Event description

Sinur (002485) released its quarterly report for 2015. the main operating results are as follows: in the first three quarters, the company achieved revenue of 755 million yuan, an increase of 3.24% over the same period last year, and realized net profit attributable to 134200 yuan from-0.10 yuan in the same period last year. Earnings per share increased to 0.0004 yuan from-0.10 yuan in the same period last year. Of this total, revenue in the third quarter was 249 million yuan, down 5.67 percent from the same period last year; net profit attributable to it increased from-14.62 million yuan to-5.09 million yuan in the same period last year; and earnings per share was-0.016 yuan, an increase of 65.21 percent over the same period last year.

Event comment

Revenue was basically the same as the previous year, and gross profit margin fell slightly.

In the first three quarters of 2015, the company achieved revenue of 755 million yuan, an increase of 3.24% over the same period last year, operating costs of 552 million yuan, an increase of 6.45%, and a gross profit margin of 26.88%, down 2.20% from the same period last year. Of this total, revenue in the third quarter was 249 million yuan, down 5.67 percent from the same period last year. Due to the acceleration of payment recovery and the decrease of payment during the reporting period, the net cash flow generated by the company's operating activities was 70.94 million yuan, an increase of 225% over the same period last year.

The ability of cost control has been enhanced, and the performance has been turned from deficit to profit.

In the first three quarters of 2015, the company's sales expenses, management expenses and financial expenses were 143 million yuan, 4666 yuan and 4.66 million yuan respectively, down 19.29%, 6.89% and 64.42%, respectively, compared with the same period last year. The change of financial expenses is mainly affected by the increase of exchange rate gains caused by exchange rate changes. During the reporting period, the company's expense rate during the period was 25.78%, a decrease of 6.26 percentage points compared with the same period last year. Due to the decrease in the provision for bad debts and inventory depreciation during the reporting period, the loss of asset impairment decreased to 3.97 million yuan from 6.92 million yuan in the same period last year, down 42.60% from the same period last year. As there was no need to pay for the transfer, non-operating income increased to 4.78 million yuan from 1.64 million yuan in the same period last year, an increase of 191% over the same period last year. Affected by the above factors, the company achieved a net profit of 134200 yuan in the first three quarters, turning losses into profits; the net interest rate was 0.02%, up 4.58% from the same period last year. Among them, the net profit attributable to the third quarter was-5.09 million yuan, an increase of 65.16% over the same period last year.

Optimization of supply model and decline in inventory and receivables

By the end of the reporting period, the size of the company's inventory and accounts receivable were 308 million yuan and 492 million yuan respectively, down 16.24% and 5.07% respectively from the same period last year. Inventory decline mainly benefits from the company gradually changing the mode of inventory product sales to strengthen supply chain cooperation, through small batch production, rapid counter-order and other ways to control the rhythm of product delivery and effectively control inventory.

Maintain the "overweight" rating

The company is a clothing enterprise that focuses on the design, production and sales of high-grade suits, shirts and clothing products. During the reporting period, the company actively strengthened the construction of marketing channels, while increasing the training of key franchisees, at the same time through relocation, rental and other ways to integrate direct channels. In terms of brand building, on the one hand, it strengthens the R & D and production of cost-effective brands such as Hinur and Melton, and on the other hand, it launches the high-end Pranio brand to develop customized business to achieve a reasonable layout of high, medium and low products. The company is currently planning a major asset restructuring by issuing shares and paying cash to buy 100% of Beijing Xinghe Internet Venture Capital Co., Ltd., held by Horgos Micro-Innovation Star Venture Capital Co., Ltd., Kashgar Xinghe Venture Capital Co., Ltd. We estimate that the EPS of the company in 2015-2016 is 0.07yuan and 0.06yuan, corresponding to the current stock price estimated at 210x and 277x. Maintain the "overweight" rating.