\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 398 Hla Group Corp.Ltd(600398) )
Men’s wear is the first leader. Its performance has been damaged after the epidemic and has been repaired in 21 years. The company owns Hla Group Corp.Ltd(600398) (men’s wear, founded in 2002), San Keno (professional wear, founded in 1990s), ovv (women’s wear, founded in 2017), Yingshi (children’s wear, invested in 2017), boys and girls (children’s wear, capital increase and holding in 2018) and other brands, of which the main brand Hla Group Corp.Ltd(600398) ranks first in the market share of men’s wear in China for seven consecutive years. It developed rapidly from 2011 to 15 (revenue cagr50% +), and the revenue growth rate dropped to single digits after 2016. In the past 20 years, affected by the epidemic, the revenue and net profit attributable to the mother decreased by 18.26% and 44.42% respectively year-on-year. The performance in the past 21 years has recovered, but it has not yet returned to the level before the epidemic. The revenue is 20.188 billion yuan / yoy + 12.41% / compared with – 8.11% in 19 years, and the net profit attributable to the parent company is 2.491 billion yuan / yoy + 39.60% / compared with – 22.4% in 19 years. The profit growth rate is higher than the revenue, mainly due to the increase of gross profit margin. 22q1 revenue / net profit attributable to the parent company increased from – 5.15% / – 14.17% to 5.212723 billion yuan respectively year-on-year. The profit decreased more, mainly due to the increase of expenses.
In terms of sub brands, the growth rate of small brands is high and Hla Group Corp.Ltd(600398) main brands need to be further recovered. In 21 years, the revenue of Hla Group Corp.Ltd(600398) / San Keno / other brands accounted for 77.9%, 11.6% and 10.5% of the main business respectively. 1) Hla Group Corp.Ltd(600398) : it is greatly affected by the epidemic and needs further recovery. Due to the large proportion of offline brands, the revenue of main brands affected by the epidemic in 20 years was – 20.97% year-on-year, 21 years was + 9.91% / 19 years was – 13.14%, which has not yet fully recovered, and 22q1 revenue was – 7.28% year-on-year, mainly because East China is the company’s key sales area, and the epidemic in Shanghai at the end of March repeatedly affected sales and logistics. 2) San Keno: it is less affected by the epidemic and has returned to the pre epidemic level. The income affected by the epidemic in 20 years was – 4.47% year-on-year, and increased by 9.14% year-on-year in 21 years / compared with + 4.26% in 19 years, which has returned to the level before the epidemic. In the 21st year, we will actively promote the project of intelligent manufacturing workshop, realize contactless volume measurement, and expect 22 years of trial production. 22q1 revenue was – 4.28% year-on-year. 3) Other brands: the revenue growth rate is high, and the brand continues to expand. The revenue growth rate of other brands is relatively high, with a total of 2.042 billion yuan / yoy + 27.14% / compared with 19 years + 13.3% and 22q1 year-on-year + 16.27%. In the year of 21, the subsidiary became the exclusive licensor of Hyde brand (Austrian professional sports brand, designated equipment supplier for many world champions in the field of skiing and tennis) in China and cut into the high growth sportswear track. At present, the volume is small. It opened its first store in China in December of 21. The company plans to open about 10 stores in first tier cities in the future.
