Located in the bustling heart of Shanghai,Nanjing Road is known for its prime real estate where every square meter holds immense value.Recently,an impressive standalone property known as "Sunshine Mansion," situated at 580 Nanjing East Road,was auctioned for a staggering 299 million yuan.

According to information from Alibaba Auction,the building covers a total area of approximately 7,252.43 square meters,leading to an average floor price of about 41,000 yuan per square meter.The buyer,Anta Sports (02020.HK),managed to secure this seemingly low-profile acquisition as part of a larger strategic positioning move.

The property was owned by Jiangyin Jindi Wool Textile Co.,which was previously part of the financially troubled Jiangsu Sunshine Group.Due to defaulted loans amounting to 197 million yuan owed to Ping An Bank,Sunshine Mansion was subjected to compulsory auctioning.Anta,being the sole bidder,seized the opportunity to acquire it at a significant discount,approximately 70% of the assessed value. According to the announcements,the property generates annual rental income exceeding 30 million yuan,suggesting a rental yield of over 10% based on the purchase price – a considerable bargain.

Business records indicate that the shareholders of Jiangyin Jindi Wool Textile Co.have now changed to Anta Sports,which holds a 100% stake.This transition took effect on January 2,2025.

However,Anta's ambitions extend well beyond just rental income.The main structure's first through fifth floors are already leased by brands under the Anta umbrella,meaning that this acquisition translates rental costs into value growth for their own assets while securing a long-term flow of customers in a critical business area.Nanjing Road sees nearly 2 million visitors daily,creating a perfect platform for brand visibility and upscale strategic initiatives.

The story of this low-cost acquisition underscores the divergence in fortunes between two leading apparel companies.

The transfer of Sunshine Mansion mirrors the starkly contrasting fates of these companies.

Once considered a "giant in woolen textiles," Jiangsu Sunshine Group,under the leadership of Lu Keping,dominated four public companies.However,a series of scandals,including insider trading and delisting crises,led to their downfall.By 2024,the company faced delisting as its stock price fell below 1 yuan per share.Data from Wind highlights that other subsidiaries,such as HaiRun Photovoltaics and Weichuang Co.,have also exited the market.As of 2024,the only remaining listed company under Jiangsu Sunshine is SiHuan Bio,which is experiencing its own set of difficulties.

In stark contrast,Anta continues to thrive and is edging closer to matching the scale of Nike in China.In the first half of 2024,the revenues for Nike China and Anta Sports were reported at 37.5 billion yuan and 33.735 billion yuan,respectively.Anta's revenue growth stood out at 13.8%,while Nike's increased by 8%.Although Nike maintains its lead in absolute figures,Anta's faster revenue growth sets it apart.

As of February 14,during midday trading,Anta Sports boasts a market capitalization of 245.9 billion HKD.While this is a decline from the highs of 345.7 billion HKD in January 2023 and 300 billion HKD in October 2024,it still solidifies Anta's position as a leader in China's athletic apparel market.

In comparison,Li Ning (02331.HK) has a market cap of about 42.5 billion HKD,with Xtep International (01368.HK) and 361 Degrees (01361.HK) tallying at approximately 14.6 billion HKD and 8.25 billion HKD,respectively.Meanwhile,three outdoor-focused companies,Sanfu Outdoor (002780.SZ) and Explorer (300005.SZ),have seen their market caps shrink to 1.75 billion yuan and 6.09 billion yuan.

Despite market fluctuations exerting pressure on Anta's market value,the company still maintains a scale that is approximately 3.5 times larger than that of the combined total of its competitors,reinforcing its stronghold as an industry oligarch.

Anta's growth amidst adversity stems from its dedicated approach to a combination of acquisitions and operational partnerships.Beginning with the acquisition of FILA in 2009,Anta gradually incorporated brands such as Descente,Arc'teryx,and Salomon,successfully establishing a differentiated brand matrix.The acquisition of yoga apparel company Maya in 2023 and the recent purchase of Nanjing Road properties in 2024 exemplify its foray into specialized markets and extensive channel management.

Yet,even with such dynamic growth,Anta faces significant challenges ahead.

A primary concern revolves around the FILA brand,which has encountered its first revenue decline in 2022.The forecast for 2024 indicates a further reduction in growth rates.In 2022,FILA's revenue was 21.52 billion yuan,a slight drop from 21.82 billion yuan in 2021.This marked the brand's first annual revenue decline since Anta took over the Chinese operations of FILA. In the first half of 2024,FILA's revenue was reported at 13.056 billion yuan,reflecting a year-on-year growth of 6.8%.

Leadership changes are adding further unpredictability to the situation.With the retirement of former president Yao Weixiong,the new successor Jiang Yan is faced with the challenge of sustaining FILA's reputation for "fashion sports." The divisions within the brand,which encompass FILA ICONA,ATELIER,Fusion,Kids,and GOLF,must be aligned to function cohesively rather than suffer from internal conflicts.This requires Anta and Jiang Yan to exhibit high-level operational precision.

The more significant trials lie with managing multiple brands in harmony.Anta's main brand targets the mass market,FILA aims for the mid-to-high-end sector,whereas outdoor brands like Descente and Kolon target specialized niches.Balancing resource allocation while avoiding internal competition between these brands represents a daunting task.

In an investor meeting held in 2023,Anta revealed ambitions to develop both Descente and Kolon into "the third brand worth a hundred billion," but as it stands,neither brand has yet reached the 5 billion yuan mark in revenue; growth will depend on channel expansion and product innovation.

On top of these operational challenges linger financial risks associated with aggressive acquisitions.

While Anta's acquisition endeavors have undeniably propelled growth,they have also introduced complexities.Data from Wind shows that when Anta collaborated with a consortium to acquire Amer Sports in 2019,it took on 800 million euros in floating-rate debt and provided guarantees amounting to 1.3 billion euros,thus inflating its liabilities from 7.854 billion yuan in 2018 to a staggering 20.157 billion yuan.

Amer Sports also bore substantial debt,including approximately $4 billion in shareholder loans alongside nearly $1.8 billion in financial institution loans,contributing to a heightened financial burden for Anta and Amer Sports alike.

Although the recent Nanjing Road acquisition was not particularly large in transaction value,it reflects Anta's tendency towards heavy asset investments.In December 2024,the company acquired a 100,000 square meter plot in Xiamen for 980 million yuan,with plans for a 4 billion yuan investment towards a new operations center; it also aims to open 1,000 Olympic-themed stores in the next five years,each spanning over 500 square meters.Such a capital-intensive strategy can reinforce brand barriers,yet in the context of soft consumer recovery,this deep financial commitment could inflict further cash flow pressures.

Transitioning from a small factory in Jinjiang to becoming the world's third-largest sports group,Anta embodies a classic narrative of a Chinese brand's resurgence.Its low-cost acquisition of Sunshine Mansion and its investments in commercial real estate demonstrate its capabilities in channel management and capital operations.However,the hurdles posed by FILA's growth stagnation,challenges of brand synchronization,and financial strains from acquisitions continue to loom large.

As the advantages of scale slowly reach their peak,Anta must illustrate its potential to thrive not solely through acquisitions but also through refined operations,establishing sustained competitive advantages.The reality is the business arena is rife with dark horses; the true challenge lies in remaining a steadfast leader.