Biem.L.Fdlkk Garment Co.Ltd(002832) (002832)
The short-term operation is stable and the fundamentals are excellent. 1) In the first three quarters, the company still gave excellent answers under industry fluctuations. In the first three quarters, the company’s revenue / performance were RMB 1.71/460 billion respectively, an increase of 25% / 32% year-on-year in 2020 and 30% / 47% year-on-year in 2019. 2) According to our tracking judgment, the company’s terminal has still been growing steadily in the near future. We estimate that the flow in October increased by double digits year-on-year.
In the medium term, it has abundant power, high-quality extension and store efficiency improvement. We split the company’s growth power by channel: 1) offline: quantity expansion, quality improvement, management efficiency improvement, driving terminal. ① Number of stores: high and low tier cities continue to make efforts, At the end of H1, there was a net increase of 28 to 1007 stores (500 Direct stores / 507 franchisees) compared with the beginning of the year. We expect to open about 150 stores in the whole year, and the opening of stores next year is expected to be further accelerated (it is estimated that there will be a net opening of about 180 stores throughout the year). ② store efficiency: stores focus on improving operation efficiency, get through inventory data and digital tools, assist in order management, improve sales training and assessment incentive system, add brand strength and promote new product driven terminals, and we judge that store efficiency is expected to continue to improve. 2) online focus on brand publicity and member management, and promote the new retail ecological layout. Public The company has grasped the private sector traffic and refined VIP management, and actively distributed new channels such as tiktok and jitter to create a new online luxury sales mode. 2021H1 online sales increased by 41% to 60 million yuan over the same period.
For a long time, we are optimistic about the potential brought by the accumulation of brand power. The company has arranged high-quality sports and leisure tracks, and the brand continues to be high-end and young. We are optimistic about the long-term growth potential of Biem.L.Fdlkk Garment Co.Ltd(002832) as a medium and high-end high-quality national brand. 1) Product level: continuously innovate from the fabric and design level, pay attention to quality details, launch Polartec thermal fabric series and Guochao series, and continue to attract new and old consumers. 2) Marketing level: multi pronged approach to build brand recognition and popularity. The company sponsors the Tokyo Olympic uniforms of China’s national golf team to build professional brand image and recognition; Join hands with Yongda media to launch advertisements covering 80% of China’s high-speed rail sites and effectively expose business consumer groups.
The operation is optimized, and it is expected to grow steadily throughout the year. 1) Looking forward to the whole year, channel extension × For the contribution of store efficiency optimization, we expect the company’s revenue / performance to increase by about 25%. The company implemented the third employee stock ownership plan and promised not to redeem convertible bonds in advance this year, demonstrating performance confidence. 2) The company’s cash flow was excellent, and the terminal growth promoted the continuous marginal improvement of operation. The days of inventory turnover / accounts receivable turnover in the first three quarters were 358 days / 23 days respectively, and – 37 days / – 4 days respectively year-on-year.
Investment advice The company has excellent fundamentals and stable operation. In the long run, with channel expansion and operation efficiency improvement, the performance is expected to grow rapidly. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 600 / 780 / 980 million, and the current market value will be RMB 13.2 billion, corresponding to 17 times of PE in 2022. The target market value is 19.4 billion, corresponding to 25 times of PE in 2021, maintaining the “buy” rating.
Risk warning: the epidemic situation continues to exceed expectations; Macroeconomic weakness; Venice brand incubation failed to meet expectations; The prosperity of sports and leisure consumption market fell.
