Main points of investment
Since 2019, extraordinary Leader has successively acquired shoes and clothing brands with high visibility and rich brand culture, formally transformed into multi-brand operators, and opened the strategy of "multi-brand, multi-category, multi-channel". It is expected to restart the growth depth of the company.
Extraordinary leadership: Li Ning Co. Ltd. family holding, multi-brand operators in transition
Under the leadership of the Li Ning Co. Ltd. family, after 10 years of development and business exploration, the company began to streamline its business in 2019, focusing on expanding multi-brand footwear and sports experience, forming a multi-brand footwear business as the main engine for the company's scale growth. sports experience business is the secondary engine. Revenue in 2022 rose 399 per cent year-on-year to HK $6.9 billion, with a net profit of HK $850 million.
The multi-brand footwear business, which mainly owns Clarks, Baishilong, bossini.X, LNG and Amedeo Testoni, grew 652 per cent year-on-year to HK $6.4 billion in 2022.
Clarks: British century-old footwear brand, the main engine of company growth, the growth of the Chinese market is expected.
The century-old British footwear brand, founded in 1825, has a history of 200 years, accumulating world-renowned century-old British footwear brand awareness, strong R & D + design to create strong product power; after being acquired by the company in 2022, cross-border joint popular styles continue to strengthen the "fashion" attribute of the brand and expand brand awareness through star endorsements. 2022A7-22Compact 12 contributed HK $5.4 billion to the company, accounting for 78% of the total revenue. In the future, with the company's operating experience in China's footwear market, the superimposed Chinese footwear market has a broad prospect, and Clarks will show high growth space.
Bao Lion Dragon and bossini.X: leisure clothing time-honored brand in Hong Kong, new brand bossini.X opens the ceiling of scale growth with cycling clothes
Hong Kong time-honored brand of leisure clothing, which was founded in 1987, has gradually transformed from an old brand of Fort Lion Dragon to a new brand bossini.X after the company acquired a 66.6% stake in 2020.
The new brand bossini.X is expanding against the trend, creating a brand image of life and leisure with new sports elements, deepening brand awareness through strategic cooperation with the national cycling team combined with community marketing, upgrading channel image to strengthen brand positioning, and improving the number of stores and the efficiency of individual stores through two years of operation, promoting the growth of the bossini.X brand by 100.5% to HK $45.27 million in 2022 with a low base income.
LNG and Testoni: positioning light extravagance and luxury respectively, gradually growing under the accumulation of brand awareness
LNG: a fashion and leisure clothing brand with light and extravagant positioning, accurately capturing the needs of Generation Z, with an income of HK $80 million in 2022. With the recovery of passenger flow, the optimization of channel structure and the improvement of brand sound, the LNG brand will grow steadily.
Amedeo Testoni: a century-old Italian luxury leather brand that contributed HK $80 million to the company in 2022.
The new LOGO and store image will be launched in 2021, superimposed with exquisite handmade shoes, and Testoni will steadily improve in the future.
Profit forecast and valuation: all the brands acquired by the company are well-known brands internationally or domestically. After the acquisition, the company's multi-brand footwear business is expected to enter the upward phase. It is expected that the company will achieve a net profit of HK $8.5 / 1.13 billion in 2023-2025, compared with the same period last year. The closing price of PE on July 25 is corresponding to 25-16-12.
Considering the expansion of various brands in the offline core business area under extraordinary leadership management and the development in the Chinese market, the company is expected to restart the depth of growth and give a "buy" rating for the first time.
Risk hint: the same store growth is not as expected; the progress of store expansion is not as expected; the risk of multi-brand business failing to coordinate effectively