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1 ANTA Sports (2020 HK) Multi brands drive growth Anta reported an impressive +16.9%/12.5% increase in net profit for FY16/2H16, broadly in line with our estimate. We edge up our FY17-18F earnings by 1%-3%, mainly on higher GP margin from FILA. We see its diversified brands including Anta Brand, FILA and Descente as multiple earnings drivers for coming years. Reiterate BUY with higher TP of HKD27.6 (from HKD27.3). 2H16 results in line with our estimates Anta reported an impressive 16.9%/+12.5%yoy surge in net profit of RMB2.4bn/ RMB1.3bn in FY16/2H16 respectively, which were in line with our estimates. The +16.9%yoy increase in net profit for 2016 was firstly because +20% increase toplines, from +23.1%/18.3%yoy increase in apparel and footwear segment respectively as a result of (1) high teens retail sales growth in Anta and Anta Kids; and (2) FILA brand sales were up over 50%yoy. 3) +180 bps increase in gross margin from wider-margin FILA business and e-commerce sales (over 50% growth). 4) SG&A to revenue ratio at 26.3% from 2015 s 24.4%. 5) Effective tax rate stayed around 26% in Anta also announced + yoy increase in 3Q17 trade fair, the slowdown was mainly due to higher replenish orders (mainly on footwear) from its wholesalers. Moreover, company guided an +10%yoy increase for 3Q17 for replenish order. Diversifying brands as drivers. Since Anta acquired FILA in 2009, the latter s revenue hit over RMB 2.7bn, contributing 20% of Group s sales in However, with its focus in retail sales channel, FILA could bring further margin expansion to Anta. In term of stores metrics, the company also targets to open another stores (18%-24%yoy increase) in For Descente, it is also expected to breakeven in JV with Kolon Sports On the same 2016 result announcement, Anta also announced its JV with Kolon, (50%:50% Anta : Kolon), which is a leading Korean brand focusing on outdoor sports footwear, apparel and accessories. Kolon sports brand has 200 stores in China with around 7 years sales experiences there. However, further regulatory approval is still required. Raising our FY17-18F estimates by 1-3%. Reiterate BUY We raise our FY17-18F earnings by 1-3% mainly on wider gross margin assumption from FILA. Our target price rises to HKD27.6 (from HKD27.3), and is based on unchanged 20x FY17 P/E. Consistent with both global and local sector mean including Nike (NKE US, NR), Puma (PUM GR, NR) and Li Ning (2331 HK, BUY, TP HK$6.5), we deem our target P/E multiple is justified on its continuous market share gain and leading position in China. The stock also offers 4% FY17 dividend yield. Reiterate BUY with 13.6% potential upside. Figure 1: Financial Summary Year to Dec 31(RMBm) FY15A FY16A FY17F FY18F FY19F Revenue 11,126 13,346 15,893 18,479 20,684 Reported Profit 2,041 2,386 2,887 3,380 3,700 Underlying Profit 2,041 2,386 2,887 3,380 3,700 Underlying (RMB) Underlying growth (%) P/E P/B DPS (HKD) Dividend Yield (%) Guosen/Consensus (%) China Consumer Discretionary Apparel & Textile Products 23 February 2017 BUY Target price HKD27.60 Previous Rec/Target Last price (22 Feb 17) Buy HKD27.30 HKD24.30 Upside/downside (%) 13.6 HSI Mkt cap (HKDb/USDb) 60.8/ week range (HKD) Avg trading volume daily (USDm) Free float (%) 45.1% Performance HKD Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Price(LHS) Performance 1M 3M 12M Absolute (%) Absolute (USD, %) Relative to HSI (%) (2.2) Company background Anta Sports Products Limited designs, develops, manufactures, and markets sportswear, including sports footwear and apparel for professionals and the general public. Terence Lok SFC CE No.: BAI terence.lok@guosen.com.hk Rel. to HSI(RHS) 250% 200% 150% 100% 50%

