Xin Hee Co.Ltd(003016) middle and high-end women’s wear is leading in China, with strong multi-channel sales momentum

Xin Hee Co.Ltd(003016) (003016)

The company is a leading medium and high-end women’s clothing enterprise in China, mainly engaged in the design, production and sales of high-end women’s clothing. The company pays attention to the multi-channel sales of offline Direct stores and online e-commerce network, and the resonance between scientific and technological innovation and digital transformation will help to further improve the market share in the future. At the same time, the company improves its competitive advantage through product R & D and Brand Co branding, and its performance is expected to maintain steady growth. First coverage, give buy rating.

Key points supporting rating

China’s leading medium and high-end women’s wear enterprises are expected to continue to maintain a leading position in the future. The company has established a complete production and supply chain system, and the seven brands have a pyramid product structure, which can cover the medium and high-end women’s clothing market in an all-round way. From 2017 to 2020, the company’s operating revenue increased from RMB 1.634 billion to RMB 1.833 billion, with a compound growth rate of 3.91%. In 2021q3, the company’s operating revenue reached 1.507 billion, with a year-on-year increase of 22.88% in 2020 and 10.81% in 2019. It is expected to maintain a leading position in the future.

The direct marketing reform helped Wuxi Online Offline Communication Information Technology Co.Ltd(300959) increase sales, and the performance inflection point appeared. Offline, the company has implemented direct marketing reform since 2014. In 2020, the company’s direct revenue reached 1.329 billion yuan, accounting for 93.92% of the total offline revenue. Online, the company’s e-commerce business revenue increased rapidly by optimizing the information system and strengthening the construction of supply chain system. In 2021h1, the company’s e-commerce channel revenue was 230 million, a year-on-year increase of 37.71% and a year-on-year increase of 37.72% in 2019.

Focus on design, strong R & D ability, multi-channel publicity and create high-end brand image. The company has sufficient R & D personnel, and the number of employees in the design team is significantly higher than that in peers. By the end of 2020, there are 417 R & D personnel, accounting for 9.2%, of which about 60% have worked in the company’s design team for more than 5 years. The sub brand design style is independent and stable, with obvious differentiation. In terms of publicity, the company actively expands its promotion strategy, pays attention to the upgrading of its brand image, and improves brand awareness through cross-border cooperation and IP joint branding. The company will also carry out a series of promotion and marketing in line with the brand tone in the future to further enhance the brand influence.

Profit forecast and valuation

It is estimated that the company’s revenue from 2021 to 2023 will be RMB 2.115/25.37/3.103 billion respectively, and the net profit attributable to the parent company will be RMB 292/3.89/458 million, corresponding to EPS 0.68/0.91/1.07 yuan / share. The current stock price corresponds to 16 / 12 / 10 times of 2021e-2023e P / E ratio. First coverage, give buy rating. Main risks of rating

Store sales were lower than expected under the epidemic situation; The development of e-commerce is less than expected; Failed to accurately grasp the new trend of fashion

 

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