16 years to return to positive growth, 17 years, 18Q1 performance growth rate gradually increased
In 2017, the company achieved an income of 1.073 billion yuan, an increase of 13.12%, a deduction of 74.6411 million yuan in non-net profit, an increase of 0.98%, a net profit of 83.6753 million yuan to its mother, an increase of 10.59%, and a planned 10-share distribution of 1.05 yuan (including tax). The lower growth rate of deducting non-net profit than income is mainly due to the decline in gross profit margin and the rise in expense rate, and the lower net profit is mainly due to the substantial increase in government subsidies and entrusted financial income included in the profits and losses of the current period.
2018Q1 realized income of 276 million yuan, up 16.34%, deducted non-net profit of 14.401 million yuan, increased by 15.06%, net profit of 16.6537 million yuan and 30.12% increase of 30.12%. The growth rate of net profit was higher than that of deducting non-net profit, mainly due to a substantial increase in investment income over the same period last year.
From 2013 to 2017, the growth rate of company income was 19.41%,-1.93%,-1.47%, 5.71% and 13.12% respectively, and the growth rate of net profit was-10.97%,-26.51%,-8.92%, 0.67% and 10.59%, respectively.
After 2016, under the background of industry adjustment, the company closed distribution channels and gradually expanded direct channels, resulting in a decline in revenue. In 2014-17, direct revenue growth and distribution channel adjustment were basically in place, driving income growth back to positive growth and gradually increasing. In 2013-16, due to the increase in the number of directly operated stores and the upgrading of information systems, the expense rate continued to rise, resulting in a large decline in profits, and the rebound in income led to a return to net profit growth after 2016.
On a quarterly basis, 17Q3-18Q1's revenue increased by 12.77%, 12.27% and 16.34%, and net profit increased by 39.80%,-8.94% and 30.12%, respectively. The number of 18Q1 stores increased by about 10%, and the revenue growth rate increased under the catalysis of cold winter. the decline in 17Q4 gross profit and the increase in the rate of sales and management expenses led to a decline in net profit compared with the same period last year, while the impairment loss of 18Q1 assets fell by 4.37% and investment income increased by 915.40%.
The main brand broadcaster resumes the net opening of stores to accelerate revenue growth, and the offline direct channel performs well.
The company is mainly engaged in the design, research and development, production and sales of middle and high-end women's wear, with "broadcast broadcast", "CRZ" and "PERSONAL POINT" three major designer brands, respectively positioning urban literature and art style, youthful vitality style, personality advocate style. The company's production is dominated by outsourcing, supplemented by self-production, with offline channels (direct marketing, distribution and joint marketing) as the main and online as the auxiliary.
By brand: the revenue of "broadcast broadcast", "CRZ" and "PERSONAL POINT" in 2017 was 857 million yuan, 168 million yuan and 26.3498 million yuan respectively, an increase of 14.12%, 6.21% and 10.53% respectively. Among them, the growth rate of "broadcast broadcast" brand revenue has significantly increased compared with 6.37% in 2016, CRZ brand revenue growth has dropped to single digits, and "PERSONAL POINT" revenue has reversed the downward trend and achieved double-digit growth.
In 2017, "broadcast: broadcast" resumed the net opening of stores, and the extension of the number of stores increased by 12.26%. Among them, the expansion of direct business was intensified, the net opening of distribution resumed, and joint sales continued to expand. At the end of the period, the number of direct, distribution and joint sales stores were 174,501 and 85 respectively, up 46.22%, 2.66% and 21.43%, respectively. In 2017, the number of CRZ-branded stores increased by 4.15%, and the growth rate slowed down, while Tongdian slightly increased by 1.98%.
The PP brand is in the stage of adjustment in recent years, with net stores resuming in 2017, with 28 channels at the end of the period, an increase of 75 per cent.
The revenue of 2018Q1 "broadcast", CRZ and PP increased by 17.51%, 9.82%, 33.50% to 220 million yuan, 45.6134 million yuan, and 7.4121 million yuan.
From a sub-channel point of view: the company's offline and online income in 2017 was 939 million yuan and 112 million yuan, an increase of 12.68% and 12.79%. Offline income growth accelerated and returned to double-digit growth in 2017. In 2015-16, the company's store extension decreased by 6.27% and 4.42%. At the end of 2017, the company had a total of 989 stores, with an extension increase of 11.63% and a return to rapid growth, leading to an increase in offline income growth. Among them, the number of direct sales, distribution and joint sales channels were 247, 636 and 106 respectively, an increase of 37.99%, 1.76% and 29.27%, respectively. The company increased its efforts to expand direct stores, restored the net opening of distribution stores, and continued to expand joint sales stores since 2016.