2 Figure 2 FY16 results RMB (mn) 1H15 2H F Actual 2016 Diff % 1H16 2H16F Actual 2H16 Diff % Footwear 2,400 2,674 5,074 6,051 6, % 2,867 3,184 3, % yoy 19.5% 27.3% 23.4% 19.3% 18.3% 19.4% 19.1% 17.2% Apparel 2,472 3,120 5,592 6,695 6, % 3,027 3,668 3, % yoy 27.4% 24.2% 25.6% 19.7% 23.1% 22.5% 17.5% 23.7% Accessories % % yoy 37.5% 18.1% 27.5% 13.5% -0.2% 4.6% 23.0% -5.2% Total 5,110 6,016 11,126 13,268 13, % 6,143 7,125 7, % yoy 24.0% 25.3% 24.7% 19.3% 20.0% 20.2% 18.4% 19.7% COGS (2,728) (3,213) (5,941) (6,951) (6,887) -0.9% (3,201) (3,749) (3,685) -1.7% Gross profit 2,382 2,803 5,185 6,317 6, % 2,941 3,376 3, % Gross margin 46.6% 46.6% 46.6% 47.6% 48.4% 47.9% 47.4% 48.8% Other income, gains / (losses) % Selling & distribution (991) (1,221) (2,212) (2,544) (2,831) 11.3% (1,261) (1,283) (1,570) 22.4% Admin (234) (270) (504) (580) (685) 18.1% (299) (281) (386) 37.4% Operating profit (EBIT) 1,267 1,433 2,700 3,187 3, % 1,488 1,699 1, % Operating margin 24.8% 23.8% 24.3% 24.0% 24.0% 24.2% 23.8% 23.8% Net finance income % % Pre-tax profit 1,341 1,530 2,871 3,387 3, % 1,577 1,811 1, % Tax (354) (387) (741) (881) (866) -1.6% (415) (466) (452) -3.1% Minority interests (21) (26) (48) (56) (59) 5.2% (33) (23) (26) 12.7% Net profit 965 1,117 2,082 2,451 2, % 1,129 1,321 1, % Figure 3 SSSG SSSG Anta Li Ning 4Q16 high teens 3Q16 low dd 2Q degree Peak Xtep 7.5% Q16 lowsd 7.2 flat 4Q Q Q15 1Q15 low teens Q Q14 sd 4.7 2Q14 low dd sd (-) 2.8 1Q14 sd 1.8 High sd Figure 4 Trade Fair orders 3Q17 2Q17 1Q17 4Q16 Anta Li Ning 3Q16 HSD low teens 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14 high teens 361 degree High sd High sd 15 teens 15 low teens 18 high teens 16 teens 11 twenties Peak (-) Low teens teens teens teens teens teens % Xtep Low sd teens % flat

3 Figure 5 4 years forward PE band chart Figure 6 4 years forward PB band chart, Guosen Securities (HK) Research, Guosen Securities (HK) Research Figure 7 Peers Comparison Company Ticker Price Mkt cap (US$m) 3-mth avg t/o (US$ m) PER FY16 PER FY17 PER FY18 FY16 YoY% FY17 YoY% FY18 YoY% 3-Yr Cagr (%) PEG P/B FY17 Sh px 1- mth % Sh px 3-mth % Footwear Belle Intl Daphne Internati C.Banner Le Saunda 1880 HK , % 17.8% -2.0% (10.0) 210 HK N/A N/A % (149.0) N/A HK % -33.3% (7.2) HK N/A -0.3% 25.0% 16.7% N/A N/A Footwear average (0.1) 0.0 (0.5) (47.4) Sportswears Nike Inc - Cl B NKE US , % 25.0% 16.7% Puma Se PUM GR , % 15.2% 17.6% Under Armour-A UA US , % 54.2% 37.9% (21. 7) (18.0) Abercrom bie & Fi ANF US % 14.6% 19.5% (3.7) N/A (19.9) Gap Inc/The GPS US , % -26.7% 31.7% (3.9) N/A (3.2) Anta Sports Prod 2020 HK , % 21.0% 17.0% Li Ning Co Ltd 2331 HK , % 35.4% N/A (7.1) Xtep Intl 1368 HK , % 12.1% 8.8% degree 1361 HK % 8.9% Sportswears average , Guosen Securities (HK) Research

4 Summary financial statements(year to Dec 31) Profit & Loss (RMBm) FY15A FY16A FY17F FY18F FY19F Financial Ratios FY15A FY16A FY17F FY18F FY19F Revenue 11,126 13,346 15,893 18,479 20,684 Gross profit margin (%) Revenue growth (%) Operating profit margin (%) Cost of sales (5,941) (6,887) (8,102) (9,385) (10,432) Underlying profit margin (%) Gross profit 5,185 6,459 7,791 9,094 10,251 Net debt/equity (%) (45.8) (49.4) (47.4) (39.1) (30.6) Other income/(expense) Net debt/total assets (%) (32.3) (34.4) (30.6) (24.6) (19.1) Operating expenses (2,716) (3,515) (4,184) (4,812) (5,534) Current ratio (%) Operating profit 2,697 3,203 3,892 4,568 5,003 Dividend payout (%) Operating profit growth (%) Interest cover Other non-operating inc/(exp) Dividend cover Finance income Acct. receivable turnover days Finance expenses (82) (65) (66) (66) (66) Acct. payable turnover days Associates & JCE Inventory turnover days Profit before taxation 2,829 3,311 4,006 4,691 5,136 Cash cycle days 10.0 (6.3) (20.1) (20.0) (20.5) Taxation (741) (866) (1,048) (1,228) (1,344) Dupont Analysis FY15A FY16F FY17F FY18F FY19F Non-controlling interests (48) (59) (71) (84) (92) Tax burden (%) Net profit 2,041 2,386 2,887 3,380 3,700 Interest burden (%) Other Adjustments on UP Operating profit margin (%) Underlying Profit 2,041 2,386 2,887 3,380 3,700 Asset turnover Underlying profit growth (%) Leverage ratio (RMB) ROA (%) Underlying (RMB) ROE (%) Underlying growth (%) DPS (HKD) DPS growth (%) Balance Sheet (RMBm) FY15A FY16A FY17F FY18F FY19F Cashflow (RMBm) FY15A FY16A FY17F FY18F FY19F Fixed assets 1,166 1,327 2,235 3,291 4,480 EBIT 2,697 3,203 3,892 4,568 5,003 Associates & JCE Depreciation & amortization (188) (206) (252) (290) (250) Others 1,180 1, Interest expense (66) (66) (66) Non-current assets 2,345 2,770 3,225 4,058 5,100 Change in working capital (415) (216) (745) (547) (478) Inventories 1,016 1,295 1,523 1,765 1,962 Tax paid (738) (948) (267) (1,048) (1,228) Debtors & prepayments 3,775 4,328 5,385 6,261 7,008 Other operating cashflow (12) (15) (17) Bank deposits & cash 5,166 5,830 5,816 5,184 4,482 Operating activities 1,903 2,468 2,550 2,601 2,959 Others Capex (457) (571) (680) (790) (884) Current assets 