A sales clerk holds up an Anta sports shoe at a department store. The company reported 1.55 billion yuan of net profit for the year ended Dec 31, 2010. Natalie Behring / Bloomberg

ANTA Sports Products Limited, one of the major sportswear makers on the mainland, said Monday it expects to post above-average sales growth in 2011 after reporting a 24 percent gain in its net profit for 2010 on higher average selling prices and an expanded distribution network.

ANTA posted net profit of 1.55 billion yuan for the year ended Dec 31, 2010, up 24 percent compared with 2009, while its revenue surged 26.1 percent year-on-year to 7.41 billion yuan.

The past year saw the company's earnings per share shoot up 23.9 percent to 0.6221 yuan from 0.5023 yuan. The board proposed a final dividend of HK$25 cents, bringing the total dividend for the year to HK$45 cents compared with a full-year dividend of HK$35 cents for 2009. The payout ratio for 2010 was 62.1 percent, up from 61.3 percent a year earlier.

"As the Chinese economy expands steadily and the trend of rising wages continues, the surge in disposable income and domestic consumption continued to fuel the growth and prospects of the sportswear industry," said ANTA Chairman Ding Shizhong at the media briefing Monday. "We believe the prospect of the mass market is still inspiring and we would strive on leveraging our competitive strengths to foster a more desirable market share."

The chairman expects the domestic sportswear industry as a whole to grow by an average of 10-15 percent in 2011, a rate he said his company will "outrun".

With a primary focus laid on business expansion in the second and third-tier cities, the company registered strong growth in both sales volume and selling prices in 2010.

ANTA sold 38.43 million pairs of shoes and 50.63 million apparel items in 2010, representing year-on-year growth of 10.9 percent and 27.1 percent respectively. The average selling price (ASP) for ANTA's footwear products grew 4 percent to 99.5 yuan in 2010, while that for apparel items climbed by 8.8 percent to 65.8 yuan over the same period.

"We are confident that our order book growth for the current year will be maintained at above 20 percent," said the company's Chief Operating Officer Lai Shixian.

On the same day, the company reported a 20 percent rise in order value for the third quarter of 2011, after increases of 23 percent for the second quarter of 2011 and 21 percent for the current quarter.

Yet, the company expects to further increase its selling prices in 2011 as the cost of material continues to pick up.

"The rising cost of material will be weighing on our gross profit margins for 2011, but we will keep a close eye on the cost trends and adopt effective cost control measures to counteract inflation," said Lai.

One such measure is though price increases, which Chairman Ding said will be kept below 10 percent this year.

The company opened another 958 stores in 2010, taking the total number of stores to 7,549. ANTA is expecting to operate a total of 8,200 stores by end-2011, according to Claudia Lo, the company's vice president of investor relations.

ANTA shares closed the trading day in the city at HK$12.26, down 4.52 percent. Linus Yip, a strategist with First Shanghai Securities, said the dip reflected investors' lack of enthusiasm toward the sportswear sector. "Although ANTA is still the top pick for the sportswear sector as a whole, investors are generally cautious about investing in the sector," Yip told China Daily.

Mark To, head of research at Wing Fung Financial Group, said ANTA's position in the mid-range market will continue to benefit the company's growth going forward. But the momentum may slow down. "With the expected deceleration of GDP growth, ANTA will find it hard to maintain the growth rate seen in 2010," said To.

China Daily

(HK Edition 02/22/2011 page3)