\u3000\u3 Shengda Resources Co.Ltd(000603) 877 Ningbo Peacebird Fashion Co.Ltd(603877) )
The company announced the first quarterly report of 2022: 22q1 revenue of 2.464 billion yuan / yoy-7.74%, deduction of non parent net profit of 112 million yuan / yoy-40.24%, and parent net profit of 190 million yuan / yoy-6.44%. The decline in income was mainly due to the decline in the high base of women’s wear, the adjustment pressure period in leting and the impact of the epidemic. The decline in net profit deducted from non return was more, which was mainly dragged down by the decline in gross profit margin and the increase in expense rate. Since the net profit deducted from non return to parent in 21q1 was the highest level since listing, 22q1 was still at a high level in absolute value. In addition, 22q1 received 93 million yuan of government subsidies and the decline in net profit promoted to return to parent was significantly narrower than that deducted from non net profit.
By brand, men’s and children’s wear are stable, while women’s and leting are under pressure. 22q1 men’s clothing / children’s clothing / women’s clothing / leting revenue were + 4.27% / – 0.58% / – 12.37% / – 21.75%, accounting for 33.7% / 12.8% / 39.23% / 11.6% of the total revenue respectively. Among them, men’s wear has benefited from the adjustment of product style from youth leisure to sports cool in the past two years, and the development trend has improved and resumed growth; After repositioning the high-end of children’s wear, the product reputation has improved and the recovery momentum is good; Women’s wear fluctuates due to the deviation of category planning, which is currently being adjusted and sorted out. The company expects to improve after half a year’s adjustment; Le Machi, which has performed poorly for 21 years, is still in the process of style adjustment, and the current pressure is slightly greater than that of women’s wear.
From the perspective of sub channels, the direct channels declined more, and the initiative to close stores continued to advance. 22q1 online / direct / franchise revenue was – 3% / – 12.89% / – 0.51% year-on-year, accounting for 32% / 48% / 20% respectively. Among them, the online decline was mainly due to the poor performance of women’s wear and leting on tmall platform, and the slowdown of the growth of Tiktok platform; By the end of 22q1, the company had 5074 stores / 140 net closed stores / yoy-2.7%, including 1590 directly operated stores / 26 net closed stores / yoy-1.6%, 3484 franchised stores / 114 net closed stores / yoy-3.3%, of which the number of franchised channel closed stores was large, mainly due to the delay of 70-80 closing stores to 22q1 confirmation at the end of 21 and the actual net closed stores in 22q1 of 30 +. The company plans to continue to promote the net closure of Direct stores (closing inefficient stores that do not generate net cash flow and net profit) and the continuous expansion of franchises (the target is to expand about 300 stores in 22 years, mainly focusing on Q3).
The gross profit margin decreased and the expense rate increased. It is planned to strengthen fee control in the 22nd year. 1) Gross profit margin: 22q1 gross profit margin -1.69pct to 54.19% year-on-year. In terms of channels, online / direct sales / franchising increased from + 2.38 / – 2.38 / – 3.51pct to 44% / 64.31% / 46.89% year-on-year respectively. The decline in the gross profit margin of direct sales is mainly due to the increase in the processing of old goods through direct sales channels and the more flexible discount rate of new products than in the past (when the selling out rate of new products decreases, it can be improved by adjusting the discount); The decline in franchise gross profit margin is mainly due to the digestion of some old goods through franchise channels and the company’s increased support for new franchisees (such as decoration subsidies). In terms of sub brands, the gross profit margin of women’s clothing / men’s clothing / leting / children’s clothing increased from -3.25 / + 0.11 / – 6.30 / + 1.63pct to 55.93% / 54.64% / 49.53% / 54.66% respectively year-on-year. Under the pressure of retail, the gross profit margin of women’s clothing and leting decreased, the trend of men’s clothing and children’s clothing improved, and the gross profit margin increased. 2) Expense rate: the expense rate of 22q1 increased from + 1.34pct to 46.11% year-on-year, of which the expense rates of sales / management / R & D / finance were + 0.5pct / + 0.93pct / – 0.09pct/year-on-year respectively. In the future, it is planned to effectively reduce expenses by closing inefficient Direct stores, increasing the rigidity of channel rent negotiation, controlling the online KOL and Tiktok expenses, and controlling background management expenses. 3) Inventory: at the end of 22q1, the inventory was 2.26 billion yuan / yoy + 5.37%, and the inventory turnover days increased by 23 days to 192 days, mainly from the inventory backlog in the second half of the 21st century. At present, the company attaches importance to rational production and controlling the production sales ratio, and we expect the inventory to continue to decline.
Profit forecast and investment rating: the company focuses on the fashion clothing industry, digital transformation and layout, and long-term high-quality growth. After the 20-year epidemic, it recovered earlier and stronger among peers. In the second half of 21, the epidemic affected terminal sales, more expenses, and the pressure on Q4 performance dragged down the annual performance. 22q1 continued to decline due to the adjustment of women’s clothing and leting and the impact of the epidemic. The company plans to take effective measures to strengthen cost control and alleviate performance pressure. Considering the impact of the epidemic, we lowered the year-on-year growth rate of net profit attributable to parent companies in 22 years from 17.37% to 15.17%. It is expected that the net profit attributable to parent companies in 23-24 years will be + 16% / 14% year-on-year, and the EPS in 22-24 years will be 1.64/1.89/2.16 yuan / share respectively, with the corresponding PE of 11 / 10 / 9x respectively, maintaining the rating of “overweight”.
Risk tips: the epidemic situation worsens, the economy is weak, and the cost control is less than expected.