10,157 11,453 12,724 13,208 13,450 Free cash flow 1,446 1,897 1,870 1,810 2,075 Bank & other borrowings 1, Disposal of non-current assets Trade & payables 1,990 3,060 3,600 4,170 4,636 Associates & JCE (net) Taxation ,048 1,228 1,344 Interest received Others Dividends received Current liabilities 3,563 4,273 5,594 6,343 6,921 Other investing cashflow Bank & other borrowings Investing activities (413) (515) (499) (600) (685) Others New loans raised Non-current liabilities Repayment of loans (18) (392) Net assets 8,814 9,896 10,301 10,868 11,574 Dividends paid (1,356) (1,572) (2,066) (2,634) (2,976) Share capital Other financing cashflow Premium & reserves 8,572 9,654 10,058 10,626 11,332 Financing activities (1,294) (1,398) (2,066) (2,634) (2,976) Shareholders' funds 8,814 9,896 10,301 10,868 11,574 Inc/(dec) in cash (15) (633) (702) Non-controlling interests Cash at beginning of year 4,934 5,166 5,830 5,817 5,184 Total equity 8,814 9,896 10,301 10,868 11,574 Foreign exchange effect BVPS (RMB) Cash at end of year 5,166 5,830 5,816 5,184 4,482

5 Information Disclosures Stock ratings, sector ratings and related definitions Stock Ratings: Buy: A return potential of 10 % or more relative to overall market within 6 12 months. Neutral: A return potential ranging from -10% to 10% relative to overall market within 6 12 months. Sell: A negative return of 10% or more relative to overall market within 6 12 months. Sector Ratings: Overweight: The sector will outperform the overall market by 10% or higher within 6 12 months. Neutral: The sector performance will range from -10% to 10% relative to overall market within 6 12 months. Underweight: The sector will underperform the overall market by 10% or lower within 6 12 months. Interest disclosure statement The analyst is licensed by the Hong Kong Securities and Futures Commission. Neither the analyst nor his/her associates serves as an officer of the listed companies covered in this report and has no financial interests in the companies. Guosen Securities (HK) Brokerage Co., Ltd. and its associated companies (collectively Guosen Securities (HK) ) has no disclosable financial interests (including securities holding) or make a market in the securities in respect of the listed companies. Guo sen Securities (HK) has no investment banking relationship within the past 12 months, to the listed companies. Guosen Securities (HK) has no individual employed by the listed companies. Disclaimers The prices of securities may fluctuate up or down. It may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities. The content of this report does not represent a recommendation of Guosen Securities (HK) and does not constitute any buying/selling or dealing agreement in relation to the securities mentioned. Guosen Securities (HK) may be seeking or will seek investment banking or other business (such as placing agent, lead manager, sponsor, underwriter or proprietary trading in suc h securities) with the listed companies. Individuals of Guosen Securities (HK) may have personal investment interests in the listed companies. This report is based on information available to the public that we consider reliable, however, the authenticity, accuracy or completeness of such information is not guaranteed by Guosen Securities (HK). This report does not take into account the particular investment objectives, financial situation or needs of individual clients and does not constitute a personal investment recommendation to anyone. Clients are wholly responsible for any investment decision based on this report. Clients are advised to consider whether any advice or recommendation contained in this report is suitable for their particular circumstances. This r eport is not intended to be an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. This report is for distribution only to clients of Guosen Securities (HK). Without Guosen Securities (HK) s written authoriza tion, any form of quotation, reproduction or transmission to third parties is prohibited, or may be subject to legal action. Such information and opinions contained therein are subject to change and may be amended without any notification. This report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guose n Securities (HK) and its group companies to any registration or licensing requirement within such jurisdiction.

