\u3000\u3 Shengda Resources Co.Ltd(000603) 808 Shenzhen Ellassay Fashion Co.Ltd(603808) )
Event 1: the company released the annual report of 2021 and the report of the first quarter of 2022. In 2021, the company's sales revenue grew well, its profitability recovered significantly, and its net profit after deducting non recurring profits and losses increased significantly year-on-year. According to the company's annual report in 2021, the company's operating revenue was 2.363 billion yuan, yoy + 20.4%; The net profit attributable to the parent company was 304 million yuan, yoy-31.7%, mainly because the sale of some shares of baiqiu network in 2020 raised the net profit base attributable to the parent company, deducting non net profit of 250 million yuan, yoy + 31.48%; The company plans to distribute a cash dividend of RMB 2.5 per 10 shares to all shareholders.
Event 2: the company released the first quarter report of 2022. The company went deep into South China and made great efforts in East China. In the first quarter of 2022, the epidemic situation was repeated, and the direct stores in East and South China were affected to some extent. At the same time, Q1 company invested certain expenses and superimposed the confirmation of share based payment expenses, which had a certain impact on profits. In 2022q1, the company's revenue was 628 million yuan (YoY + 17.2%), the net profit attributable to the parent company was 47 million yuan (yoy-49.67%), and the net profit not attributable to the parent company was 49 million yuan (yoy-45%).
The effect of multi brand strategy appears, the main brand grows steadily, and the growth of new brands accelerates. The company's main brand, Ellassay, grew steadily, and achieved a revenue of 1.012 billion yuan in 2021, yoy + 7.79%; The new brand has entered a good development period, and self portal is growing rapidly. The revenue in 2021 is 175 million yuan, yoy + 432.6%; The revenue of Laur è L, ed hardy and iroparis was 241 / 308 / 592 million yuan respectively, with a good growth trend, with a year-on-year increase of 64.89% / 43.10% / 9.04% in 2021.
A comprehensive breakthrough was made in online multi platform and multi brand. The online growth rate of new brands reached 151%, the offline direct channels were significantly expanded, and the store efficiency was significantly improved. 1) Online: in 2021, the company achieved an online revenue of 270Million yuan, yoy+9.24%, the revenue of the main brand Ellassay Tiktok platform increased by 629%, and the Tiktok live Gmv has reached the level of 40% of tmall; Laur è L, edhardy, etc. successively landed in Tiktok live broadcast, both of which achieved a single performance of more than one million Gmv, and the online growth rate of new brands reached 151%. 2) Offline: Ellassay / laurel / edhardy and edhardyx / IrO / selfportal brands had a net increase of 19 / 17 / 5 / 13 / 14 Direct stores in 2021, with a single store revenue of 367 / 354 / 290 / 740 / 8.77 million yuan, yoy + 12.86% / 23.66% / 84.95% / - 8.68% / 59.79%, and the overall direct revenue reached 1.799 billion yuan, a year-on-year increase of 28.93%.
The company increased the investment of brand fees, and joined hands with Tencent to start digital and refined operation, enabling channel expansion and operation efficiency. The company has formed rich brand resources through endogenous and M & A. It is working with Tencent smart retail to actively promote digitization, achieve precision marketing, and increase cost investment to achieve breakthroughs in various brand circles; The digital enabled stores and operation effect are beginning to show, and the company's inventory / accounts receivable turnover rate will be significantly optimized in 2021.
Investment suggestion: in the early stage, the company expanded the original main brand Ellassay series. After listing, it incorporated Laur è L, edhardy, iroparis and other foreign brands into its command through mergers and acquisitions and joint ventures, forming a multi-attribute brand matrix including fashion, fashion brand, light luxury, online popularity and so on. At present, the main brand is growing steadily, the new brand is growing steadily, and the effectiveness of multi brand strategy is beginning to show. We believe that at present, the company has rich brand resources. In the future, through the three measures of digital transformation, strengthening brand cost investment and fine operation superposition channel construction, it is expected to achieve further breakthroughs of various brands in subdivided fields, further strengthen brand synergy and boost performance. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be RMB 387 / 447 / 517 million respectively, and the corresponding PE will be 9x / 8x / 7X respectively. It will be covered for the first time and given a "recommended" rating.
Risk warning: the epidemic affects the expansion of offline channels; The slowdown of economic growth has led to the decline of residents' consumption power;
