Key investment points
Leading Hong Kong stocks: Li Ning disclosed that Q1 running water showed a healthy operation effect and raised Bosideng’s fy22 forecast
This week, Li Ning announced Q1 retail performance: the running water increased by 25% – 30%, while the retail discount rate increased by nearly 1pp to more than 70% year-on-year, the stock sales ratio remained at a healthy level of 4, and the proportion of new products in stock remained at 90%, showing a highly healthy operation results. Although the ultra-high base brought by the Xinjiang cotton incident that began on March 24 and the impact of the epidemic on the high-speed city represented by Shanghai are increasing, The company still said that it would not lower the guidance at the beginning of the year (the high double-digit number of revenue increased to 20%, and the high double-digit number of net interest rate), showing a high degree of confidence in its alpha nature, and in fact, the operation performance so far at the beginning of the year is better than the budget. At the beginning of April, the leaders of sportswear represented by Li Ning faced high base pressure, but from the perspective of fundamentals, once the epidemic control is relaxed, the sports and sports fashion targets led by Li Ning (28x in 22), Anta sports (26x in 22), Tebu International (21x in 22) and Biem.L.Fdlkk Garment Co.Ltd(002832) (16x in 22) will still rebound first and remain our first sector.
At the same time, it is highlighted that Bosideng’s investment opportunities: subject to the weather, epidemic situation and the overall consumption environment, Bosideng’s sales were under certain pressure in December of 21 years. However, in the past 22 years, on the one hand, the colder weather in January and February pulled the company’s sales up significantly. At the same time, Bosideng also entered the off-season when the national epidemic occurred in March and April, and was not affected by the epidemic. At the same time, we believe that the rebound in sales also makes the company’s overall channel inventory control good, which lays a solid foundation for growth in the next fiscal year. Driven by 22q1 sales, we believe that the performance of fy22 is expected to further accelerate compared with previous expectations. We raised the fy22 / 23 / 24 net profit forecast to 2.04/24.7/3 billion, with a growth rate of 19% / 22% / 22%, corresponding to the valuation of 18 / 15 / 12x, which is worthy of special attention at present.
Home textile: as a slow consumption track, the steady growth of the underestimated value of the three leading companies under the fluctuation of the epidemic is worthy of attention
This week, Luolai Lifestyle Technology Co.Ltd(002293) and Shenzhen Fuanna Bedding And Furnishing Co.Ltd(002327) successively disclosed 21 annual reports and the first quarterly report, among which:
Luolai Lifestyle Technology Co.Ltd(002293) : 21 the annual income is 5.76 billion (+ 17.3%), and the net profit attributable to the parent company is 713 million (+ 21.9%). The annual report plans a cash dividend of 6 yuan per 10 shares, superimposed with the dividend of three quarterly reports, and the annual dividend exceeds 1 billion yuan; In terms of channels, the revenue of online / franchise / direct sales / Lexington channels increased by 14% / 23% / 11% / 22%, while benefiting from the high-end products, the gross profit margin of all channels increased; 22q1’s revenue was 1.286 billion (- 2.5%), and the net profit attributable to the parent company was 159 million yuan (- 12.8%), of which Lexington’s high-income units fell, and China’s home textile business revenue fell slightly, mainly due to the impact of a certain epidemic since late March on the company as the main market in Jiangsu, Zhejiang and Shanghai, and the superposition of some product publicity expenses had been put in advance, resulting in fluctuations in the profit margin of a single quarter; In April, the impact of the epidemic continued, and the Q2 performance is expected to fluctuate in the short term under the limited logistics. However, from the perspective of the whole year, the signing of new stores in terminal channels is still very smooth. The plan to open 350 new stores / net 150 stores throughout the year continues to be promoted in an orderly manner, driving the company to further improve market coverage. It is estimated that the net profit attributable to the parent company in 22 / 23 / 24 will be RMB 780 / 8.9 / 1.02 billion, an increase of 10% / 14% / 14% at the same time, corresponding to pe14 / 13 / 11x. As the largest leader of home textile, it has a steady growth and “buy rating”.
Shenzhen Fuanna Bedding And Furnishing Co.Ltd(002327) : in 2021, the revenue was 3.18 billion (+ 10.6%), the net profit attributable to the parent company was 5.46 (+ 5.7%), the e-commerce / direct business / franchise revenue increased by 16% / 10% / 5%, and the net interest rate remained at a high level of 17.2%; In 2022q1, the revenue / net profit still increased by 7% / 14% year-on-year, and the net interest rate increased by 1.0pct to 15.7% year-on-year. In terms of channels, the revenue of direct sales / franchising / e-commerce increased by 4% / 16% / 8% year-on-year respectively. It is expected that the franchise channels will release elasticity in 22 years, and the direct sales and e-commerce will grow steadily. In 22 years, the company’s direct channels will continue to focus on the first and second tier cities and provincial capital cities, and promote growth through the improvement of store efficiency and brand strength; The de stocking cycle of franchise channels has come to an end since 2019. We believe that 22 years will accelerate the pace of opening stores, achieve the sinking goal of third and fourth tier cities, and the performance elasticity is expected to be released; The flow pattern of e-commerce channels has changed greatly. It is expected that the company will ensure the stable growth of revenue and profit with personalized products and refined operation. It is estimated that the net profit attributable to the parent company in the year 22 / 23 / 24 will be 630 / 720 / 820 million, an increase of 15% / 15% / 14% at the same time, corresponding to PE11 / 9 / 8x. As the leader of stable performance, undervalued value and high score red subdivision, it will maintain the “buy” rating.
Shanghai Shuixing Home Textile Co.Ltd(603365) which will release the first quarterly report next week, is expected to have a steady growth in Q1 performance based on excellent e-commerce operation. It is expected that the profit will increase by 30% / 14% in the 21st / 22nd year, and the current valuation is 11 / 10x, which also deserves special attention.
Textile manufacturing: subdivision leaders with abundant orders and high proportion of overseas production capacity have become the first choice
From the perspective of demand, the demand for sports and outdoor activities is booming, while the relevant supply chain resources are still in short supply, and the production capacity of core suppliers is in short supply. From the perspective of production capacity supply, considering China’s relatively strict epidemic management, the leading companies with overseas production capacity have higher safety. Therefore, the leading sports companies with high proportion of overseas production capacity have become the first choice, It is suggested to pay attention to Huali Industrial Group Company Limited(300979) (22 revenue / profit + 23 / 28%, valuation 23x), Shenzhou International (22 revenue / profit + 17% / 49%, valuation 27x), Zhejiang Jasan Holding Group Co.Ltd(603558) (22 revenue / profit + 20 / 68%, valuation 17x, first quarter performance growth estimated at 50%), Virgin (23fy revenue / profit + 12% / 40%, valuation 8x), in addition, Zhejiang Xinao Textiles Inc(603889) (22 revenue / profit + 26 / 33%, the valuation is 8x, and the performance growth in the first quarter is estimated to be 40%). As the leader of wool and cashmere yarn, Q2 has entered the traditional peak season, and the external demand is relatively strong. At the same time, the valuation is at the bottom, which also deserves special attention.
Risk tips: (1) fluctuations in end consumer demand; (2) Multi brand operation is less than expected; (3) Raw materials and exchange rate fluctuations
