The company's 1-3Q22 revenue / net profit reached 4.19 billion yuan, which was 10.9% compared with the same period last year, and the profit from the clothing / real estate / investment business was 1.32 billion yuan for the clothing / real estate / investment business respectively, and-23.2% for the same period last year.
The clothing business is still affected by the channel adjustment of the new brand in the short term, but the main brand YOUNGOR has performed steadily (Q3 revenue alone increased by 3%). Looking to the future, the company's brand adjustment is expected to gradually reap results, we are optimistic about the company's long-term development potential and maintain the "buy" rating.
2022Q3's performance fell year-on-year due to the pace of real estate revenue recognition, with 1-3Q22 profits up 11 per cent year-on-year.
1) income and profit: 1-3Q22 income is 12.83 billion yuan / + 27.7%, net profit is 4.19 billion yuan / + 11.0%, deducting non-net profit is 4.02 billion yuan / + 22.5%. The company's 3Q single-quarter income reached 3.280 billion yuan /-47.08%, the net profit returned to the mother was 1.06 billion yuan /-50.4%, and the non-net profit was 1.04 billion yuan /-48.6%. The sharp decline in single-quarter performance was mainly due to the fact that the real estate business concentrated on Q3 delivery last year, while this year focused on Q3 delivery in the first half of the year, resulting in a difference in the pace of revenue recognition. 2) costs and expenses: the gross profit margin of company 1-3Q22 is 52.7%. The gross profit margin of 3Q22 is 41.9%/-15.8pcts. The sales / management / R & D expense rate is 14.1%, 5.7%, 0.7%, compared with the same period last year-5.0/-0.9/-0.1pcts. The return on investment of 1-3Q22 reached 2.44 billion yuan / + 13.6%. 3) Cash: 1-3Q22 operating cash flow net outflow of 3 billion yuan (net inflow of 2.99 billion yuan in the same period last year), as of 3Q22, book cash is 10.37 billion yuan, transactional financial assets is 620 million yuan.
Clothing business: year-on-year pick up in a single quarter, new brand adjustment is still in progress. The company's 1-3Q22 fashion segment achieved revenue of 4.51 billion yuan /-3.0% (including brand clothing business income of 3.74 billion yuan /-3.2%), net profit of 565 million yuan /-23.2%, and gross profit margin of 72.7%/-0.5pct. Among them, the income of single Q3 clothing business is 945 million yuan / + 3.2%, and the gross profit margin is 68.1%/-4.3pcts, which we think is mainly due to new brands increasing discounts to clear inventory. From the perspective of sub-brands, the revenue and profitability of the main brands remain relatively robust. 1-3Q22YOUNGOR achieves an income of 3.43 billion yuan / + 2.7% and a gross profit margin of 73.7%. Due to channel adjustment, revenue and gross profit margins of other sub-brands have declined in varying degrees. MAYOR realized income of 170 million yuan /-47.3%, gross profit of 73.6%, gross profit of 0.6 billion yuan /-71.9%, gross profit of 47.1%, gross profit of 0.7 billion yuan /-19.5%, gross profit of 47.9%/-9.0pcts.
From a sub-channel point of view, e-commerce continues to grow at a high speed, with 1-3Q22 achieving revenue of 410 million yuan / + 21.2%, and franchised outlets also growing, with revenue of 130 million yuan / + 7.3%. Revenue from other channels declined to a certain extent, with revenue of 850 million yuan /-14.4% for proprietary outlets, 4.6 billion yuan /-6.8% for shopping malls, 1.23 billion yuan /-8.2% for shopping malls, 230 million yuan /-1.5% for Olai, 350 million yuan /-5.0% for group buying business, and 0.9 billion yuan /-16.2% for distribution. At the same time, the company added a new experience hall channel, 1-3Q22 achieved revenue of 4 million yuan.
Other business: the delivery of real estate projects is smooth, and the investment business runs smoothly. 1) Real estate business: the company's 1-3Q22 real estate business achieved a total of 8.33 billion yuan / + 55.1%, with a net profit of 2.31 billion yuan / + 30.4%. 1-3Q completed a total pre-sale area of 172500 square meters /-36.6%, realized the pre-sale amount of 3.9 billion yuan /-33.7%, and started 3 new projects (Shanghai Lingang Xinghai Cloud, Ningbo Jiangshang Cloud and Zhuhai Jinwan Project Phase II). The newly started area is 305800 square meters, and 2 completed projects (Ningbo Xinhu Landscape Garden and Xianghu Dandi Garden), with a completed area of 188200 square meters. At the end of the period, there are 14 projects under construction, covering an area of 1.5426 million square meters.
2) Investment business: 1-3Q22 achieves a net profit of 1.32 billion yuan / + 3.7% and runs steadily.
Risk factors: local epidemic repeatedly affects the company's offline store sales and real estate business sales and construction; the company's brand aging and brand adjustment and upgrading are not as expected; the fluctuation of the invested project operation leads to the fluctuation of the company's investment income.
Investment suggestion: maintain the company's 2022-2024 EPS forecast of 1.04 pound 1.16pm 1.30 yuan. According to the segment valuation method, the clothing business refers to the comparable valuation of the industry (the average PE,wind is 15.5 times higher than that of Yinlefen and Seven Wolves), and gives the company's clothing business 15 times PE in 2022, corresponding to the target market value of 13.4 billion yuan. Real estate business gives 0.9 times PB (refer to Vanke A, Poly Development, Metro Holdings, Jindi Group, Binjiang Group, Rongan Real Estate, Greentown China average 0.92 times PB,wind consensus expectation), corresponding to the target market value of 6.8 billion yuan, investment business reference sub-project valuation method and PB valuation method (1 times PB), maintain the target market value of 17.1-26.8 billion yuan, and then give the company a group discount of 10%, and a comprehensive target market value of 338-42.3 billion yuan in 2022. Corresponding to the target price of 7.3-9.2 yuan. Maintain a "buy" rating.
