\u3000\u3000 Lancy Co.Ltd(002612) (002612)
Local head high-end women’s wear to expand medical beauty and infant and child business. The company is mainly engaged in high-end women’s wear. Since 2014, the company has successively expanded the businesses of baby and children’s wear, medical beauty and asset management. Since 2019, the company has focused on the three main businesses of women’s wear + medical beauty + Green Baby and children. In 2020, the income of the three major industries accounted for 46% / 28% / 24% respectively, and the compound growth rate of income from 2017 to 2019 was 17% / 57% / – 4% respectively. Under the influence of the epidemic in 2020, the revenues of the three major businesses were – 12.51% / + 29.28% / – 9.92% year-on-year respectively, and Yimei maintained stable and rapid growth.
Women’s clothing recovery + medical beauty expansion, and the revenue and profit in the first three quarters of 2021 have returned to the pre epidemic level. In 2021q1-q3, the company’s revenue was 2.651 billion yuan / yoy + 32.8% / 24.5% compared with the same period in 2019 (including women’s clothing, medical beauty and infant and child income + 41.4% / 37.4% / 14.3% respectively), and the net profit attributable to the parent was 158 million yuan / yoy + 216.07% / 0.57% compared with the same period in 2019. On a quarterly basis, the spread of the epidemic in the middle of the year slowed down the recovery process of Q3. The revenue of 2021q1 / Q2 / Q3 was + 52.1% / 39.7% / 12.2% year-on-year, and + 23.6% / 32.8% / 17.8% year-on-year compared with the same period in 2019. The net profit attributable to the parent company turned from loss to profit / + 19460% / + 22.4% year-on-year, and – 33.3% / + 59.8% / – 4.84% year-on-year compared with the same period in 2019.
Women’s wear has a multi brand layout, and the recovery trend is good. The company’s women’s clothing is positioned at the high end. It has 6 own brands (Lanzi / Rhine / zibaomi / Liya / yuelanzi / lancypink) + 2 agent brands (jigott / mozo), of which Lanzi and Rhine contribute the main revenue (2021h1 respectively accounts for 72.7% / 17.7% of women’s clothing revenue, and the revenue is + 81.5% / 28.5% year-on-year respectively). 2021q1-q3 women’s clothing revenue increased by 41.4% year-on-year, and both online and offline achieved significant growth, with a year-on-year increase of + 45% / 40.7% and 17% / 83% respectively. There were 598 women’s clothing stores at the end of 2021q3, a decrease of 10 compared with the beginning of 2021.
The United States continues to expand and is less affected by the epidemic. Since 2016, the company has entered the medical beauty track and expanded its territory by means of M & A + self construction. So far, it has three brands: Miran Boyu, Jingfu medical beauty and gaoshengli. The revenue of 2021h1 accounts for 63.2% / 22.7% / 14.1% of the business revenue of medical beauty respectively. As of 2021h1, there are 22 medical and American institutions (4 hospitals + 18 clinics). China’s medical beauty industry is in a period of rapid development, and the company’s medical beauty business is less affected by the epidemic. The medical beauty revenue of q1-q3 in 2020 / 2021 is + 29.3% / 37.4% year-on-year respectively. Since 2021, it has successively set up six equity M & a funds of medical America, with a cumulative scale of nearly 3 billion yuan. In the future, it will continue to acquire high-quality targets and help the medical America business maintain a rapid growth trend.
After adjustment, the baby business returned to profitability. In 2014, the company acquired 26.53% shares of akabang, a listed company of baby and children’s clothing in South Korea, and further acquired consolidated statements in September 2016. Akabang has 10 + series brands. At present, ettoi is the main brand in China. As of 2021h1, there are 858 sales terminals for infant and child business (814 in South Korea + 44 in China). Akabang disclosed the performance forecast on February 11, 2022. It is expected that the revenue in 2021 will be + 18.3% year-on-year, the net profit attributable to the parent company will turn around, and benefit from the increase of revenue + the decrease of cost rate.
Profit forecast and investment rating: Based on high-end women’s clothing, the company has successively cut into the fast-growing children’s clothing and the fast-growing medical beauty track. After years of integration and development, the company now has strong multi business collaborative management ability. Since 2021, China’s medical and American regulatory policies have become stricter. As the head organization of standardized operation, the company is expected to benefit from the improvement of concentration in the future. After integration and adjustment, the infant and child business has returned to profitability. We expect that the net profit attributable to the parent company from 2021 to 2023 will increase by 71.1% / 35.6% / 26.2% year-on-year respectively, and the corresponding PE will be 47.4x/34.9x/27.7x respectively. The “buy” rating will be given for the first time.
Risk tip: the epidemic repeatedly affects residents’ consumption, medical and American safety accidents, and clothing inventory pressure increases.
