertising and publicity expenditure accounted for 10.8%, 10.54% and 9.9% respectively; the stock was 3 billion 284 million yuan, 5 billion 85 million yuan, and 6 billion 365 million yuan respectively.

Nike (NKE.N) - in 2014 -2016, the proportion of advertising and publicity expenditure accounted for 10.9%, 10.5%, 10.12%, and the stock was 27 billion 106 million yuan, 30 billion 238 million yuan, and 31 billion 594 million yuan respectively.

Because the commodity is based on the "sell the product", so, looking at the change in the quantity of the stock and the advertising expenditure, it can be clear how the efficiency of the advertising of the sports brand is exactly.

With the combination of advertising spending and inventory, the four quadrant compares:

Obviously, Nike is in the situation 1, the advertising effect is good, the brand effect is good, Anta is in the situation 2.

About Nike, let's feel its style.

Taking all the information into account, the investment logic of this report is as follows:

1) in 1993, Buffett analyzed that shoemaking was a good business, so the acquisition of Dexter shoe industry by way of stock exchange, who knows, Dexter profits decline after 95 years, and often lose money. In the end, Buffett saw it as the worst investment in his life.

2) but if Buffett bought Dexter, not a leather shoes business, but a Nike with high technology shoes, then the investment would be totally different. Nike today is no longer a shoe maker, but a material technology company.

3) in the textile and clothing competition, from the perspective of business attributes, winter clothing is better than summer wear (Mao Ligao), functional clothing is better than casual wear (less seasons, longer life cycle), and sports shoes are better than casual shoes. Sports shoes and sportswear are the best businesses on all tracks.

4) and the most important three core elements in sporting goods racetrack are product performance, brand and product line.

5) in the consumer goods business, low-end products want to enter the high-end camps and rely on violent advertising to enhance brand value. The better way is to buy high-end brands directly and form a combination of multiple product lines.

6) the most noteworthy ones in the field of clothing are group and multi brand large groups. At present, the largest clothing listed company in the world is VF Corporation (Vf Corporation). Its brands include: Wrangler, Lee, Riders, The North Face, etc.

7) another major concern outside the large group is sporting goods. In the US stock market, Nike is worth studying for a long time, while in the domestic market, Anta deserves to be followed up for a long time.

Finally, a statement was added that the cases involved in the study were merely academic exchanges, and did not constitute any suggestion. Never take a shuttle.

In addition, the accounting cases involved in the report are reasonable, reasonable, legal and compliant. All the financial data that we acquiesce in through audit institutions are truthful and credible.