\u3000\u3 Shengda Resources Co.Ltd(000603) 877 Ningbo Peacebird Fashion Co.Ltd(603877) )
The operating income and net profit attributable to the parent company in 21 years were + 16.34% and – 4.99% respectively year-on-year, and the profit performance was lower than expected
In 2021, the company achieved an operating revenue of 10.921 billion yuan, a year-on-year increase of 16.34%, an increase of 37.76% over the same period in 19 years. The net profit attributable to the parent company was 677 million yuan, a year-on-year decrease of 4.99%, lower than expected, deducting 520 million yuan of non net profit, a year-on-year decrease of 7.26%. EPS is 1.44 yuan, and the proposed dividend per share is 0.60 yuan (including tax). The year-on-year decline in net profit attributable to the parent company was mainly due to the decline in retail sales in the fourth quarter with a large proportion of sales and the increase in expenses. In 21 years, the company’s net profit attributable to the parent company decreased by 1.39pct to 6.20% year-on-year.
The operating revenue of the company from 2021q1 to Q4 in a single quarter was + 93.10%, + 27.82%, + 3.92%, – 9.16% respectively year-on-year, and + 60.93%, + 60.48%, + 27.14% and + 20.09% respectively compared with the same period in 19 years. The net profit attributable to the parent company increased 22 times year-on-year, + 85.52%, – 24.66% and – 69.33% respectively. The revenue in the fourth quarter decreased and the expenses increased more, resulting in a large decline in the net profit attributable to the parent company.
Q4 saw a decline in several brands, and sales fell short of expectations, with a net increase of 13% in stores throughout the year
1) revenue split by brand: in 21 years, the revenue of main brands Pb women’s wear and Pb men’s wear was 4.484 billion yuan (year-on-year + 18.60%), 3.370 billion yuan (+ 18.99%), and that of leting, MP children’s wear and other brands were 1.398 billion yuan (+ 5.20%), 1.274 billion yuan (+ 29.53%) and 306 million yuan (+ 16.20%) respectively.
In terms of quarters, the growth rate of main brands Pb men’s wear and women’s wear 21q3 slowed down and Q4 turned to decline. Among them, the revenue of Pb women’s wear 21q1 ~ Q4 increased by + 120%, + 46%, + 4% and – 18% respectively year-on-year; Pb men’s wear + 77%, + 31%, + 9%, – 1% respectively; Leting + 83%, + 2%, – 4%, – 18% respectively; MP children’s wear + 76%, + 72%, + 12%, + 2% respectively.
2) revenue is split according to Wuxi Online Offline Communication Information Technology Co.Ltd(300959) price: online sales increased by 19.94% year-on-year to RMB 3.364 billion in 21 years, accounting for 0.54 PCT to 31.06% of total revenue, and offline sales increased by 16.98% to RMB 7.467 billion. In offline channels, the revenue of Direct stores accounted for 42.60%, with a year-on-year increase of 13.21%; Franchise store revenue accounted for 26.34%, with a year-on-year increase of 23.64%. After deducting the impact of the adjustment of financial standards in the fourth quarter, the revenue of Direct stores, franchisees and online stores decreased by about 12%, 10% and 9% respectively year-on-year.
3) offline revenue is split by extension endogenous: in terms of the number of channels, the total number of stores of the company at the end of 2021 was 5214, a net increase of 598 (1315 newly opened and 717 closed) compared with that at the beginning of 21, and the net increase of extension was 12.95%. Among them, the number of Direct stores increased by 62 (+ 3.99%, 317 opened and 255 closed), and the number of franchise stores increased by 536 (+ 17.50%, 998 opened and 462 closed), which was the largest since its listing in 2017. In terms of endogenous, the average store efficiency of Direct stores has increased by 5.90% year-on-year for 12 consecutive months.
The gross profit margin was stable, the expense rate increased significantly, the inventory increased, the accounts receivable decreased, and the cash flow was healthy
Gross profit margin: in the 21st year, the gross profit margin increased by 0.44pct to 52.93% year-on-year, and the gross profit margin of main business decreased by 0.36pct to 53.21% year-on-year, which was mainly affected by the decline of gross profit margin of Pb men’s wear and franchise stores. In terms of quarters, the gross profit margins of 21q1 ~ Q4 in a single quarter were 55.88% (year-on-year + 3.98pct), 54.61% (+ 1.70pct), 50.02% (+ 0.05pct) and 51.55% (- 2.46pct) respectively.