6 信息披露公司评级行业评级及相关定义公司评级买入 : 我们预计未来 6-12 个月内, 个股相对大盘涨幅在 10% 以上 ; 中性 : 我们预计未来 6-12 个月内, 个股相对大盘涨幅介于 -10% 与 10% 之间 ; 减持 : 我们预计未来 6-12 个月内, 个股相对大盘跌幅大于 10% 行业评级超配 : 我们预计未来 6-12 个月内, 行业整体回报高于市场整体水平 10% 以上 ; 中性 : 我们预计未来 6-12 个月内, 行业整体回报介于市场整体水平 -10% 与 10% 之间 ; 低配 : 我们预计未来 6-12 个月内, 行业整体回报低于市场整体水平 10% 以上利益披露声明报告作者为香港证监会持牌人士, 分析员本人或其有联系者并未担任本研究报告所评论的上市法团高级管理人员, 也未持有其任何财务权益本报告中, 国信证券 ( 香港 ) 经纪有限公司及其所属关联机构 ( 合称国信证券 ( 香港 )) 并无持有该公司须作出披露的财务权益 ( 包括持股 ), 在过去 12 个月内与该公司并无投资银行关系, 亦无进行该公司有关股份的庄家活动本公司员工均非该上市公司的雇员免责条款证券价格有时可能非常波动证券价格可升可跌, 甚至变成毫无价值买卖证券未必一定能够赚取利润, 反而可能会招致损失本研究报告内容既不代表国信证券 ( 香港 ) 的推荐意见, 也并不构成所涉及的个别股票的买卖或交易要约国信证券 ( 香港 ) 或其集团公司有可能会与本报告涉及的公司洽谈投资银行业务或其它业务 ( 例如配售代理牵头经办人保荐人包销商或从事自营投资于该股票 ) 国信证券 ( 香港 ) 不排除其员工有个人投资于本报告内所提及的上市法团报告中的资料均来自公开信息, 我们力求准确可靠, 但对这些信息的正确性公正性及完整性不做任何保证本报告没有考虑到个别客户特殊的投资目标财务状况或需要, 并不构成个人投资建议, 客户据此投资, 责任自负客户在阅读本研究报告时应考虑报告中的任何意见或建议是否符合其个人特定状况本报告并不存在招揽或邀约购买或出售任何证券的企图本报告仅向特定客户传送, 未经国信证券香港书面授权许可, 任何人不得引用转载以及向第三方传播, 否则可能将承担法律责任研究报告所载的资料及意见, 如有任何更改, 本司将不作另行通知在一些管辖区域内, 针对或意图向该等区域内的市民居民个人或实体发布公布供其使用或提供获取渠道的行为会违反该区域内所适用的法律或规例或令国信证券 ( 香港 ) 受制于任何注册或领牌规定, 则本研究报告不适用于该等管辖区域内的市民居民或身处该范围内的任何人或实体

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公司报告业绩分析国药控股 (1099 HK) 持续改革以稳定增长国药控股于 8 月 22 日公布总体盈利和核心净利润分别为人民币 25.29 亿 ( 同比升 32%) 及 25 亿 ( 同比升 35%), 较我们预期高 17% 及 8%, 原因是融资成本和税率下降 16 第 2