\u3000\u3 Shengda Resources Co.Ltd(000603) 877 Ningbo Peacebird Fashion Co.Ltd(603877) )
The company released its 2021 annual report on March 29, 2022. In 2021, the revenue was 10.921 billion yuan, a year-on-year increase of 16.34%, and the net profit was 677 million yuan, a year-on-year decrease of 4.99%. Optimistic about the company’s direct, franchise and online multi-channel growth, and maintain the buy rating.
Key points supporting rating
The performance of 2021q4 fluctuated due to the impact of the epidemic and the lower than expected cold winter. Q4 achieved a revenue of 3.512 billion yuan, a year-on-year decrease of 9.16%, and a net profit of 123 million yuan, a year-on-year decrease of 69.33%. Q4 performance is lower than expected, mainly because the cold winter is lower than expected, which affects the dynamic sales of products in winter. Although Q4 income fluctuates, in the medium and long term, the company’s omni-channel operation improves efficiency, and the long-term development trend remains unchanged.
Join the fast expansion of stores, enhance the quality of Direct stores, and continue to invest online, driving the steady growth in 2021. The direct marketing channels focused on the growth of store efficiency and the adjustment of stores, with a net expansion of 62 stores, and the direct marketing revenue reached 4.614 billion yuan, a year-on-year increase of 13.21%. Franchise channels strengthened the enabling support for franchisees, helped improve the efficiency of stores, expanded 536 stores, and the franchise revenue increased to 2.853 billion yuan, a year-on-year increase of 23.64%. Online, Tmall and other traditional e-commerce platform to enhance consumer shopping experience, while cultivating vibrant, Xiaohong tiktok and other emerging e-commerce channels, the annual online revenue reached 3 billion 364 million yuan, an increase of 19.94% over the same period. By brand, in 2021, the revenue of Ningbo Peacebird Fashion Co.Ltd(603877) women’s wear and men’s wear reached RMB 4.484 billion and RMB 3.370 billion respectively, with a year-on-year increase of 18.60% and 18.99%, maintaining a good growth; The annual revenue of children’s wear brand was 1.274 billion yuan, with a year-on-year increase of 29.53%, promoting the growth of high-end product line.
Increasing brand building through multiple channels has led to an increase in sales expenses and an improvement in gross profit margin. The company’s sales expense rate in 2021 was 36.16%, up 1.30pct, mainly due to the increase in investment in offline store construction and brand publicity. The gross profit margin increased by 0.44pct to 52.93%, and the improvement of product image drove the growth of gross profit margin.
The brand continues to be young, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) all channels are optimized, and long-term development can be expected. The company integrates into Guochao culture, caters to the consumption preferences of generation Z, continues to improve brand influence, continues to expand franchise stores and strictly controls expenses. With the continuous improvement of the company’s channel optimization efficiency, long-term growth can be expected in the future.
Valuation
Under the current share capital, the earnings per share from 2021 to 2023 are expected to be 1.67 yuan, 2.07 yuan and 2.49 yuan respectively; The P / E ratio was 13 times, 10 times and 8 times respectively, maintaining the buy rating.
Main risks of rating
Store efficiency improvement is less than expected, digital transformation is less than expected, and new product sales are less than expected.
