Youngor is a leading domestic menswear enterprise, whose business covers clothing, real estate and investment. in recent years, under the strategy of focusing on the main business, the growth of clothing business has been stable. at the same time, the company has also made in-depth adjustments in brands, channels and other aspects to lay the foundation for long-term development. In the short term, the company relies on the continuous growth of the main brands, and in the long run, with the growth and transformation of new and old brands, it is expected to gradually contribute to the increment. The development of the company's real estate business is stable, the cash flow is stable, there is no need to worry about risks, and the investment business is also transformed from financial investment to industrial investment to better enable the main business. In the future, we are optimistic that the company will gradually move towards an international fashion group, covering the "buy" rating for the first time.

Youngor is a diversified enterprise with clothing as its main business. The company started with clothing business, and at present its main business includes brand clothing, real estate development and investment, with profits of 880 million yuan, 2.29 billion yuan and 1.84 billion yuan respectively in 2021. The company is a domestic leader in the field of men's wear, including a number of brands based on YOUNGOR. In 2021, the company achieved an income of 13.6 billion yuan and a net profit of 5.1 billion yuan.

Clothing main business: strategic focus, gradually increasing results. In recent years, the company's strategic focus has focused on the main clothing industry, and its performance has gradually returned to steady growth. The CAGR of clothing revenue / profit in 2015-2021 is 5.8% and 5.2% respectively. The company has made adjustments in many aspects such as brand and channel. 1) Channel side: founded Kuafu Technology and increased its capital to 2.6 billion yuan in April 2021; accelerated online development, online sales accounted for more than 12% in 2021, and CAGR was 49% in the past 6 years. The structure of offline channels has been optimized, and the proportion of department stores has dropped from 26% in 2019 to 19%. At the same time, it has actively opened large stores, with an average store area of 226sqm in 2021 and 9% CAGR in 5 years. Youngor experience Museum has been set up to enhance store digitization and improve store experience and efficiency. 2) Brand side: the main brand has maintained steady development over the years, with a revenue CAGR of 4.2% from 2014 to 2021. In the past, most of the other brands were sold in the form of brand collection stores, which had cost advantages, but it was not conducive to brand building. In the past two years, the company began to promote the independent operation of each brand, and adjusted the positioning and style of some brands, so the performance of some brands fluctuated since 2020, but we believe that this has laid a high-quality foundation for the healthy development in the future. In 2021, the company acquires / operates new brands such as HH and Undefeated, embraces outdoor and street trendy subdivision tracks, and further enriches the company's brand matrix.

Real estate business: accelerate the payback and optimize the layout. After the company proposed the inventory strategy in 2017, the scale of the real estate business declined, but the profitability and collection performance were excellent. By the end of 2021, the sales rate of the company's projects on sale has reached 79%, and more than half of the new development projects are cooperative projects. The overall project is running smoothly and there is no need to worry too much about risks. Looking to the future, the company is expected to speed up the payback as the core goal, in the expansion to remain cautious. According to the company's annual report, the company plans to start 2 new projects in 2022, with a new construction area of 294500 square meters, 6 completed projects and a completed area of 797000 square meters. In 2022, new projects such as the cloud on the Ningbo River and the starry sky in Shanghai will be launched, with an additional sales area of 321200 square meters.

Investment business: accelerate the transformation of industrial investment and empower the main business. Since 2014, the average annual income of the company's investment business has reached 1.9 billion yuan, and the profit contribution is more than 30% (except in 2017), which is an important source of profit for the company. In 2019, the company made it clear to further focus on the main clothing industry, gradually selling financial investment, emphasizing strategic investment. In 2020, the company invested in beauty makeup company Shangmei Group, and in 2021, it invested in Qingdao Qinghe and domestic cycling brands, acquired Undefeated40% shares in Chao Brand of the United States, cooperated with HH brands, etc., and sold shares in national pipe networks in 2022. With the gradual enrichment of the company's layout in the field of consumption, it is expected to better empower the development of the main business.

Risk factors: local epidemic repeatedly affects offline store sales and real estate business sales and construction, brand aging and brand adjustment and upgrading are not as expected, inventory overstock risk caused by clothing business sales is not expected, investment income fluctuations caused by fluctuations in invested projects, real estate business industry policy changes and other risks.

Investment suggestion: in recent years, the company has strengthened its focus on the main clothing industry, the growth of the main brands is steady, and the rest of the brands are undergoing an adjustment period. at the same time, the company has also acquired and cooperated some more prosperous sub-sector brands, which are expected to gradually release increments in the future. In the short term, the company is in the stage of leading the main brand and waiting for the rest of the brand to be developed, and the long-term company is still moving towards the development goal of the international fashion group. In addition, the company's real estate business currently runs smoothly, the cash flow is good, and the future business is expected to run smoothly, while the investment business has gradually transformed from financial investment to industrial investment to better enable the main business. On the whole, we think the company is already in the middle and later stage of the transformation, and it is expected that the harvest will be gradually ushered in in the next 2-3 years. The EPS of the company in 2022-24 is expected to be 1.04 1.16 soybean 1.30 yuan. According to the division valuation, we give the company a target market value of 14.8 billion yuan for clothing business, 6.8 billion yuan for real estate business, and 17.1-26.8 billion yuan for investment business. At the same time, we give the company a 10% diversification discount, corresponding to the company's overall target market value of 34.8-43.4 billion yuan in 2023, corresponding to the target price of 7.50-9.40 yuan, giving a "buy" rating for the first time.