\u3000\u3 Shengda Resources Co.Ltd(000603) 877 Ningbo Peacebird Fashion Co.Ltd(603877) )
Key investment points
The company released its annual report for 2021: the revenue in 2021 was 10.92 billion yuan / yoy + 16.3% / compared with 2019 + 37.8%, and the net profit attributable to the parent company was 680 million yuan / yoy-5% / compared with 2019 + 22.8%. The year-on-year decline in profit was mainly due to the weak retail sales in the second half of the year caused by the repeated epidemic in the middle of the year, while the company's optimistic expectation of winter clothing sales and increased spending led to a large decline in Q4 profit. Quarter by quarter, the revenue of 2021q1 / Q2 / Q3 / Q4 was + 93.1% / + 27.8% / + 3.9% / - 9.2% year-on-year respectively, and the net profit attributable to the parent company was + 2222.3% / + 85.5% / - 24.7% / - 69.3% year-on-year respectively. The recovery strength in the first half of the year was in the forefront of the industry.
The online proportion increased slightly, and the endogenous extension jointly promoted the offline growth. 1) tiktok: in 2021, the proportion of traditional business services increased, and actively promoted new channels such as small programs, live broadcast network, etc., and strengthened interaction with young people on B platforms, jitter, Xiaohong book and other platforms. In 2021, the online revenue was 3 billion 360 million yuan /yoy+20%, accounting for 31%/ compared to +1.2pct tiktok, and the channel was busy with revenue of about 20%-25%. 2) Offline: in 2021, the offline revenue is 7.47 billion yuan / yoy + 17%, the number of stores is 5214 / a net increase of 598, corresponding to yoy + 13%. It is estimated that the revenue contribution of the same store will increase by about 4%. 3) Offline is dominated by direct sales revenue. In 2021, direct sales / franchises increased by 13% / 24% year-on-year respectively, accounting for 62% / 38% of offline revenue respectively. At the end of 2021, the number of direct sales / franchises was 1554 / 3598 respectively, with a net opening of 62 / 536 respectively, a year-on-year increase of + 4% / + 17.5%. The company plans to control the number of Direct stores, improve the operation quality of Direct stores and increase the proportion of franchise business in 2022. It is expected that the number of Direct stores will reach 1:2.8 (1:2.3 in 2021).
Children's wear grew rapidly, and leting needs to be adjusted and improved. The development of various brands of the company is relatively balanced. Children's wear grew rapidly in 2021. The adjustment of leting brand style and offline store closure led to a slowdown in revenue growth. In 2021, the revenue of Ningbo Peacebird Fashion Co.Ltd(603877) women's clothing / men's clothing / children's clothing / leting / other brands (including materialgirl women's clothing and Beitian children's clothing) was + 18.6% / + 19.0% / + 29.5% / + 5.2% / + 16.2% year-on-year respectively, and the revenue proportion was 41.4% / 31.1% / 11.8% / 12.9% / 2.8% respectively. The number of stores at the end of 2028 (compared with + 322 at the end of 2020, the same below), 1573 (+ 224), 811 (+ 90), 690 (- 8) and 112 (- 30) respectively.
The expense rate increased more, the inventory turnover slowed down slightly, and the funds in the account were abundant. 1) Gross profit margin: in 2021, the company's gross profit margin was 52.9% / + 0.4pct, mainly due to the lower gross profit margin of epidemic prevention materials produced by subsidiaries in the previous period, which lowered the base; The gross profit margin of the upper / direct / franchise channels of the main business line was 45% / 65.7% / 42.7% respectively, with a year-on-year increase of + 1.9pct / + 0.1pct / - 2.4pct respectively. The fluctuation was mainly due to the change of sales goods structure and supply discount. 2) Expense ratio: during 2021, the expense ratio increased from + 2.3pct to 44.7% year-on-year, of which the sales / management / Finance / R & D expense ratio was + 1.3/0.4/0.4/0.2pct respectively, mainly because the company was optimistic about winter clothing sales and increased product publicity and digital transformation investment, such as the addition of spokespersons Wang Yibo, Bai Jingting and Yang Qian, and the signing of digital transformation project cooperation agreement with Huawei. The Q4 sales / management expense ratio increased by + 3.3pct / + 0.8pct respectively year-on-year. 3) Net interest rate: the increase in expenses led to a year-on-year return to the parent net interest rate of -1.4pct to 6.2% in 2021, of which Q4 was -6.9pct to 3.5% year-on-year. 4) Inventory: at the end of 2021, the company's inventory was 2.54 billion yuan / yoy + 12.6%, of which the inventory within one year accounted for 68.6% (66.3% in 2020), and the inventory turnover days were + 2 days to 168 days year-on-year. 5) Cash flow: the net cash flow from operating activities in 2021 was 1.3 billion yuan / yoy + 12.6%, and the monetary capital at the end of 2021 was 1.15 billion yuan / yoy + 72.7%, mainly due to the cash received from the issuance of convertible bonds during the year.
Profit forecast and investment rating: the company focuses on the fashion clothing industry, digital transformation layout, long-term high-quality growth, insufficient adjustment response and performance pressure under the adverse environment in the second half of 2021, and looks forward to improving performance and reducing volatility by optimizing assessment indicators (from income assessment to profit assessment) and adjusting channel layout (reducing the high proportion of direct sales of fixed expenses) in 2022. The company has sufficient incentives. In January 2022, the registration of restricted stock incentive plan was completed. The incentive objects include 50 directors, senior executives and core backbone personnel. The performance evaluation objectives are that the net profit attributable to the parent company or the simultaneous increase of revenue in 2021, 2022 and 2023 shall not be less than 15%. In March 2022, it was announced that 50-100 million yuan would be used to repurchase shares for equity incentive or employee stock ownership plan. Considering the epidemic factors, we maintain eps1 from 2022 to 202367 / 2.00 yuan / share forecast, increase the forecast value of 2024 by 2.29 yuan / share, and the corresponding PE is 12 / 10 / 9x respectively, maintaining the "overweight" rating.
Risk tip: the epidemic repeatedly affects consumption, and the cost control is less than expected.
