\u3000\u3000 Zhejiang Semir Garment Co.Ltd(002563) (002563)
Event: the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be 1.45 billion yuan – 1.55 billion yuan in 2021, with a year-on-year increase of 79.97% – 92.38%; It is expected to realize a net profit of RMB 1.3 billion to RMB 1.4 billion, with a year-on-year increase of 71.79% – 85%.
Comments:
Kidiliz group ended its losses by making statements & the operation quality of its original business was improved and its performance was significantly improved. In 2020, the company’s operating performance was affected by the epidemic situation and the loss of French kidiliz group, with a low base. The company completed the transfer of French K group in early September 2020. Excluding its consolidated losses in the same period of last year, the net profit attributable to the parent company in 2020 was 1.302 billion yuan. Under comparable standards, the net profit attributable to the parent company in 2021 is expected to increase by about 11.33% – 19.01% year-on-year. In 2021, the company continued to promote the construction of core competencies such as brand operation, product innovation, retail experience and supply chain management, accelerated the digital transformation of enterprises, expanded the live broadcast coverage platform, continuously improved the quality of existing business operations, and showed double growth in operating revenue and gross profit margin. In a single quarter, 21q4 company expects to realize a net profit attributable to its parent company of 507-607 million yuan, with a year-on-year change of – 14% – 2.95%. In the fourth quarter, the adverse effects of the epidemic and high temperature continued, and the performance growth slowed down.
Barabara brand construction continues to advance, and the leading advantage of children’s clothing is stable. In 2021, the company’s children’s wear business is expected to return to the pre epidemic level. According to Euromonitor data, the market share of balabalabala brand in China’s children’s wear market in 2021 was 7.1%, which still has a leading advantage of more than 5pcts compared with the second place. In the context of increasingly fierce market competition, barabara paid more attention to the construction of long-term brand strength. In the first half of 2021, barabara participated in tmall super brand day and held the “endless dream” fashion show at Shanghai Fashion Week; In the second half of the year, we will participate in the tiktok super product day, and hold the the Great Wall show of “feather you velvet”, and enhance the brand topic and influence through the global channel linkage. It is expected that in 2022, balabalabala brand will continue to optimize and upgrade from product strength, brand strength, store image, marketing promotion and other aspects, so as to consolidate the leading advantage of the first brand of children’s clothing.
Investment suggestion: the company’s leading position in children’s wear is stable, and the brand construction continues to be promoted. After stripping kidiliz, the children’s wear business is light and maintains rapid growth. The casual wear business is still recovering steadily, and the business quality is expected to continue to improve. We maintain the company’s profit forecast. It is estimated that the net profit attributable to the parent company in 21 / 22 / 23 will be RMB 1.542/18.15/2088 billion, corresponding to 13 / 11 / 10 times of the current market value PE respectively, maintaining the “buy” rating.
Risk tip: industry competition intensifies and the epidemic affects offline retail.
