\u3000\u3 China Vanke Co.Ltd(000002) 563 Zhejiang Semir Garment Co.Ltd(002563) )
Report summary
The company released its 2021 annual report, during which the revenue / net profit attributable to the parent company was RMB 15.421486 billion, with a year-on-year increase of + 1.41% / + 84.5% in 2020 and - 20.26% / - 4.06% in 2019. Among them, Q4 achieved a revenue / net profit attributable to the parent company of RMB 5.399544 billion in a single quarter, with a year-on-year growth of - 6.2% / - 7.8% in 2020 and - 11.1% / + 124.6% in 2019. In recent years, the statistical standard of the company has been changed from net method to total method, and kidiliz was stripped in September 2020. If calculated according to the comparable standard, the revenue / net profit attributable to the parent company in 2021 is expected to be + 10.25% / + 14.13% year-on-year in 2020 and - 5.2% / - 20.1% year-on-year in 2019 (the revenue in 2020 / 2019 is about 13.99/16.26 billion yuan, and the net profit attributable to the parent company is about 1.36 billion yuan). The revenue / net profit attributable to parent company in the single quarter of 21q4 was - 1.8% / - 7.7% respectively compared with that in 2020 (the revenue / net profit attributable to parent company in the single quarter of 20q4 was about 5.65/590 billion yuan respectively). In addition, the company plans to pay dividends of 0.5 yuan / share for the whole year.
Sub brands: Children's wear resumed growth, and leisure optimization continued
Children's wear returned to positive growth, and new brands opened up room for growth: during the period, the revenue was 10.272 billion yuan, accounting for 67%. We expect that under the comparable caliber, it will be + 14.9% / + 6% year-on-year in 2020 / 2019 respectively. From the perspective of channels, the number of stores in 2021 ranged from + 110 to 5744, and the year-on-year growth of revenue benefited from the expansion of stores and the strong brand advantages of the company as the leader of children's wear track. In terms of gross profit margin, the gross profit margin of children's wear during the period was 43.74%. It is expected that the gross profit margin under comparable caliber will be + 3.06pcts year-on-year, mainly because the company comprehensively promotes the development of product line and improves product power, and improves brand power through omni-channel marketing. Looking forward to the future, Balabala premium, a high terminal brand incubated in Balabala, will be listed in 2022. While improving the brand image, it can also meet the needs of consumers for high-end children's clothing products. At the same time, makalo and other brands are also developing rapidly. It is expected that the performance of the company's children's clothing business is expected to be further improved.
Leisure clothing continued to be optimized and its profitability improved: during the period, the revenue reached 5.027 billion yuan, accounting for 33%. It is expected that under the comparable caliber, it will be + 1.4% / - 23% year-on-year in 2020 / 2019 respectively. From the perspective of channels, the net closure of 268 to 2823 stores in 2021 was mainly due to the company's continuous optimization of channel structure. At the same time, when the number of stores decreased significantly, the revenue remained stable, reflecting the significant improvement of single store efficiency. In the same period, the gross profit margin was 40.13%, which was + 4.25pcts under the comparable caliber. The year-on-year increase benefited from the improvement of pricing ratio, the proper control of discount rate and the increase of the proportion of new products in online channels of leisure clothing. Looking forward to the future, the company will continue to promote the synchronous upgrading of brands and products of casual wear business by refreshing the global brand positioning, strengthening fabric technology and deepening the reform of flexible supply chain.
From the perspective of different channels: online performance is good, and the epidemic affects the slowdown of offline sales
Online: during the period, the revenue was RMB 6.458 billion, accounting for 42%. We expect the revenue on the offline of comparable caliber to be + 13.1% year-on-year. Online sales are good, thanks to the development of the tiktok's key layout online platforms (Tmall, Jingdong, vip.com, jitter, etc.). In the second half of the year, the online marketing is actively used in the case of frequent epidemic situations. Meanwhile, Semir and Barbara held the "tiktok super product day" in the second half of the year, and released new products through the tea card Saline Lake and the Great Wall show activities, achieving the combination of product sales and global marketing, and got 2 billion + exposure. The online gross profit margin is 37.36%. We expect the gross profit margin under comparable caliber to be + 5.2pcts, which is mainly driven by the increase in the proportion of new products in online channels (expected to be 70%).
