\u3000\u3000 Ningbo Peacebird Fashion Co.Ltd(603877) (603877)
The company expects the net profit attributable to the parent company to decline by about 7% year-on-year in 2021. The company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company is about 660 million yuan, a year-on-year decrease of about 7%, and the net profit not attributable to the parent company is about 500 million yuan, a year-on-year decrease of about 11%. Among them, the net profit attributable to the parent company in 2021q4 is expected to be about 110 million yuan, with a year-on-year decline of about 74%. The sharp decline in performance is mainly due to the year-on-year decline in retail sales in 2021q4, the increase in brand marketing & digital transformation expenses and the increase in social welfare donation expenses.
After the epidemic, the company recovered early and vigorously in the industry, but the growth rate of 2021q3 performance is slowing down. 1) From 2020 to 2021h1, the company’s revenue and profit performance is ahead of its peers. Thanks to the active layout of new e-commerce channels and the increase in the proportion of fast reverse goods, the company’s revenue recovered positive growth and high growth trend from 2020q2 to 2021q2. It recovered the Soviet Union earlier and made great efforts in the industry. From 2020q1 to 2021q2, the company’s revenue was – 16.7% / + 25.6% / + 22.3% / + 32.2% / + 93.1% / + 27.8% year-on-year respectively, and the net profit attributable to the parent was – 89.9% / + 146.7% / + 153.4% / + 16.8% / + 2222.2% / + 85.5% year-on-year respectively. 2) The growth rate of 2021q3 performance slowed down. In July 2021, China’s epidemic counterattacked and the clothing retail environment deteriorated. Since August, China’s clothing retail sales (above the quota) have continued to decline year-on-year. The year-on-year growth rate of 2021q3 company’s revenue slowed to 3.9% and the year-on-year net profit attributable to the parent decreased by – 24.7%.
Due to the superposition of internal and external adverse factors, the performance of 2021q4 is lower than our expectation. 1) In terms of internal factors, after experiencing the fluctuation at the retail end of 2021q3, the company was more optimistic about the sales of Q4 double eleven and down jacket, increased product publicity and investment in digital transformation, added spokesmen Wang Yibo, Bai Jingting and Yang Qian, and signed a cooperation agreement with Huawei on digital transformation and transformation project, resulting in a significant increase in costs. 2) In terms of external factors, due to the impact of the 2021q4 epidemic and the cold winter climate is lower than the market expectation, the retail sales of the company’s terminal stores fell by about 15% year-on-year from November to December, of which the same store fell by 10-25% year-on-year. 3) The decline in comprehensive retail sales + increase in expenses led to a year-on-year decline of about 74% in the net profit attributable to the parent company in 2021q4.
With the development of online multi platforms and the expansion of offline stores, we expect the revenue to maintain a medium double-digit growth in 2021. 2021q1-q3 company’s online / offline revenue was + 27.5% / 42.3% year-on-year, accounting for 28.9% / 71.1% respectively. 1) online, the company tiktok /B station / Xiao Hong book and other new traffic platform operation, we expect 2021 online revenue is expected to increase by 15-20% over the same period. 2) Offline, as of 2021q3, the company had 5078 stores / yoy + 15.8% (a net increase of 462 compared with the end of 2020, the same below), including 1653 Direct stores (+ 99) and 3425 franchisees (+ 363). We expect the net increase of the company’s stores to be about 600 / yoy + 11.8% in 2021. Despite the poor performance of Q4 stores, combined with store expansion throughout the year, offline revenue is also expected to reach a medium double-digit growth.
Profit forecast and investment rating: the company focuses on the mid-range leisure and fashion clothing market. In the long run, the investment in brand construction and digital transformation is expected to enhance the company’s brand strength and consolidate its leading position. Under the adverse environment in the second half of 2021, the adjustment response is insufficient, and the Q4 performance is lower than our expectations. We expect to effectively improve the performance and reduce fluctuations in 2022 by optimizing the assessment indicators (from income assessment to profit assessment), strengthening cost control, adjusting the channel layout (reducing the proportion of direct sales with high fixed costs). We lowered the EPS from 1.92/2.29/2.70 yuan to 1.39/1.67/2.00 yuan from 2021 to 2023, and the corresponding PE was 17.8x/14.7x/12.3x respectively, which was lowered to the “overweight” rating.
Risk tip: the epidemic repeatedly affects residents’ consumption, and the adjustment of management strategy is less than expected.
