\u3000\u3 Shengda Resources Co.Ltd(000603) 877 Ningbo Peacebird Fashion Co.Ltd(603877) )
Performance review
On April 28, the company released 1q22 results, achieving a revenue of 2.46 billion yuan (- 7.7%), a net profit attributable to the parent of 190 million yuan (- 6.4%), and a deduction of 110 million yuan of non net profit (mainly including government subsidies of 90 million yuan), a year-on-year decrease of 40%, lower than previously expected.
Business analysis
Pb men’s wear is still resilient against the trend, and offline / online sales continue to be under pressure. By brand, Pb women’s wear / Pb men’s wear / leting / MP children’s wear achieved revenue of RMB 9.6/8.3/2.8/310 million respectively, with a year-on-year increase of – 12.4% / + 4.3% / – 21.8% / – 0.6%. By channel, 1q22 company achieved offline revenue of 1.67 billion yuan (- 9.6%), and the decline narrowed compared with 4q21. Among them, the revenue of direct channels decreased by 13% to 1.18 billion yuan year-on-year, and 26 stores were closed (- 1.6%) during the period. The same stores continued to be under pressure under the epidemic situation; The franchise channel achieved a revenue of 500 million yuan (- 0.5%), and 114 stores were closed (- 3.2%) during the period. The franchise stores accounted for a high proportion in low-level cities and were limited by the impact of the epidemic. In addition, the company’s online revenue was 780 million yuan (- 3%), which was mainly affected by last year’s high base and logistics stagnation in some cities.
Online channel profits increased and inventory turnover slowed down. The gross profit margin of 1q22 of the company was 54.2% (year-on-year – 1.7pct), of which the gross profit margin of offline direct sales / offline franchise / online was 64.3% (- 2.4pct) / 46.9% (- 3.5pct) / 44.1% (+ 2.4pct) respectively. The increase of online gross profit margin was mainly due to the remarkable effect of Alibaba channel discount control. The company’s sales / management expense ratio was 37.5% / 6.7% respectively, with a year-on-year increase of + 0.5% / + 0.8% respectively. The net interest rate was 7.7%, basically the same as that of the same period last year; Deducting non net interest rate of 4.6%, a year-on-year decrease of 2.5pct. In the first quarter, the company’s inventory turnover days were 192 days, an increase of 24 days year-on-year. The weak terminal sales led to inventory backlog.
Investment suggestions and risk tips
Investment suggestion: Despite the short-term disturbance from external factors and the obvious year-on-year decline in online / offline channel revenue, the company’s management team has sufficient momentum and the digital transformation process is smooth. With the mitigation of the epidemic, the performance is expected to recover rapidly. It is estimated that the net profit attributable to the parent company in 22-24 years will be RMB 724 / 847 / 961 million respectively, corresponding to 11 / 9 / 8 times of PE, maintaining the “buy” rating.
Risk tip: repeated outbreaks lead to terminal recovery less than expected, store opening less than expected, inventory backlog, etc.