By channel, online and direct sales grew rapidly. 1) In 21 years, the company’s offline / online revenue accounted for 86% / 14% of the main business respectively, and the revenue was + 8.52% / + 33% year-on-year respectively. Among them, the offline revenue was – 16.7% compared with that in 19 years, which has not fully recovered. The online revenue was less affected by the epidemic and has not declined in 20 years. 22q1 offline / online revenue was – 5.1% / – 6.3% year-on-year respectively, mainly due to the drag of the epidemic in March. 2) By the end of the year, the company had 7652 stores / a net increase of 271 stores / yoy + 3.7% (it is estimated that the revenue of the same store in the 21st year is + 4.6% year-on-year). Among them, the number of Hla Group Corp.Ltd(600398) series / other stores was 5672 / 1980, 129 / + 142 respectively compared with the beginning of the year, and the corresponding yoy + 2.3% / + 7.7%. By the end of 22q1, the number of stores was 7671, with a net increase of 19 ( Hla Group Corp.Ltd(600398) + 20 & other – 1). The company expects to maintain a net opening of about 150 main brands in 22 years, and other brands to make progress steadily. 3) In 21 years, except for the San Keno brand, the revenue of Direct stores / franchises and others accounted for 14% / 86% respectively, and the revenue was + 44.39% / + 7.62% year-on-year respectively. The direct revenue increased rapidly. By the end of the 21st century, the number of Direct stores / franchisees and other stores was 1115 / 6537, respectively + 310 / – 39 compared with the beginning of the year, and the corresponding yoy was + 38.5% / – 0.6%. The growth of direct sales revenue came from the joint contribution of extension stores + same store growth (estimated to be + 38.5% / + 4.3% year-on-year respectively), and the growth of franchisees came from the same store growth contribution (estimated to be + 8.3% / – 0.6% year-on-year respectively). Among the direct stores, the average revenue of Hla Group Corp.Ltd(600398) , other brands and stores that have been open for more than 12 months in a row in 21 years was + 0.41% / – 4.54% year-on-year respectively.
Gross profit margin and expense rate increased, inventory pressure increased slightly, and cash flow was abundant. 1) Gross profit margin: since the beginning of the 21st century, the annual gross profit margin has continued to increase, from 40.64% / yoy + 3.22pct in the 21st year to 45.26% / yoy + 2.35pct in 22q1, which is mainly due to the increase in the proportion of direct sales with high gross profit and the decrease in the contribution of promotional activities. 2) Expense rate: during the 21-year period, the expense rate is 21.68% / yoy + 0.71pct, of which the sales / management / R & D / financial expense rate is + 2.73 / – 2.05 / + 0.16 / – 0.12pct year-on-year respectively. The increase of sales expense rate and the decrease of management expense rate are mainly due to the adjustment of personnel structure (managers are transferred to Marketing). During 22q1, the expense rate increased from + 3.74pct to 23.5% year-on-year, mainly due to the increase in expenses caused by the expansion of Direct stores. 3) Inventory: at the end of the 21st century, the inventory was 8.12 billion yuan / yoy + 9.49%, of which the storage goods accounted for 72% / yoy + 12pct, the stock age structure was improved, and the inventory turnover days were shortened by 30 days to 233 days year-on-year. Affected by the epidemic, the inventory at the end of 22q1 was 8.562 billion yuan / yoy + 17.65%, and the inventory turnover days increased to 263 days. The inventory pressure has increased, but historically, it is within the normal range. We expect that it will be gradually digested with the mitigation of the company’s dynamic Management + epidemic situation. 4) Cash flow: the net cash flow from operating activities in 21 years was 4.361 billion yuan / yoy + 54.09%. 22q1 was affected by the epidemic, with a year-on-year increase of – 24.25% to 909 million yuan. As of 22q1, the capital in the account was 13.4 billion yuan and the cash was abundant.
Profit forecast and investment rating: the company is the first brand of men’s wear in China. Due to the large proportion of offline channels, the performance has been affected to some extent since the epidemic. It has not fully recovered in 21 years and the performance fluctuated in 22q1. Although the short-term performance fluctuates due to the impact of the epidemic, as a cost-effective national brand, in the long run, the performance is expected to continue to grow steadily due to the improvement of industry concentration. It is proposed to pay 5.1 yuan (including tax) in cash in 21 years, with a cash dividend ratio of 88% and a dividend rate of 10.3%. The high dividend policy is expected to be maintained. Considering the impact of the epidemic, we expect that the net profit attributable to the parent company in 22-24 years will increase by 8% / 11% / 11% year-on-year respectively, and the EPS will be 0.62/0.69/0.76 yuan / share, corresponding to pe8 / 7 / 7X, and the “buy” rating will be given for the first time.
Risk tips: the epidemic situation worsens, the economy is weak, and the development of new brands is less than expected.