In terms of the same store, the same store in 2015-16 increased by 7.28% and 8.08% respectively. In 2017, the same store increased by 0.94% to 949700 yuan, and the growth rate of new stores slowed down. According to different channels, the store efficiency of direct operation, distribution and joint distribution in 2017 was 1.5487 million yuan, 765800 yuan and 657500 yuan respectively, down 13.97%, 1.29% and 38.81%, respectively. The expansion of direct operation has been strengthened, and the efficiency of the store has declined. In 2017, the efficiency of direct stores increased by 4.01% after opening for more than one year.
2018Q1 direct revenue maintained a good momentum of growth, with revenue rising 37.80%, distribution income falling slightly, 5.57%, joint sales up 26.02%, and e-commerce 13.58%, slightly higher than that for the whole of 17 years. The total number of 2018Q1 stores is down 0.3% from the beginning of the year.
The gross profit margin falls, the cost rate increases, and there is little pressure on inventory as a whole.
Gross profit margin: the gross profit margin in 17 years was reduced by 1.66PCT to 60.08%, mainly for the company to improve the quality and cost-effective ratio of goods, optimize technology, and increase the procurement cost of raw materials; the increase in the proportion of direct income of high gross profit margin offset some of the decline in gross profit margin. The gross profit margins of "broadcast broadcast", "CRZ" and "PERSONALPOINT" in 2017 were 61.04% (- 1.76PCT), 61.60% (- 1.69PCT) and 53.47% (- 2.13PCT), respectively.
The gross profit margin of 17Q2-18Q1 is 60.72% (- 5.19PCT), 60.29% (+ 0.13PCT), 56.59% (- 1.00PCT) and 64.21% (- 0.31PCT) respectively, and the decline of 18Q1 gross profit margin has narrowed.
Expense rate: during the 17-year company period, the expense rate increased by 0.77PCT to 46.64%. Among them, the sales expense rate increased by 0.18PCT to 32.49%, mainly due to the increase in the proportion of direct stores; the management expense rate also increased by 0.72PCT to 13.76%, mainly due to the increase in R & D fees and the salary of newly introduced senior managers; and the financial expense rate decreased by 0.13PCT to 0.39%. During the period of 2018Q1, the expense rate increased by 0.58PCT to 51.17%, the sales expense rate decreased by 0.28PCT to 33.71%, the management expense rate increased by 0.90PCT to 17.03%, and the financial expense rate decreased by 0.04PCT to 0.43%.
Other financial indicators:
1) the total inventory at the end of 17 years was 278 million yuan, an increase of 28.02% over the beginning of the year, mainly as follows: a) the direct and joint sales business expanded, the number of stores increased compared with the same period last year, and the corresponding inventory in stores increased; b) the winter of 17 years was relatively cold and the cycle was prolonged, and winter equipment preparation led to an increase in inventory at the end of 17 years; c) the company adjusted its commodity strategy, increased the output of jackets and trousers, and increased inventory accordingly. The storage age within one year accounts for 77.23%, and the overall inventory structure is relatively reasonable. Inventory / income was 25.94% in 17 years and 22.29% in 16 years, and the inventory turnover rate was 1.73, up slightly from 1.67 in the previous year. 18Q1 inventory fell 12.42% from the beginning of the year to 244 million yuan.
2) at the end of 17, accounts receivable increased by 26.21% to 85.0844 million yuan compared with the beginning of the year, mainly due to the adjustment of the payment cycle of the company and strengthening strategic cooperation with suppliers; 18Q1 accounts receivable decreased by 16.06% compared with the beginning of the year.
3) the 17-year asset impairment loss increased by 1.48% to 40.8547 million yuan, while the 18Q1 asset impairment loss decreased by 4.37% to 14.2085 million yuan.
4) the net cash flow of operating activities in the past 17 years decreased by 78.11% to 23.1464 million yuan, due to the increase in the total amount of goods purchased and services received. The increase in purchases is related to the company's channel expansion plan; in addition, the winter of 2017 is relatively cold and the cycle is longer, and the company has made some winter goods to prepare goods, resulting in an increase in total purchases in the current period. The net cash flow of 18Q1 operating activities also fell 19.90% to 47.3952 million yuan.
