\u3000\u3 China Vanke Co.Ltd(000002) 563 Zhejiang Semir Garment Co.Ltd(002563) )
Event: the company released its annual report for 2021, and achieved an annual operating revenue of 15.42 billion yuan, a year-on-year increase of + 1.41%; The net profit attributable to the parent company was 1.486 billion yuan, a year-on-year increase of + 84.5%.
Comments:
E-commerce channels grew steadily, and Q4’s performance growth slowed down due to the retail environment. In terms of channels, the company’s direct / franchise / online channels achieved revenue of RMB 1.4682 billion / 6.458 billion respectively, with a year-on-year revenue of – 29.9% / + 2.5% / + 11.2% respectively. If the impact of kidiliz is excluded, the revenue of each channel is – 3.1% / + 8.2% / + 13.1% year-on-year respectively. In 2021, the company focused on building live broadcast business, and the two brands had been holding “tiktok super products day”, and the combination of product sales promoted steady growth of online business. In terms of the number of stores, the number of direct / franchise channels increased from 100 / – 281 to 781 / 7412 respectively. Due to the impact of the retail environment in the second half of the year, the franchise channels shrank slightly. In a single quarter, the company achieved a revenue of 5.399 billion yuan in Q4, a year-on-year increase of – 6.19%; The net profit attributable to the parent company was 544 million yuan, a year-on-year increase of – 7.82%, mainly due to (1) the impact of the epidemic on offline passenger flow (2) the high temperature, which affected the sales of autumn and winter categories.
Profitability is improved and inventories are under short-term pressure. The company’s annual gross profit margin rose from + 2.24pcts to 42.58% year-on-year. We believe that it mainly benefited from the new product expansion and operation efficiency improvement of direct and online channels. The sales / management / R & D / financial expense ratio was – 0.1 / – 1.26 / + 0.14 / – 0.17pct to 21.93% / 6.08% / 2.06% / – 0.67% respectively, mainly due to the statement of K group. Excluding the influence of K group, the sales expense was + 32.1% year-on-year, mainly due to the company’s increased brand publicity and promotion during the period. Under the comprehensive influence, the net interest rate rose from + 4.41pcts to 9.63% year-on-year. The inventory scale is + 60.9% to 4 billion yuan, the inventory turnover days are + 22 days to 155 days, and the accounts receivable turnover days are – 6.7 days to 33 days.
The brand positioning is clear, and the construction of product publicity is continuously strengthened. In terms of business, in 2021, Senma casual wear / children’s wear achieved revenue of RMB 5.03 billion / 10.27 billion respectively, with a year-on-year increase of 1.43% / 1.38% respectively. The company defined the brand of Senma as “comfortable fashion”, built brand events around product function selling points, continued to strengthen fabric technology and deepen the reform of flexible supply. Balabala brand’s new positioning is “the most growth aware children’s fashion brand”, expanding its product line, continuously investing in R & D and innovation, and improving operational efficiency through digital transformation. In the medium and long term, the company’s brand power and product power are expected to continue to upgrade.
Investment suggestion: the company’s leading position in children’s wear is stable, and the short-term epidemic affects the performance recovery process. In the medium and long term, the company actively promotes the improvement of brand strength, supply chain efficiency and channel optimization, and the performance is expected to grow with high quality. Considering the impact of the epidemic, we slightly lowered our profit forecast. It is estimated that the net profit attributable to the parent company in 202224 will be RMB 1.68/19.8/2.31 billion respectively (the original forecast was RMB 1.82/2.09 billion in 2022 / 23), corresponding to the current market value PE of 11 / 9 / 8x respectively, maintaining the “buy” rating.
Risk tip: the epidemic affects offline retail, the upgrading of brand strength is less than expected, and the industry competition is intensified.
