Core views

In the spring and summer of 2024, the company focused on sunscreen clothing categories, focusing on the middle and high-end market and professional performance (such as UPF100+, cool and breathable). In addition to the Hot Sun 3.0 series, new urban light outdoor (focusing on outdoor scenes) and outdoor camping (focusing on water repellent, breathable, and cool) series were launched in 24. It is estimated that in the summer of 2023, the company's revenue for sunscreen products will be about 500 million yuan. The expansion of categories combined with an increase in offline store sales rates is expected to drive a continued high increase in the revenue of sunscreen products in spring and summer of '24. Since October '23, fueled by weather, snow and ice tourism, etc., combined with the relatively late Spring Festival period, sales of peak season sales are expected to grow strongly during the peak season, corresponding to FY24H2's revenue growth rate of 30% + during the peak season.

occurrences

On April 3, 2024, the company teamed up with “Fashion Bazaar” to hold a new summer sunscreen product launch event in Shanghai to launch the “Hot Sun Series 3.0” and “Urban Light Outdoor” series products; on April 19, the world's first sunscreen show appeared at the Beijing International Film Festival and held the world's first special sunscreen press conference.

Brief review

Sun protection clothing focuses on professional and stylish design, and the category is further expanded. Sales are expected to continue to increase in the spring and summer of '24. In 2024, the company began the era of sunscreen 2.0 and launched more stylish professional sun protection clothing, focusing on the middle and high-end market and professional performance (such as UPF100+, cool and breathable). In addition to the Hot Sun 3.0 (innovative color scheme, mainly for young people) series, the Urban Light Outdoor (focusing on outdoor scenes) and outdoor camping (focusing on water repellency, breathability, and coolness) series were launched in '24. According to Magic Mirror data, in 2023, Bosideng's products topped the brand list in the sunscreen market of 400 yuan or more on major e-commerce platforms (Tmall and JD), with a growth rate of 200% +. The company's revenue for sunscreen products is expected to be about 500 million yuan in the summer of 2023. In the spring and summer of 2024, the company will focus on the sunscreen clothing category, combined with an increase in offline store sales rates, which is expected to drive a continued high increase in revenue for sunscreen products in spring and summer of '24.

The FY24H1 Bosideng brand's revenue was +25.5% year-on-year, and the FY24H2 down jacket season is expected to continue to perform well during the peak season (fiscal year 0401-0331). Since October '23, fueled by weather, snow and ice tourism, etc., sales of down jacket product terminals have been booming. The company has continued to launch two iterations and upgrades of lightweight down jackets and a three-layer goose down jacket, adding the 24th Spring Festival to February 10, earlier than January 22, 23, extending the peak sales season for nearly 20 days, further boosting peak season performance. It is expected that sales of the main brand FY24H2 Bosideng will continue to grow rapidly with the help of e-commerce transformation (FY24H1 revenue +52.2%). Subsequent company plans to meet consumers' demand for down jackets in different scenarios, such as lightweight down jackets, high goose down jackets, etc. In addition to this, the company's horizontal expansion of categories, expansion of outdoor and sunscreen tracks, and ironing out the impact of seasonal revenue cycle fluctuations will also help occupy the brand mentality of young consumers.

At the end of November '23, an option and equity incentive plan for 9 core executives and 170 core management and employees was announced to continuously motivate and bind employees to grow together with the company. On November 29, the company issued the “Grant of Award Shares and Share Options”, which resolved: 1) grant award shares, grant 78.4 million award shares (accounting for about 0.72% of the total share capital) to 9 selected directors, supervisors, and core management, and the relevant grantees must pay HK$1.62 per share; 2) grant share options to 170 core executives and employees (accounting for about 4.69% of the total share capital before exercise). The exercise price was HK$3.24 per share, with the effective option As of November 28, 202344 months.

Follow-up outlook: The company's revenue growth is strong, driven by the expansion of categories such as lightweight down jackets and jackets combined with peak season sales, and the FY24 revenue growth rate is expected to be nearly 30%; in terms of operation, the company's current inventory level remains low in the industry, inventory pressure is low, and the discount rate is expected to maintain an ideal level; in terms of costs, it is expected that the fee control strategy will continue to improve slightly throughout the year.

Profit forecast: According to online data tracking and other forecasts, the company's peak season sales performance is expected to exceed expectations, and the company's FY24-FY26 revenue is expected to be 216.9, 248.5, and 28.14 billion yuan respectively, up 29.3%, 14.6%, and 13.2% year-on-year respectively; net profit to mother is 29.4, 33.6, and 3.82 billion yuan, respectively, up 36.5%, 14.2%, and 13.8%; corresponding PE is 14.6x, 12.8x, and 11.2x, maintaining a “buy” rating.

Risk warning:

Consumption recovery has fallen short of expectations: the company's operations are affected by consumer confidence, and the current operating environment and supply chain in domestic and foreign markets will also face uncertainty, thus bringing uncertainty to the achievement of companies' production and operation goals within the industry.

Warm winter affects winter sales: The company's main product is down jackets, and product sales are clearly seasonal. Every year from November to January of the following year, it accounts for about 70% of the company's fiscal year revenue. The functionality of the down jacket category is obvious. Warmer temperatures in winter will directly affect the company's product demand.

Risk of raw material price fluctuations: Raw material procurement costs account for a large proportion of the company's operating costs. If the price of upstream raw materials rises, it will directly affect the company's profitability.