This report is read as follows:
The performance is in line with expectations. The channel adjustment is in place and the fee control effect is remarkable, the marginal improvement of business efficiency is expected to establish a performance inflection point, and is expected to usher in strong endogenous growth. CAGR25%+ is expected to exceed market expectations and maintain its overweight rating in the next three years.
Main points of investment:
The performance is in line with expectations and maintain the increase of holdings. The channel adjustment is basically over, and the marginal improvement of business efficiency is expected to usher in a new stage of endogenous growth. As the fee control significantly increases the net interest rate and the online income of Q4 e-commerce is expected to exceed expectations in the peak season, the EPS forecast for 2017-19 is raised to 0.63 EPS 0.84 PE (the original 0.57 pound 0.65 pound 0.75 yuan), maintaining the target price of 24.42 yuan, corresponding to 38 times 2018 PE.
The revenue structure has been optimized and the proportion of e-commerce has increased. 1) 17Q1-3 revenue / return net profit is 1.539 billion (+ 3.47%) / 227 million (+ 40.69%), Q3 revenue / return net profit is 503 million (+ 3.45%) / 49.62 million (+ 19.74%). 2) the proportion of e-commerce in the revenue structure is expected to be nearly 30%, with an increase of 40%. Structural optimization Q4 is expected to benefit from the peak season of e-commerce; offline direct channels are down 30% from the same period last year (about 1300), but direct revenue is only declining in single digits. Store efficiency has greatly improved and the marginal improvement is obvious, and the number of stores is expected to remain stable in the future.
The effect of fee control is obvious, and the net interest rate is significantly increased. 1) the gross profit margin remained stable at 69.12% (- 0.19pct), while the net profit margin increased significantly at 15.69% (+ 4.13pct). 2) the sales expense rate is 34.73% (- 8.79pct), and the sharp reduction is due to the decline in the wages of shop closures and sales staff, while the management expense rate increases slightly by 11.27% (+ 2.17pct). Q4 is expected to increase in peak season, but the effect of fee control in the whole year is significant. 3) inventory / receivable turnover rate is 0.78 (+ 0.1) / 9.07 (+ 0.96), and the operating efficiency is improved.
The performance inflection point is expected to be established and the improvement of business efficiency will usher in strong endogenous growth. 1) the adjustment of offline direct channels is basically over, and the growth rate of the same store returns to high-unit growth; the proportion of online e-commerce is increasing, and the peak season of Q4 power e-commerce is expected to exceed expectations. 2) Jiangxi production base has been completed, and the underwear production capacity has been increased to 20 million pieces. 3) the department system of brand underwear promotes the enthusiasm of personnel, the inventory and receivables decrease significantly, and the management quality improves obviously. 4) the new category of Manifen makeup will release the growth potential after the promotion period. 5) projected net profit for 2017 is 246 million (+ 34%)
Risk tips: increased competition in the industry, inventory backlog, new business development is lower than expected and so on.