\u3000\u3000 Xin Hee Co.Ltd(003016) (003016)
Xin Hee Co.Ltd(003016) is one of the leading enterprises in China’s high-end brand women’s clothing, with a mature and high-quality brand matrix and a complete industrial chain from design to sales. The company has formed a pyramid brand structure in which jorya and joryaweeken are positioned at the high end and Λ nm Λ Ni, givhshyh, Caroline, aivei and QDA are positioned at the medium and high end. The company’s revenue in 2020 is 1.833 billion yuan, of which the main brand Jr and the second brand JW account for about 40% and 12%. In 2017, the company experienced changes in the management team, and the industrial chain from design to sales also experienced intelligent and information upgrading. The company’s revenue and profitability are in the channel of improvement.
The growth of medium and high-end women’s wear continues. With the brand matrix of endogenous training, the share of the company can be expected to increase. The scale ratio of women’s clothing and men’s clothing industry in mature markets in Europe, America and Japan is about 2:1, and that in China is currently 1.74:1. Compared with overseas Chinese women’s clothing industry, there is still room for development. Under the background of the increase of China’s high net worth population, medium and high-end women’s clothing has become an opportunity for structural growth in the women’s clothing industry. Under the mode of independent brand cultivation, the company has stronger control over the brand, clear positioning of each brand and better coverage of different types of consumer groups in the market. In terms of future development potential, the company’s main brand Jr is still the main growth force. In addition, the company’s expanded marketing network layout in the “new third tier” cities with great market potential, the development of other brands is expected to be improved and contribute to new revenue growth points.
The most important advantage of the company is the construction of self operated channels, including offline self operated stores and online layout.
1) the company’s self operated stores account for 80%. The advantages of self operated mode are obvious, and the improvement of store efficiency can be expected. At present, the core high-end brands Jr and JW of Xinhe are fully self operated. In the high-end women’s wear industry, the proportion of self operated channels of the company is at a high level (self operated stores account for 80%). Self operated mode is conducive to centralizing the company’s resources and advantages, improving brand awareness and influence, and seizing the high-end market. In recent years, the company has achieved remarkable results in improving the efficiency of self operated stores through comprehensive strategies, and there is still much room for improvement in the future, including: in terms of channel structure, increasing the proportion of new channels such as shopping centers; Store, unified design and decoration to strengthen brand image construction; In terms of informatization, open up the cargo flow and improve the sold out.
2) the company’s e-commerce strategy is clear and its online growth remains high. In recent years, online consumption has gained popularity and formed a trend, and the new social e-commerce platform has become a gathering place for young consumer groups. The company has intensified the development of the business of electronic business, and has achieved remarkable results. Besides taking Tmall and vip.com as the main battlefield, it also attached importance to the layout of Xiaohong tiktok and the platform of shaking the sound, and used it as a platform for planting grass and draining. Under the force of multiple platforms, the revenue of the company’s e-commerce platform maintained a high growth, with a CAGR of 37.6% from 2017 to 2020, accounting for more than 20%.
The profitability of the company is expected to be improved through the improvement of self operated stores and the sinking of other brands. The net profit rate of the company is lower than the average level in the high-end women’s wear industry. In the past few years, the store efficiency and floor efficiency of the company’s self operated stores have maintained a trend of continuous improvement. If the second tier brands such as IV sink, they will continue to improve
Profitability of the company.
Profit forecast and investment rating: it is expected that the company will achieve revenue of RMB 2.185/25.60/2.985 billion from 2021 to 2023, and the net profit attributable to the parent company will be RMB 286/3.69/448 million, and the corresponding PE will be 14.51x/11.24x/9.24x respectively. Based on the scarcity of the company’s brand matrix and future potential in the high-end women’s wear industry, the company was given a “recommended” rating for the first time.
Risk tip: the demand is less than expected under the repeated epidemic, the competition of e-commerce platforms is fierce, and the management changes.
