The leading company in China B2C Cross-border e-commerce enterprises of clothing and footwear, relying on SanfangpingTaiwan continues to build and cultivate its own brands.The company was founded in Zhejiang in 2011 and sells clothing, shoes, etc. through third-party e-commerce platforms. As of 2022H1, it goes without saying that 62,680 clothing and shoes have been designed and sold, including over 9000 styles added in the first half of 2022. It has also successfully incubated and nurtured more than 300 private brands, of which 87 have annual sales exceeding 10 million yuan, and their products are sold to more than 80% of countries and regions around the world. According to Frost & Sullivan's data, the company ranked third among all platform sellers in China's cross-border B2C e-commerce apparel and footwear market based on GMV of selling clothing and footwear products through third-party e-commerce platforms in 2021.

22 Annual performance is under pressure in the short term, and we are optimistic about the company's long-term core competitiveness.2022 H1 revenue was 1,278 million yuan, up 16% year on year; net profit in 2022H1 was 61.3 million yuan, down 46% year on year; mainly due to factors such as US inflation combined with the increase in Amazon's return rate. We are optimistic about the company's core strengths in “design+supply chain+marketing”. The design team includes a front-end fashion research team and a back-end product design team. The front and back ends cooperate to create synergies. The company has set up a product design database to make the design process fully data-driven. The company also uses a small order return model to improve feedback efficiency, reduce inventory costs, and increase the number of SKUs and the speed of new products. On the supply chain side, it goes without saying that various digital tools such as ERP, SCM, GMS, etc. are used to empower the supply chain, improve supply chain efficiency and control operating costs. At the same time, it closely cooperates with various suppliers to keep a close eye on inventory management and quality control. In terms of marketing, the company has built a diverse product matrix and incubated many popular brands and popular brands through omnichannel e-commerce operations and diversified marketing.

Future outlook: category expansion, supply chain upgrade&Independent station construction.The company's future development strategy mainly focuses on four major aspects: (1) closely following fashion trends and technological innovation and continuing to develop innovative products; (2) continuing to integrate supply chain resources to improve operational efficiency and expand global layout; and (3) establishing a brand matrix for overseas business to further expand localized business. In terms of the global layout, Zibunji plans to upgrade brand building and establish a brand matrix for overseas business; (4) establish large-scale independent self-operated websites to enhance brand awareness and seek investment and acquisition opportunities to explore synergies.

Profit forecast:We expect the growth rates of the company's apparel products and footwear products to be 31.3% and 20.8% respectively in 2023, corresponding to the company's total revenue of 3.89 billion in 2023, an increase of 28.9% over the previous year. We used PS valuation. We used comparable companies in the cross-border e-commerce industry Lego Co., Ltd., Superstar Technology, Yuanfei Pet, Huakai Yibai, Anke Innovation, JS Global, and Vesync as comparable companies. For the 2023 average PS was 1.2, the corresponding company's market capitalization in 2023 was HK$5.13 billion, corresponding to the target price of HK$10.3 in 2023, covering the “buy” rating for the first time.

Risk warning:(1) Risk of declining consumption power in target markets: continued inflation in the US, Europe and other regional markets may bring consumption to users in target markets falling short of expectations; (2) three-party platform policy risk: changes in the operating policies of overseas e-commerce platforms such as Amazon, Wish, etc.; (3) Risk of falling sales of three-party platforms: the risk of falling sales of three-party platforms such as Amazon; (4) risk of increased industry competition: competitive risk brought about by e-commerce such as Temu, Shein, and the cost of local e-commerce in Europe and the US; (5) freight rate risk: large increases in freight rate fluctuations brought about by e-commerce such as Europe and the US; (5) freight rate risk: large increases in freight rate fluctuations Risk; (6) Risk of exchange rate fluctuations: Significant appreciation of the RMB exchange rate poses a risk of exchange loss.