\u3000\u3 Shengda Resources Co.Ltd(000603) 518 Jinhong Fashion Group Co.Ltd(603518) )
Event overview
In 2021, the company’s revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company were RMB 4.324224/198 billion respectively, with a year-on-year increase of 29% / loss reversal / loss reversal. Excluding the impact of impairment, the net profit attributable to the parent company increased by 155% year-on-year, which met the notice. The net profit was lower than the exercise conditions of equity incentive, but the income met the requirements. 21q4 company’s revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company were RMB 1.506/0.83/78 billion respectively, with a year-on-year increase of – 3% / – 72% / – 72%. The company does not distribute cash dividends this year.
The syndicated loan of no more than RMB 1.5 billion signed between the company and China Merchants Bank Co.Ltd(600036) and other financial institutions has been implemented, with a loan term of five years. The principal of RMB 4.5/3/3/2.25/225 million will be repaid respectively from 2022 to 2026. The loan is used to buy back the property share of Nanjing jinweige held by it from Hangzhou financial investment, or replace the M & a consideration paid with self raised funds in the early stage.
Analysis and judgment:
Tw’s online growth is high, while its offline growth is mainly due to the significant improvement of store efficiency. In 2021, teenie and weenie realized a revenue of 3.176 billion yuan, a year-on-year increase of 38%. Tiktok tiktok (1) we estimate the offline / online revenue of 19.36/12.4 billion yuan, up by 16%/95% over the same period, and the contribution of online revenue channel to rapid growth. We estimate that the proportion of channel on the line is over 40%. (2) At the end of the 21st century, the number of offline stores of teenie and weenie was 1212 (1077 / 135 direct / franchise stores respectively), with a year-on-year increase of 4% and a net increase of 52 (22 / 30 direct / franchise stores respectively), and the number of Direct stores accelerated and a net increase of 44 in 21q4. (3) In terms of store efficiency, the store efficiency of teenie weenie’s Direct stores that have been operating for more than 12 months in a row in the past 21 years was 1.86 million yuan, a year-on-year increase of 27%; The improvement of store efficiency mainly comes from the increase in volume. The unit prices of main products of TW women’s / men’s / children’s wear in 21 years were 849 / 858 / 605 yuan respectively, a year-on-year decrease of 6% / 6% / 3%. (4) In 2021, teenie and weenie realized a net profit of 306 million yuan, with a corresponding net interest rate of 9.6%, which has not yet recovered to the highest level of 15.6% (2018).
VG’s online high base fell, and its offline growth came from the improvement of store efficiency. In 2021, vgrass achieved a revenue of 1.114 billion yuan, an increase of 11% year-on-year.
(1) we estimate that the offline / online revenue is RMB 930 million / 184 million respectively, with a year-on-year increase of 16% / – 8%. We analyze that the online revenue has decreased, mainly due to the high online base affected by the epidemic in the past 20 years. (2) In 21 years, the number of vgrass offline stores was 216 (187 / 29 direct sales / franchises respectively), with a year-on-year increase of 11% and a net increase of 22 (11 direct sales / franchises respectively), and 9 direct sales accelerated and net opened in 21q4. (3) From the perspective of store efficiency, the store efficiency of Direct stores that have been operating for more than 12 months in 21 years was 4.63 million yuan, a year-on-year increase of 12%; Vgrass store efficiency growth also came from volume increase, and the unit prices of various categories decreased by double digits. The unit prices of tops / skirts / coats were 2447 / 3909 / 5345 yuan respectively, a year-on-year decrease of 11% / 10% / 14%. (4) In the 21st year, vgrass realized a net profit of 61 million yuan and a corresponding net interest rate of 5.3%, with a record high of 16% (2014).
In 2021, the revenue of Yunjin was 22 million yuan, with a year-on-year increase of 24%, the net profit was 06 million yuan and the net interest rate was 17%. Except for three businesses, the unallocated public expenses were 149 million yuan.
