Introduction to this report:
The company's 2024Q1 turnover growth rate is impressive. 2024Q1-Q3 orders will perform well, and a high increase in revenue/profit can be expected throughout the year.
Summary:
Investment advice: The company is a leader in sports footwear and apparel in the domestic market. It is optimistic that the medium- to long-term large sales channel structure will continue to be optimized. NBA players will cooperate to strengthen brand influence and product expertise. Children's clothing is expected to create a second growth curve, and has high dividend characteristics. We maintain the 2024-2026 net profit forecast of 11.3/13.2/1.52 billion yuan, corresponding to PE of 8/7/6 times, respectively, and maintain the “increase” rating.
2024Q1's turnover performance was outstanding, and inventory discounts remained healthy. 1) Channel division: The company's main brand offline sales increased by double digits in 2024Q1, and the sales volume of children's clothing offline channels and e-commerce platforms both increased by 20-25%. 2) Month by month: The flow growth rate in January and March was relatively better. The growth rate was affected in February due to the Spring Festival mistake. 3) Discounts and inventory: offline discount is about 30% off, online discount is about 4.5-50% off, inventory ratio is 4.5-5 months, maintaining health.
Product strength continues to improve, and marketing activities are rich and diverse. In the context of the overall weak recovery of clothing retail terminals, the company's turnover performance is excellent. The main reasons for our analysis are: 1) The brand positioning is reasonable:
The 361 brand is positioned in the third- and fourth-tier mass market, with an outstanding cost performance ratio, in line with the K-type consumer recovery trend.
2) Breakthrough in product power innovation. There are many new products in Q1: new products such as Running Shoe Side, Flying Fire 3, Fast Family, and Super Speed 3 Pro fully cover professional racing and daily training scenarios; on the basketball side, the company signed Pop to enhance brand influence; on the comprehensive training side, the company caters to the rise of the Chinese style and launched the Women's Sports New Skin 4.0 series. 3) Support for marketing activities: In terms of the event, the company collaborated with the Qingdao Marathon as a sponsor to accurately enter the running circle and promote the growth of running shoe sales performance through direct access to the Qingdao Marathon; in terms of IP cooperation, the company launched a joint product with Xiao Liu Ya to target the low price range and attract young consumers.
The order performance will be outstanding, and we look forward to the full year's performance. Despite intense terminal competition, we believe the company is expected to maintain excellent turnover growth through rich new products and diversified marketing. Considering the average growth rate of 2024Q1-3 company orders is about 15%-20% (mainly driven by volume growth), we expect the company's revenue to grow by 15-20% in 2024.
Risk warning: industry competition intensifies; terminal consumption falls short of expectations, etc.