\u3000\u3 Shengda Resources Co.Ltd(000603) 877 Ningbo Peacebird Fashion Co.Ltd(603877) )
Report summary
The company issued the 2021 annual report, during which the revenue / net profit attributable to the parent company / net profit attributable to the parent company after deduction were RMB 109.21/677520 million, with a year-on-year increase of + 16.34% / – 4.99% / – 7.26% respectively; Among them, Q4 realized revenue / net profit attributable to the parent company / net profit attributable to the parent company after deducting non-profit of RMB 35.12/1.23/111 million (- 9.16% / – 69.33% / – 68.09%). In addition, the company paid an annual dividend of 0.6 yuan / share, with a dividend rate of 42.23%.
Sub brands: the short-term revenue of various brands is under pressure under the weak terminal, focusing on the transformation of national tide and opening up long-term growth space
Women’s wear / men’s wear / children’s wear achieved annual revenue of 4.484/33.7/1.274 billion yuan respectively (year-on-year + 18.6% / + 18.99% / + 29.53%), of which Q4’s single quarter revenue was 1.251/12.69/421 billion yuan respectively (year-on-year – 17.6% / – 1.21% / + 1.96%). The weak performance of Q4 brands or the weak terminal demand caused by the superposition of epidemic and warm winter under the high base during the period. In this environment, leting brand, which is still in the adjustment stage, achieved a revenue of 1.398415 billion yuan in the whole year / Q4 single quarter, a year-on-year increase of + 5.2% / – 17.71%. In terms of gross profit margin, under the strict control of discount rate of all brands, the gross profit margin of women’s clothing / men’s clothing / children’s clothing increased from + 0.37 / – 1.1 / + 0.12pct s to 55.87% / 53.32% / 51.27% respectively, which remained stable as a whole, while the gross profit margin of men’s clothing decreased slightly, mainly due to the decrease of supply discount rate caused by the cancellation of franchise trusteeship mode during the period. In addition, the gross profit margin of leting increased from -1.01pct s to 48.81% year-on-year.
Looking forward to 2022, the company will realize all-round transformation and upgrading from brand positioning (transforming national fashion through men’s Taiping youth and women’s superchina Series), marketing (increasing investment, focusing on improving consumers’ insight and connection ability), and products (increasing R & D investment, increasing R & D personnel appointment and cooperation), so as to more accurately capture clothing fashion trends and meet consumers’ needs with higher quality and more prudent goods delivery, At the same time, the income side is expected to improve month on month with the improvement of the epidemic, so as to store energy and momentum for future growth.
Sub channels: under the influence of warm winter and epidemic situation, the growth rate of all channels slowed down, and the offline channel structure continued to be optimized
Online: in 2021, the online revenue reached 3.364 billion yuan (+ 19.94%), accounting for 31.06% of the revenue, including Q4 single quarter revenue + 8.8%. In terms of channels, we expect the growth rate of Alibaba platform goods to slow down slightly (accounting for about 50%) due to strict discount control; The high growth rate of the shaking tiktok platform is 20%. Vipshop’s revenue is expected to be flat year-on-year (accounting for about 20%). In terms of gross profit margin, the gross profit margin of online business during the period was 44.95% (+ 1.91pcts), mainly due to the strict control of the company’s online channel discount rate.
Offline: 1. The expansion of Direct stores slowed down and focused on improving efficiency: during the period, the company’s direct revenue was 4.614 billion yuan (+ 13.21%), accounting for 42.6% (- 1.8pcts). The company continued to focus on the quality of Direct stores, with a net opening of 62 to 1616 stores throughout the year, with the same store revenue of + 5.9%. The gross profit margin was basically the same as that of the same period last year (65.71%) under the strict control of discounts to ensure the brand strength; 2. Acceleration of franchise store expansion: during the period, the company’s franchise revenue was 2.853 billion yuan (+ 23.64%), accounting for 26.3% (+ 1.2pcts). The rapid growth of franchise revenue and the increase of its proportion are mainly due to the company’s continuous focus on the adjustment of channel structure, with a net opening of 536 to 3598 in the whole year. The gross profit margin increased from -2.36pct s to 65.71% / 42.71% year-on-year, mainly due to: 1) the rapid expansion of stores led to the increase of store opening subsidies; 2) The franchisee custody business implemented by men’s wear in 20q4 was cancelled in 2021, and the supply discount rate decreased to the normal level; 3) The discount rate of franchisees’ old goods and special goods is low.
Under pressure, the growth of net retail investment slowed down. In 2021, the company’s overall gross profit margin was 52.93% (+ 0.44pcts), which remained stable year-on-year. The sales expense rate / management expense rate / R & D expense rate in the same period + 1.3 / + 0.4 / + 0.2pcts to 36.2% / 6.5% / 1.4% respectively. Among them, the increase of sales expense rate is mainly due to the fact that the company’s direct sales account for a relatively high proportion when the company’s revenue is lower than expected, resulting in a rigid overall cost and a significant increase in rent and advertising expenses; The increase in management expense rate is mainly due to the large number of external consulting projects in 2021, and the depreciation cost of new buildings put into use is relatively rigid and amortized to the whole year. In addition, the Q3 Henan disaster donated more than 30 million yuan, affecting the net profit. On the whole, the net interest rate during the period increased from – 1.4pct s to 6.2% year-on-year. We expect that the net interest rate will be improved in 2022 under the strict control of rent and marketing expenses and the prudent implementation of external consulting projects.
The overall operation is stable and the cash flow remains healthy. The volume of goods in the current period was 2.54 billion yuan (+ 12.54%), mainly due to the lower than expected dynamic sales of goods in the summer of 2021. The turnover days of inventory / accounts receivable in the same period are + 2.01 / – 3.71 to 167.96/23.24 days respectively, which is still at a historically low level. In the future, it is expected to continue to accelerate the turnover by strengthening the application of supply chain fast reaction (we expect that women’s / men’s fast reaction accounts for about 30-40% / 10%, and the number of units is expected to increase in 2022). In addition, the net operating cash flow was 1.3 billion yuan (+ 12.62%), mainly due to the adjustment of rent payment corresponding to lease liabilities from operating activities to financing activities under the new lease standards.
Profit forecast and investment suggestions: in the long run, the company will open up Wuxi Online Offline Communication Information Technology Co.Ltd(300959) , adjust the organizational structure of various business departments, and strengthen the digital strategic layout, so as to realize the two-step steps of improving internal operation efficiency and facing the construction of consumer ecosystem, which is expected to become a science and technology driven fashion brand. In addition, the company continues to optimize the revenue structure, focuses on the quality of direct sales and franchised e-commerce, and attaches importance to the improvement of scale under the current good profitability. It is expected that there is still a large room for the improvement of the overall net interest rate. In the short term, the proportion of direct sales with rigid expenses is still high, while the current epidemic has a great impact on terminal retail, and there is still pressure on the expected performance. We expect the net profit of 2022 / 23 / 24 to be RMB 858 / 999 / 1.16 billion respectively (compared with 12.34 / 14.75 in the previous 22 / 23 years), the corresponding EPS to be RMB 1.8/2.1/2.43 respectively, and the current price to be pe12 / 10 / 9 times, maintaining the “buy” rating.
Risk tip: the expansion of franchise channels is less than expected; The efficiency improvement of direct business stores is less than expected; Online business growth is less than expected; The terminal demand is less than expected; The public materials used in the research report may have the risk of information lag or untimely update.