From the perspective of different channels, the online revenue in the second half of the year increased faster than that in the first half of the year. In 2021, the proportion of direct sales / franchising / online was 63% / 3% / 33% respectively, and the growth rate of direct sales / franchising / online in 2021h2 was – 15.50% / 27.03% / 87.23% respectively. (86.05% / 72.79% / 51.73% in 2021h1 respectively). The gross profit margin of all channels increased throughout the year, including a significant increase of 7.5pct in online gross profit margin and a decrease in 21q4 gross profit margin. In 2021, the gross profit margin of the company was 69.62%, with a year-on-year increase of 2pct. In terms of sub brands, the gross profit margin of vgrass / Yunjin / TW was 74% / 70% / 68%, with a year-on-year increase of 1.92 / – 1.71/2.23pct. In terms of sub channels, the gross profit margin of direct sales / franchise / online and other products were 73% / 55% / 64%, with a year-on-year increase of 1 / 1.3/7.5pct, and the online gross profit margin was significantly improved. The gross profit margin of 21q4 was 68%, with a year-on-year decrease of 4.2pct. In 2021, the company’s net interest rate was 5.18%, which became positive year-on-year, mainly due to the provision of goodwill and intangible assets impairment in TW for 20 years. Excluding the impact of impairment in 20 years, the net interest rate increased by 2.6pct year-on-year. The increase of net profit margin comes from the increase of gross profit margin, the decrease of financial expense rate and the decrease of asset impairment loss. In terms of expense ratio, the sales / management / R & D / financial expense ratio in 2021 was 51.6% / 3.8% / 1.8% / 5.2% respectively, with a year-on-year increase of 2.49 / – 0.57 / – 0.16 / – 1.96pct. The increase in sales expense ratio was mainly due to: 1) the increase of sales personnel, the social security no longer enjoying the exemption policy during the epidemic period and the increase of employee salary due to the provision of excessive bonus; 2) Increased investment in publicity and promotion, including star endorsement, market activities, advertising shooting fees, etc; 3) E-commerce service charges increased significantly; 4) The expansion of warehouse capacity is caused by the increase of warehouse rent and labor cost. The sharp decline in the financial expense rate is mainly due to the reduction in interest expenses due to the repayment of bank loans of about 400 million yuan this year and the conversion of another 460 million yuan of face value convertible bonds into shares. In 21 years, the company has repaid 907 million yuan of M & A loans, and the balance of M & A loans has decreased from 2.407 billion yuan at the beginning of 2021 to 1.5 billion yuan at present. Asset impairment loss / income was 0.03%, with a year-on-year improvement of 23.18pct. Non operating income / revenue decreased by 0.5pct to 0.69% year-on-year, mainly due to the increase of government subsidies. The net profit margin of 21q4 was 5.54%, down 13.44pct year-on-year, down 3.11pct compared with 19q4, and up 4.69pct month on month. The year-on-year decline was mainly due to the decline of gross profit margin and the reversal of asset impairment losses, resulting in a higher base of 20q4.
Inventories increased year-on-year, but the month on month, structure and turnover improved. At the end of the 21st century, the inventory was 1.022 billion yuan, with a year-on-year increase of 27% and a decrease of 4% compared with the end of the 21st Q3. The inventory turnover days were 250 days, with a year-on-year decrease of 63 days. The inventory structure was significantly improved. The proportion of the company’s inventory within 1 year / 1-2 years / 2-3 years / more than 3 years was 86% / 11% / 3% / 1% and a year-on-year increase of 15 / – 13 / – 1 / – 1PCT, of which the proportion of vgrass inventory within 1 year / 1-2 years / 2-3 years / more than 3 years was 80% / 16% / 4% / 1% respectively Year on year increase of 11 / – 12 / 2 / 0pct.
The turnover days of accounts receivable were 40 days, a year-on-year decrease of 12 days, and the turnover days of accounts payable were 117 days, a year-on-year increase of 37 days.
Investment advice
Looking to the future, in the short term: (1) revenue side: the main business is expected to maintain double-digit growth in 22 years; (2) Cost side: the annual financial cost of 22 years is expected to save about 95 million yuan. In the medium and long term, (1) we estimate that the target market size of vgrass is 2.5-3.4 billion yuan and that of TW is 5-6 billion yuan; (2) Expense side: on the one hand, there is room for further improvement in financial expenses. On the other hand, with the improvement of store efficiency and the optimization of cost structure, there is room for 3-5pct improvement in sales expense rate. We believe that the long-term net interest rate is expected to reach 15%. Maintain the income of RMB 5.087/5.913 billion in 20222023, increase the income of RMB 6.77 billion in 24 years, maintain the net profit attributable to parent company of RMB 350 / 427 million in 22-23 years, increase the net profit attributable to parent company of RMB 512 million in 24 years, maintain the EPS of RMB 1.18/1.44 in 22-23 years, increase the EPS of RMB 1.72 in 24 years, close the price of RMB 9.11 on April 19, 2022, corresponding to PE of 8 / 6 / 5x respectively, and maintain the “buy” rating.
Risk tips
Risk of recurrent outbreaks; Financial risks; Goodwill impairment risk; Systemic risk.
