\u3000\u3 Shengda Resources Co.Ltd(000603) 587 Dazzle Fashion Co.Ltd(603587) )
Events
The net income of Q2 was 2.34 billion yuan (+ 1.34 billion yuan) and the net income of Q2 was 2.49 billion yuan (- 1.68 billion yuan), of which the net income of Q2 was 2.49 billion yuan (- 1.68 billion yuan) and the net income of Q2 was 2.49 billion yuan (- 1.49 billion yuan).
1q22 achieved a revenue of 597 million yuan (- 9.1%), a net profit attributable to the parent company of 150 million yuan (- 23%), and a deduction of non net profit of 100 million yuan (mainly deducting 60 million government subsidies), a year-on-year decrease of 38%, in line with previous expectations.
Business analysis
DZ has achieved outstanding online performance and improved store operation efficiency: by brand, in the past 21 years, da/dz /dm/ra has achieved revenue of 16.32/10.25/2.02/0.33 billion yuan, with an increase of 10%/19%/3%/115%. Among them, DZ has continued to make efforts in Tiktok and other platforms, and its online performance is better than that of the industry. By channels, in the past 21 years, the company’s offline direct sales / distribution revenue reached 1.291/1.216 billion yuan, with a year-on-year increase of 12% / 17% / 5%, of which Q4 was – 12% / + 4% year-on-year. Direct stores accounted for a high proportion in the first and second tier cities and were more affected by the epidemic. In the past 21 years, the company had a net increase of 43 to 1197 stores (direct / Distribution Net – 17 / + 62 to 354 / 845). The reduction of the number of Direct stores and the lower growth of distribution stores than that of distribution revenue all reflect the improvement of the company’s operating efficiency. In 21 years, the company’s online revenue was 386 million yuan (+ 5%), and the growth slowed down, mainly due to the tightening of discounts on Da online and moving towards high-quality growth.
The gross profit margin of Q4 improved month on month and the turnover capacity increased continuously: the gross profit margin of the company in 21 years was 76.6%, which was the same as last year, of which the gross profit margin of Q4 was 77.5% and increased by 3.7pct month on month; The net interest rate of the company in the year of 21 was 23.8% (- 0.8pct), of which Q4 net interest rate was only 15.4%, mainly due to the increase of sales expenses due to the cooperation with e-commerce activities and festival marketing. The company’s inventory turnover days in 21 years were 168 days, a year-on-year decrease of 20 days, reflecting the continuous optimization of the company’s operation level.
1q22 sales are still under pressure, and there are still expectations for annual growth: 1q22 company’s revenue is 597 million yuan (- 9%), of which online / offline direct sales decreased by 12% / 14% respectively. The severe epidemic in high-speed cities has dragged down the revenue performance. In the year of 22, on the one hand, the company plans to settle in the dewu platform to consolidate its online advantages. On the other hand, while steadily expanding its stores, the company maintains high operating efficiency. With the improvement of the epidemic situation, the growth momentum of the whole year is still sufficient.
Investment suggestions and risk tips
The company has many brands, covering a wide customer base, and the operation optimization of offline stores, online force live broadcasting and other platforms have grown beautifully. Considering the pressure on terminal retail caused by the epidemic in 22 years, the net profit attributable to the parent in 22-24 years is expected to be RMB 737 / 826 / 934 million respectively, corresponding to 10 / 9 / 8 times of PE, maintaining the “buy” rating.
Risk tip: the epidemic affects store sales, online expansion is less than expected, and new brand cultivation is less than expected.
