The 2024 Summer Olympics were a resounding success, delivering numerous world records and a few notable surprises. China, for example pulled an incredible upset over the US to win gold in the men’s 4x100 swimming medley relay, ending the US's undefeated record in the race at the games [1].

Beijing’s emerging dominance in the global sporting arena is underpinned by its history and it’s ambition. Consider Cuju (or Ts’u-chü), an ancient Chinese game resembling football that dates back to the Han dynasty. It's recognised by FIFA as the oldest form of football in the world. Building on its rich sporting heritage, China has invested billions of dollars in creating and improving its sports facilities. From huge stadiums to specialised training academies, the country supports the current and future generations of elite athletes.

Fact 1: Emergence of a sporting superpower 

To become a sporting superpower, China had built nearly four million facilities by the end of 2021. Public policy further supports 1,200 to 1,400 sports venues. This gives the public free or low-cost access to facilities to encourage more people to play sports or exercise regularly. Furthermore, there are over 48,000 sports organisations, and nearly three million certified sports instructors. This infrastructure development has mobilised tens of millions of people to participate in sports every year [2]. The national fitness initiative has significantly increased health awareness. According to the National Bureau of Statistics, China’s sports industry was worth 3.3 trillion yuan ($457 billion) in 2022, with its added value reaching 1.3 trillion yuan. Compared to the previous year, the total output of the sports industry grew 5.9% [3]. 

Fact 2: Sportswear is one of the key structural growth stories

Anta Sports, which we hold in our regional Asia/global emerging market portfolios, has significantly benefited from this growth. Dubbed the ‘Nike of China,’ Anta is a leading Chinese sportswear company. It has a strong presence in the mass market segment, comprising over 12,500 retail stores offering its popular brands like Anta and Fila. What we particularly like is the company’s multi-brand proposition, which has been defensive amidst tougher consumer sentiment and a challenging macro environment in China. The core Anta brand accounts for about half of its revenues. We think there's room for improvement here, which the management has been tasked with delivering. The relatively low penetration of sportswear in China is an attractive growth opportunity. Tens of millions of people are now participating in sporting events every year while there is greater health awareness post-Covid. 

Fact 3: Anta’s earnings and dividend payout are better than peers

Anta’s earnings and dividend payout have risen over the years, which is in line with the company’s strategic success. Chart 1 shows the consistent upward trend of earnings per share. In 2023, Anta increased its dividend payout from 44% to 50%. However, management has pointed out that there will be no immediate increase in payouts due to the possibility of investing in new brands and market. The company trades at ~17x forward price earnings, one standard deviation below its 10-year historical average. This is at a premium to peers, many of which face specific issues. Investors appreciate visibility in China's volatile environment. From our stock-specific insight, the sustainable growth from the Anta and Fila brands, and the upside from the rapid rise of other brands, are currently underappreciated by the market. That's why we've gradually topped up the stock. 

Anta is a stock held widely across abrdn’s Asia and Emerging Market (EM) equities desk, including in our EM income, Asia Pacific ex. Japan and All China strategies as of 7 August 2024. 

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