Zhou’s views and investment suggestions
The sunscreen clothing leader of “making a fortune with umbrellas” positioned the urban outdoor: in 2013, Jiaoxia brand was established to locate the outdoor market of young women. Then the company went deep into the field of sunscreen umbrellas, successively launched core products such as small black umbrellas and capsule umbrellas, and gradually extended from umbrellas to sunscreen clothing, masks, hats and other categories around sunscreen categories. The company’s revenue in 2021 is 2.407 billion yuan, and the CAGR in 19-21 years is as high as 150%; The adjusted net profit was RMB 0.20/0.39/136 million respectively, with a year-on-year increase of 100.3% / 244.3% in 20 / 21, and the revenue and net profit were in rapid improvement. Jiaoxia holdings submitted a prospectus to the Hong Kong Stock Exchange on April 8, and plans to use the IPO funds to strengthen R & D, marketing investment, accelerate channel construction and supply chain management.
Based on user demand, DTC mode helps the iterative upgrading of products: the company expands categories around the demand for sunscreen, and early umbrellas are the main driving force for the growth of the company’s revenue. The revenue in 19-21 was RMB 335 / 370 / 501 million, accounting for 86.9% / 46.6% / 20.8%, decreasing year by year; Subsequently, sunscreen hats, sunscreen clothes, sunscreen masks and other categories were successively launched. The revenue of clothing, the second largest category, was RMB 03 / 139 / 711 million in 19-21 years, accounting for 29.5% in three years. The company launched products with functionality as the core, streamlined SKUs, and continued iterative upgrading around core products; On the other hand, take scientific and technological research and development as the driving force to create differentiated pieces to ensure the sun protection effect and improve the wearing comfort at the same time.
Online contributed to the main revenue, and content marketing enabled brands: from 19 to 21, the online revenue achieved 286 / 618 / 1947 million yuan, accounting for 74.31% / 77.81% / 80.86%, contributed to the main revenue, and was still in rapid growth. The company has launched a large number of evaluation platforms, such as jitter, Xiao Hong, and other tiktok platforms. It has formed a multi platform marketing matrix oriented by consumer’s sunscreen demand, which has been deeply bound with consumers. During the 19-21 years, the brand repeat purchase rate has reached 18.2%/32.9%/46.5%.
Investment suggestion: it is suggested to pay attention to Li Ning, who leads in product design and has superior brand potential, as well as Tebu international, which has prominent advantages in running shoes. The upstream end is suggested to pay attention to Zhejiang Jasan Holding Group Co.Ltd(603558) , Zhejiang Weixing Industrial Development Co.Ltd(002003) , Huafu Fashion Co.Ltd(002042) , etc. with prominent manufacturing barriers and customer sales performance exceeding expectations.
Data and announcement tracking
Market review: last week (April 11, 2022 ~ April 15, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 fell 1.25%, 2.60% and 0.99% respectively, and the textile and garment sector fell 3.47%, including the textile sector fell 3.90% and the garment sector fell 2.61%
Raw material price: 328 grade cotton spot 22554 yuan / ton (- 0.32%, weekly rise and fall); Cotton Cotlook a159 9 cents / pound (7.03%); The price difference between domestic and foreign cotton is – 2225 yuan / ton (102.40%).
Industry news: 1) UNIQLO’s revenue in the first half of fiscal year 2022 was 1.2 trillion yen. 2) Brunellocucinelli’s sales increased by 19.6% in the first quarter. 3) LVMH group released first quarter data that “far exceeded” expectations. 4) Levi’s announced a “positive expansion strategy” in the The Pacific Securities Co.Ltd(601099) region of East Asia.
Risk tips
The risk of repeated epidemics, the risk of exchange rate fluctuations, the risk of Vietnam’s rising labor costs and lower than expected price increases.
