Core viewpoints
In the first three quarters of 2017, the company's operating income and net profit increased by 3.47% and 40.69% respectively compared with the same period last year. Net profit after deducting non-profit increased by 40.85% compared with the same period last year. In the third quarter, the company's operating income and net profit increased by 3.45% and 19.74%, respectively. Profit growth slowed month-on-month compared with the first half of the year (the management expense ratio in the third quarter alone is still rising). The company expects its full-year net profit to change by between 10% and 45% for 2017.
The effective control of the expense rate during the period is the main reason why the company's profit growth rate is much higher than that of revenue growth this year. In the first three quarters, the company's comprehensive gross profit margin fell 0.19pct compared with the same period last year, during which the expense rate dropped sharply 6.84pct, in which the sales expense rate decreased 8.79pct, mainly due to the decrease in the number of direct terminals, while the management expense rate increased 2.17pct compared with the same period last year.
The overall operating quality of the company in the first three quarters was sound, with the net cash flow of operating activities rising by 448.50% compared with the same period last year. At the end of the third quarter, the company's inventory decreased by 12.77% compared with the beginning of the year, and accounts receivable increased by 2.43% compared with the beginning of the year.
The company's texture is solid and robust, relying on multi-brand and multi-category layout is expected to get a broad space. In the depressed market environment, the company's main business still maintains steady growth, leading channels and R & D advantages, is a rare sub-industry leading secondary new shares. The company's multi-brand and multi-category strategy is in line with the characteristics of the underwear industry, the multi-brand layout in the underwear field has achieved complete coverage of each market segment, and the multi-category test water in the field of beauty and makeup will also be gradually cultivated and explored. Further attempts in the field of female consumer goods will not be ruled out in the future.
Financial forecasts and investment suggestions
According to the three-quarter report, we slightly downgrade the company's income growth in the next three years. Taking into account the increase in equity after the conversion, the company's earnings per share are expected to be 0.66,0.75 and 0.85 yuan respectively from 2017 to 2019. (the original forecast is 0.69,0.80,0.92 yuan). With reference to the average valuation level of the comparable company, we value the company 27 times PE in 2018, corresponding to the target price of 20.25 yuan, and maintain the company's "buy" rating.
Risk hint
Market demand risk, multi-brand, multi-category operation risk, inventory backlog risk, raw material price fluctuation risk