Strong R & D strength, designer brand style unique Nuggets niche market, multi-brand development power foot company adhere to the original design, with strong R & D capabilities, by the end of 2017, the company has a total of 260 design and R & D team. The company's designer team has rich experience in integrating fashion trends into the company's brand style to ensure the fashion, richness and continuity of the company's products. In 2017, the company increased investment in design R & D and built a new design R & D and exhibition center. The R & D expenditure rate in 2017 was 2.83%, an increase of 0.67PCT compared with 2016.
The company's three self-created designer brands "broadcast broadcast", "CRZ" and "PERSONALPOINT" have distinct styles and cover different consumer groups. Among them, "broadcast" is the main brand of the company, targeting 25-35-year-old professional women, mainly urban office workers, and has opened 766 stores at the end of March 2018, which is in the stage of resumption of growth; CRZ positioning young tide brand, mainly to 15-25-year-old personalized groups; PP positioning 25-35-year-old fashionable urban women, the product is more original, personality. In 2017, the company added "MUCHELL" and children's clothing brand "broadcute", in which "MUCHELL" is targeted at young women with a more pure and capable style. children's clothing brands continue the fashion style of the main brand and cover children's consumer groups. The first direct stores of the two brands opened in Shanghai and Beijing respectively in April 2018. Multi-brand expansion is conducive to covering different positioning of women's clothing consumer groups, providing the driving force for sustainable development.
Lean supply mode, inventory turnover is at a high level in the industry.
The company began to improve the level of information system in 14 years, the industry took the lead in using VMI supply model, timely replenishment and rapid supply according to sales, and the use of WMS warehouse management system to accurately control each item in, out of warehouse, return, replenishment and other whole process. "small batch, multi-batch" inventory management can improve the company's operational efficiency and best-selling sales, which can effectively control inventory and alleviate the inventory pressure on the company and dealers. In addition, in 2017, the company built an additional 12000 square meters of modern logistics center in the Daily broadcast Park, introduced advanced sorting logistics equipment, deepened the application of ERP system, and further improved the efficiency of supply chain management.
The company's lean supply model makes the company's inventory turnover rate continue to improve in recent years, compared with the industry, the company's inventory turnover rate in 2015-2017 is 1.65pm 1.67pm 1.73 times, compared with the same industry, the company's turnover rate in 2017 is higher than that of Jiangnan cloth (1.70 times) and Anzheng fashion (1.11 times), slightly lower than that of Goliath (1.84 times).
The adjustment of brands and channels is in place, the growth is accelerated, and the designer brand long-term growth company plans to achieve income of 1.3 billion yuan in 2018, an increase of 21.15%, and a net profit of 96.44 million yuan, an increase of 29.20%. The performance growth rate continues to improve compared with 2017, mainly because the broadcast brand resumes net store opening and the steady growth of store efficiency leads to rapid revenue growth, while the CRZ brand maintains a steady growth trend.
We believe that: 1) the company has strong R & D capability in design, distinct style of its three medium-and high-grade designer brands, focus on niche and high customer stickiness, revenue growth of "broadcast broadcast" accelerated in 2017, PP brand adjustment was effective, revenue growth resumed, CRZ brand revenue grew steadily, and it is expected that good growth momentum will be maintained in the future. In 2017, the company launched brands such as "MUCHELL" and children's wear "broadcute", focusing on young women and children's wear segments, respectively, with high growth. 2) the company optimizes processes and raw materials, improves product quality basically in place, and increases the expansion of direct channels with high gross profit margin, and it is expected that gross profit margin will gradually stabilize and pick up in the future; the company will increase investment in research and development, introduce talents and increase the proportion of direct stores. It is expected that the expense rate will continue to increase. 3) in terms of extension mergers and acquisitions, the company plans to make use of the platform advantages of listed companies to find high-quality targets to further enrich the brand layout and cover more target consumer groups. 4) the company's IPO was listed on May 31, 2017, and the ban was lifted on May 31, 2018, with a total of 5.4 million shares, accounting for 2.25% of the total share capital. The main shareholders are Zheng Zheng, Lin Liang, Wang Tao and other senior executives.
We are optimistic about the company's positioning of medium-and high-grade designer brands and cater to the future development space under the trend of personalized clothing consumption. As the company's revenue rebounded more than expected, it raised its EPS in 2018-20 to 0.45Unix 0.62 yuan, corresponding to 23 times PE in 18 years. The company's performance grew rapidly and its valuation was relatively low, so it was rated as "overweight" for the first time.
Risk tips: Channel expansion is not as expected, new brand building is not as expected, inventory backlog, small non-lifting ban, and so on.
