\u3000\u3 Shengda Resources Co.Ltd(000603) 877 Ningbo Peacebird Fashion Co.Ltd(603877) )
Revenue in 2021 is + 16%, performance / deduction performance is – 5% / – 7% respectively. According to the company’s annual report: 1) in 2021, the company’s revenue / performance / deduction of non performance were 109.2 / 6.8 / 520 million yuan respectively, with a year-on-year increase of + 16% / – 5% / – 7% respectively. Non recurring gains and losses are mainly government subsidies. 2) Single Q4 revenue / performance / deduction of non performance were RMB 3.51/1.2/110 billion respectively, with a year-on-year increase of – 9% / – 69% / – 68% respectively. We analyzed and judged that the decline in revenue was due to the fluctuation of Q4 epidemic and the weather was less than expected to affect the terminal. The sharp decline in performance was mainly due to the decline in Q4 gross profit margin and the increase in sales expense rate caused by product publicity and endorsement. 3) From the perspective of profit quality: in 2021, the company’s gross profit margin decreased slightly by – 0.4pcts to 52.9%; The sales / management / financial expense ratio increased from + 1.3 / – 0.4 / + 0.4pcts to 36.2% / 6.5% / 0.6% respectively year-on-year; To sum up, the net interest rate is 6.2%.
The performance of core brands is steady, and the growth rate of children’s wear is bright. The annual business performance of our brand splitting companies: 1) at the sales level, the revenue of Pb women’s clothing / Pb men’s clothing / leting women’s clothing / MP children’s clothing was 44.8 / 33.7 / 14.0 / 1.27 billion yuan respectively, with a year-on-year increase of + 19% / + 19% / + 5% / + 30% respectively. The net number of stores of the above brands was + 322 / + 224 / – 8 / + 90 to 2028 / 1573 / 690 / 811 respectively. The pace of store expansion basically matched the sales performance. Among them, Pb men’s wear and Pb women’s wear grew steadily, MP children’s wear sales performed better, and leting women’s wear is still in the process of product and channel adjustment. 2) In terms of gross profit margin, the gross profit margin of Pb women’s wear / Pb men’s wear / leting women’s wear / MP children’s wear was 55.9% / 53.3% / 48.8% / 51.3% respectively, with a year-on-year increase of + 0.4 / – 1.1 / – 1.0 / + 0.1pcts respectively. The decrease in gross profit margin of men’s wear was mainly due to the large number of old goods handled by Q4.
Create a whole network retail ecosystem, and the sales of all channels are growing rapidly. 1) The quality of offline stores is optimized and the franchise channel is extended rapidly. In 2021, the company’s direct / franchise sales revenue was 4.61/2.85 billion yuan respectively, with a year-on-year increase of + 13% / + 24% and a gross profit margin of + 0.1 / – 2.4pcts to 66% / 43% respectively. ① Direct marketing: optimize the channel structure and focus on quality growth. During the year, there were 62 to 1616 Direct stores, and the revenue of the same store increased by 5.9%. ② The franchise has a strong recovery momentum and its stores have expanded rapidly. In 2021, 536 to 3598 franchise stores were opened net. 2) Expand new retail channels online and fine operation to help improve gross profit margin. The company actively promoted new social retail channels such as small programs and online live broadcasting, accurately reached consumers and effectively transformed them. The annual online revenue increased rapidly by 20% to 3.36 billion yuan, and the gross profit margin increased by 1.9 PCTs to 45.0%.
The cash flow is excellent and the operation is expected to continue to be optimized. 1) Inventory turnover is expected to be optimized. By the end of 2021, the company’s inventory had increased by 12.6% to 2.54 billion yuan (120 million yuan of asset impairment loss was accrued during the year), and the number of inventory turnover days was + 2.0 days to 168.0 days. We believe that under the digital strategy and fast reverse supply chain, the company’s inventory turnover is expected to be further optimized. 2) Cash flow is good. In 2021, the turnover days of accounts receivable ranged from – 3.7 days to 23.2 days, and the net operating cash flow increased by 12.6% to 1.3 billion yuan, about 1.9 times the current performance.
It is expected to grow steadily throughout the year. 1) According to our tracking, under the influence of the epidemic, the company’s water flow may fluctuate since March. We estimate that the company’s water flow may decline in 2022q1. 2) From the long-term perspective, build an all-round retail company with digital and all-round retail channels as the center. We judge that the revenue / performance of 2022 is expected to grow steadily, driven by the double drive of joining falituo store + direct store efficiency optimization.
Investment advice. The company is a popular fashion brand group with clear long-term strategic objectives. We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 790 / 9.4 / 1.11 billion respectively, with the current price of RMB 20.35, corresponding to 12 times of PE in 2022, and maintaining the rating of “buy”.
Risk warning: the epidemic situation repeatedly affects the sales expectation; Cost control management is not as expected; Channel adjustment and improvement were less than expected.
