\u3000\u3 Shengda Resources Co.Ltd(000603) 877 Ningbo Peacebird Fashion Co.Ltd(603877) )
Core view
Ningbo Peacebird Fashion Co.Ltd(603877) released the annual report, the company achieved an operating revenue of 10.92 billion yuan, a year-on-year increase of 16.3%, and a net profit of 670 million yuan, a year-on-year decrease of 5%. Among them, Q4 achieved revenue and net profit of 3.51 billion and 123 million respectively, down 9.2% and 69% year-on-year. During the reporting period, the company’s net operating cash was excellent, reaching about 1.3 billion, a year-on-year increase of 12.62%
Warm winter + the impact of the epidemic dragged down Q4 performance, with online business as the highlight. 1) In terms of sub brands: in 21q4, the revenue of Pb women’s clothing / Pb men’s clothing / leting women’s clothing / children’s clothing increased by – 17.6 / – 1.2 / – 17.7 / + 2pcts respectively year-on-year, and the gross profit margin increased by – 2.4 / – 4.7 / + 1.9 / – 5.7pcts respectively. The warmer weather in winter has an adverse impact on the company’s winter product sales, and the local epidemic in China has also affected the performance of terminal retail. 2) In terms of channels: in 21q4, the revenue of direct sales / franchise / e-commerce channels increased by – 21.3 / – 10 / + 8.8pcts year-on-year respectively, and the gross profit margin increased by – 4.7 / – 9.5 / + 8.4pcts respectively. All channels, only online channels have achieved double growth in revenue and gross profit margins. The company has been steadily upgrading consumer shopping experience in Tmall tiktok and other strategic channels, and has also been rapidly accelerating in the emerging channels of social business such as jitter and so on, and nurturing the second curve of online growth.
Rigidity of expenses + increase of expenses + increase of income tax rate put pressure on profits in the fourth quarter. 21q4 net profit fell 69% year-on-year. We think the reasons are as follows: 1) retail growth declined in the fourth quarter. Considering that the company’s direct revenue accounts for a relatively high proportion and the cost is relatively rigid, which affects the short-term profit. 2) Star endorsement, large donations and large consulting fees increased. For example, the company signed stars such as Wang Yibo / Bai Jingting in the fourth quarter, and the company signed a cooperation agreement on digital transformation and transformation project with Huawei in September, which increased short-term expenses. 3) The effective tax rate of 21q4 was 35.6%, with a year-on-year increase of 15.5pcts.
The store structure is more balanced, and the medium and long-term operation quality and profitability are expected to improve steadily. The company has 1616 Direct stores and 3598 franchise stores respectively, with a year-on-year net increase of 62 and 536. In the future, the proportion of franchise stores will continue to be increased to make the store structure more healthy. In the past few years, the company has increased investment in digitization, fully opened up the whole link of goods supply in the core links such as design, production, logistics and marketing, and achieved initial results in brand rejuvenation and omni-channel operation. In addition, the company also launched the equity incentive plan in Q3 last year. We believe that in the long run, the company is still in the reform dividend release period of improving quality and efficiency.
Profit forecast and investment suggestions
According to the annual report, we lowered the profit forecast for 20222023 and predicted that the earnings per share for 20222024 would be 1.63 yuan, 2.03 yuan and 2.41 yuan respectively (compared with 2.67 yuan and 3.31 yuan in the previous 22-23 years). Referring to comparable companies, we gave the company 15 times PE valuation in 2022, corresponding to the target price of 24.45 yuan, maintaining the “buy” rating of the company.
Risk tips: epidemic fluctuation, continuous deceleration of traditional e-commerce platforms, failure to accurately grasp the changes of market trends, inventory falling price risk, etc.
