\u3000\u3 Shengda Resources Co.Ltd(000603) 001 Zhejiang Aokang Shoes Co.Ltd(603001) )
Event: the company issued the annual report of 2021 and the first quarterly report of 2022. During the reporting period, the company realized an income of 2.559 billion yuan, an increase of 8.06%, a net profit attributable to the parent of 34 million yuan, an increase of 21.87%, a deduction of non net profit of – 14 million yuan, an increase of 19.07%, EPS (diluted) of 0.08 yuan, and the company plans to pay a dividend of 0.5 yuan per share (including tax). The company’s strategic upgrading has driven the growth of the sales scale of the main categories of men’s shoes and Aokang’s main brands. In 2022q1, the company achieved revenue / net profit attributable to parent company of 768 million yuan / 12 million yuan, with a decrease of 8.79% / 75.09% and deduction of non net profit of 01 million yuan, with a decrease of 96.05%. Since March 2022, covid-19 epidemic spread in some regions of the country, affecting offline passenger flow and the company’s revenue.
Comments:
Focus on Aokang’s main brands and main categories of men’s shoes, and the sales scale has increased steadily. The company is positioned as an expert in “more comfortable men’s leather shoes”, constantly building high brand potential and laying out medium and high-end leather shoes. Under the guidance of the brand upgrading and transformation strategy, the sales scale of Aokang brand increased steadily in 2021, and the annual revenue was 1.843 billion yuan, an increase of 9.42%, accounting for 63.2% of the revenue, contributing to the main revenue of the company. In 2021, KANGLONG, SKECH and other brands of the company contributed 367 million yuan, 368 million yuan and 127 million yuan respectively, with a same increase of – 4.52%, 25.24% and 6.06%. In terms of categories, the company takes men’s shoes as the main category. In 2021, men’s shoes contributed 1.73 billion yuan of revenue, an increase of 14.65% at the same time, accounting for 58.47% of revenue. This is mainly because the company started brand strategy upgrading in 2021, focused on Aokang’s main brand and men’s shoes, and launched four series of new products to meet consumers’ new shopping experience and drive the rapid increase of men’s shoes revenue. In 2021, the revenue of women’s shoes and leather goods reached RMB 990 million and RMB 197 million respectively, accounting for 33.46% and 6.66% respectively.
Wuxi Online Offline Communication Information Technology Co.Ltd(300959) Omni channel operation, store expansion meets expectations. In terms of channels, the company focuses on offline channels, supplemented by online channels. In 2021, the company’s offline channels achieved a revenue of 2.371 billion yuan, accounting for 81.3%. Specifically, offline channels can be divided into independent stores, shopping malls, distribution and export. Among them, independent stores and shopping malls are the main offline channels of the company, contributing revenue of 1.193 billion yuan and 293 million yuan in 2021, accounting for 50.32% and 12.36% of offline channel revenue. From the perspective of stores, by the end of 2021, Aokang brand had 662 Direct stores and 1022 distribution stores respectively, an increase of 67 and 13 compared with the end of 2020. The main reason is that the company attaches importance to the development of offline stores and takes offline stores as an important communication channel of brand value and consumer drainage channel.
Continue to strengthen brand communication and further optimize the inventory structure. Driven by the growth of gross profit margin of various sub brands, the gross profit margin of the company increased by 1.19 PCT in 2021, reaching 41.16%. By brand, in 2021, the company’s main brands Aokang, KANGLONG, SKECH and other brands achieved gross profit margins of 42.11%, 48.34%, 30.55% and 29.04% respectively, with an increase of 1.01pct, 2.93pct, 1.11pct and 6.33pct. In terms of expenses, the company’s sales expenses in 2021 were 864 million yuan, an increase of 6.15% at the same time, mainly due to the company’s strategic transformation. In order to enhance the brand influence and increase the investment in advertising, the company’s advertising expenses in 21 years reached 52 million yuan, an increase of 72.81% at the same time. Benefiting from the scale effect, the company’s sales expense ratio decreased by 0.53pct to 29.2% in 2021. In 2021, the company’s management expense rate and R & D expense rate were 9.36% and 1.48% respectively, with an increase of 0.82pct and 0.23pct, mainly due to the payment of new strategic consulting services and the increase of R & D personnel salary. In terms of inventory, thanks to the company’s continuous acceleration of inventory structure optimization, the inventory at the end of 2021 was 667 million yuan, a decrease of 11.53% at the same time; The inventory turnover days are 148 days, 24 days less than that at the end of 2020
Optimize the allocation of brand, product and channel resources and comprehensively improve the brand potential. In 2021, the company joined hands with Junzhi consulting to comprehensively layout the brand strategy upgrading and transformation, take the differentiated competition route, and position itself as a comfortable men’s leather shoes brand at the middle and high end. Focusing on the minds of customers, the company optimizes the allocation of all-round resources for brands, products and channels. In terms of brand, the company firmly implements the “more comfortable” strategy, creates an expert atmosphere of comfortable men’s shoes, and realizes the accelerated upgrading of brand communication and the rejuvenation of consumption circle. In terms of products, the company is user-oriented, solves the uncomfortable pain points of traditional leather shoes, streamlines SKUs, and creates comfortable and fashionable products. The four new series adopt self-developed core technologies and closely follow the theme of “comfort” to bring consumers a better wearing experience. In terms of channels, the company continued to optimize the channel structure. In order to further shape the younger brand image and convey the medium and high-end brand positioning, the company transformed and upgraded the original channels, opened flagship stores in the core business district, broke the traditional display layout and created an immersive shopping experience; Make efforts to broadcast live in all areas online, build an online channel matrix, help the online transformation of private desire traffic, and spread the brand concept of “more comfortable”. Profit forecast and investment rating:
As the covid-19 pneumonia epidemic has affected sales since March 2022, we lowered the net profit attributable to the parent company in 202223 to 75 / 123 million yuan (the original value was 99 / 170 million yuan), and the new net profit in 2024 is predicted to be 181 million yuan. The current stock price corresponds to 40.27 times PE in 2022. The company actively promotes the brand upgrading and transformation strategy, comprehensively improves the brand potential energy, and accelerates the transformation of the brand to high-end and young. In the context of the rise of domestic products, the company is expected to expand its consumer base and continuously improve its market share. At present, the relative performance growth of valuation is at a low level and maintain the “buy” rating.
Risk factors: macroeconomic fluctuation risk, intensified industry competition and covid-19 epidemic rebound risk