In terms of brands, the gross profit margins of Pb women’s wear, Pb men’s wear, lecing, MP children’s wear and other products in 21 years were 55.87% (+ 0.37pct), 53.32% (- 1.10pct, mainly due to the increased handling of 21-year-old goods), 48.81 (- 1.01pct), 51.27% (+ 0.12pct) and 40.98% (- 3.37pct) respectively. In terms of channels, the gross profit margins of Direct stores, franchise stores and online stores in 21 years were 65.71% (+ 0.10pct), 42.71% (- 2.36pct) and 44.95% (+ 1.92pct) respectively. Among them, the decline in the gross profit margin of franchise stores in 21 years is mainly due to the accelerated opening speed of franchisees in the second half of the year, the large one-time expenses such as decoration subsidies of the company, the increase in the proportion of old models in the delivery of franchisees in 21 years, and the corresponding low supply discount. The increase of online gross profit margin in 21 years is mainly due to the active optimization of online sales discount contribution.
Expense rate: during the 21 years, the expense rate increased by 2.23pct to 44.66% year-on-year. Among them, the rates of sales, management, R & D and financial expenses were 36.16% (+ 1.29pct), 6.49% (+ 0.36pct), 1.39% (+ 0.15pct) and 0.62% (+ 0.42pct) respectively. The sales expenses increased by 676 million yuan in the past 21 years, among which the subjects with large growth were mainly shopping malls and shops, advertising and publicity expenses and employee compensation, with a net increase of 135 million yuan, 160 million yuan and 193 million yuan respectively; The increase of financial expense rate is mainly due to the implementation of the new leasing standards in 21 years, the recognition of interest expenses of lease liabilities and the increase of interest expenses of convertible bonds in 21 years.
On a quarterly basis, the expense rates from 21q1 to Q4 were -6.31pct, + 3.04pct, + 2.49pct and + 4.45pct respectively year-on-year. The significant increase in the expense rate during 21q4 was mainly due to the year-on-year increase in the sales expense rate of 3.31pct.
Other financial indicators: 1) the total inventory at the end of 21 increased by 12.56% to 2.54 billion yuan compared with that at the beginning of 21. The number of inventory turnover days in 21 years was 168 days, with a year-on-year increase of 2 days. The inventory age structure is optimized and the proportion of new products is increased. The proportion of goods aged within 1 year, 1 ~ 2 years, 2 ~ 3 years and more than 3 years is 68.59% (+ 2.26pct), 23.65% (+ 3.27pct), + 4.85% (- 1.11pct) and + 2.92% (- 4.41pct) respectively.
2) accounts receivable decreased by 18.79% to 632 million yuan at the end of the year compared with the beginning of the year, and the turnover days of accounts receivable were 23 days, a year-on-year decrease of 4 days.
3) asset impairment loss + credit impairment loss decreased by 13.64% year-on-year to 109 million yuan in 21 years.
4) the net cash flow from operating activities increased by 12.62% year-on-year to 1.300 billion yuan in 21 years.
The performance in 21 years is lower than expected, and we expect to return to healthy growth in 22 years
The company’s performance in 2021 was not as good as expected. On the one hand, due to the multi-point spread of the epidemic since the second half of the year, the weakening of the terminal retail environment, which affected the passenger flow of offline stores, and the warm winter and other weather factors, the sales of core categories in autumn and winter were affected. On the other hand, due to the large investment of the company’s expenses, including advertising endorsement fees, digital consulting fees and other expenses, the investment effect did not meet the expectations.
Tiktok tiktok is still bright. On the one hand, diversification of online channel has been initially effective. In 2021, the company made a breakthrough in content business, represented by jitter, and GMV grew by 7 times over the same period, contributing about 20% of the company’s retail sales. Secondly, the front-end profitability of offline Direct stores has been improved, the strength of franchise expansion is obvious, and the scale continues to expand. In 2022, the company will continue to promote the development of online diversified layout and content e-commerce, strengthen the management of offline Direct stores and overall cost control, and expand the overseas fashion product line based on the original fashion quality products under the guidance of youth trend.
Compared with 21 years, we believe that the company will operate more cautiously in 22 years, strengthen retail capacity, continue to expand the scale of franchise and e-commerce business with high profit margin, and promote the overall financial performance to be healthier. Considering that the company’s performance in 21 years is lower than expected and the current retail environment is uncertain due to the impact of the epidemic, we lowered the profit forecast for 22-23 years and the corresponding EPS for 22-23 years to 1.68 and 1.99 yuan respectively (the net profit was reduced by 35% and 36% respectively compared with the previous profit forecast), added the profit forecast for 24 years and the corresponding EPS for 24 years to 2.31 yuan, and the PE for 22-23 years was 13 times and 11 times respectively, and lowered to the “overweight” rating.
Risk tip: the impact of epidemic or extreme weather is higher than expected, and the terminal sales are weak due to the slowdown of macroeconomic growth; The cost control is less than expected; Intensified online competition, increased traffic costs and ineffective expansion of some platforms have resulted in less than expected growth or impaired profitability; Inventory backlog.