Offline: during the period, the revenue (excluding associates) was 8.22 billion yuan (estimated to be + 0.4% year-on-year). Among them, the direct sales / franchise revenue is RMB 1.4 billion / 6.82 billion respectively. It is estimated that under the comparable caliber, the direct sales end is - 3.1% / - 26.1% respectively compared with 2020 / 2019, and the franchise end is + 8.2% / - 25.6% respectively compared with 2020 / 2019. In addition, the company launched the joint venture mode in 2020h2, with a revenue of 621 million yuan during the period. In terms of stores, during the reporting period, there were 158 to 8567 new offline stores (net + 100 / - 281 / + 23 directly operated / franchised / associated stores respectively). Under the influence of the epidemic and warm winter in the second half of the year, the overall revenue growth of offline stores slowed down. At the same time, due to the continuous optimization of store strategy since the outbreak of the epidemic in 2020, the number of net closed stores is large, resulting in the fact that the offline revenue has not yet recovered to the level of 2019 (from the end of 2019 to 989). Under comparable standards, the gross profit margin of direct sales / franchise / joint venture is 66.45% / 40.01% / 70.66%, and the direct sales / franchise is + 7.78 / + 1.23pcts respectively year-on-year.
With the stripping of loss making business + Brand & product upgrading, the profitability has been steadily improved. The company's gross profit margin for the whole year was 42.58%. It is expected that the gross profit margin under comparable standards will be + 3.67pcts year-on-year, mainly benefiting from: 1) the upgrading of product structure and the increase of pricing ratio during the period; 2) The discount rate is strictly controlled (estimated to be 7-7.5% off). In the same period, the company's sales / management / R & D expense ratio was - 0.1 / - 1.39 / + 0.14pcts to 21.93% / 4.03% / 2.06% respectively, which remained stable as a whole, and the self-produced impairment loss decreased. Overall, the annual net interest rate is 9.63% (excluding the impact of consolidation, the net interest rate is expected to be about 9.4% in 2020).
The overall operation is stable and the cash reserve is sufficient. At the end of the reporting period, the company's inventory was 4.024 billion yuan (+ 20.34%), which was mainly due to the slowdown of the company's sales due to the weak industrial demand in the second half of the year, and the inventory of new products within one year of stock age increased. Inventory turnover days in the same period + 1.5 to 132.66 days, which remained stable; The turnover days of accounts receivable were - 6.65 to 33.19 days, which improved significantly, mainly due to the business development of franchisees during the period. The net operating cash flow was - 53.42% to 2.076 billion yuan year-on-year. It is estimated that the net operating cash flow under comparable standards was - 52.01% year-on-year, mainly due to the increase of the company's goods procurement and tax payment under the shortage of supply chain resources in the second half of the year. However, at the same time, the company's monetary capital reached 4.973 billion yuan, with sufficient cash reserves.
Profit forecast and investment suggestions: in the long run, the leading position of balabalabala children's wear is stable (the market share is 7.1% in 2021, and only 2% in the second place). In the future, with the improvement of quality and the expansion of categories, it will cover more customers and further improve the market share; The casual wear business actively carries out younger transformation, improves the fashion and functionality of products (fabric upgrading, focusing on wearing scenes), actively arranges new channels such as social e-commerce favored by young people, optimizes offline channels, and continues to improve the efficiency and digitization of the supply chain to improve the success rate of new products and improve the overall operation quality. The casual wear business is expected to continue to recover in the future. Considering that the terminal is in the recovery stage and the epidemic still affects terminal sales, it is estimated that the net profit in 2022 / 23 / 24 will be RMB 1.68/18.722086 billion respectively (compared with 17.38/20.15 in 2022 / 23), the corresponding EPS will be RMB 0.62/0.7/0.78 respectively, and the corresponding PE will be 11 / 10 / 9 times respectively, maintaining the "buy" rating.
Risk warning: repeated outbreaks lead to lower than expected risks in terminal retail; The risk of channel expansion not reaching the expectation; The public materials used in the research report may have the risk of information lag or untimely update.
