Matters:
Guoxin Textile's opinion:
1. Catalyzed by the cooling in the winter of 2023 and the rise of the outdoor sports trend, Bosideng e-commerce has grown significantly and the unit price has increased, and the performance is expected to be positive for the 2024 fiscal year;
2. Risk warning: macroeconomic recovery falls short of expectations; multiple rounds of the epidemic; brand image damage; category expansion falls short of expectations; channel reform falls short of expectations; systemic market risks;
Investment advice: Strong sales during the peak season, good results in category and scenario expansion, optimistic about high quality and rapid growth, and raise profit forecasts. In the fall and winter of 2023, Bosideng continued to grow rapidly based on healthy inventory and healthy discounts. Under the catalyst of the widespread outdoor boom and winter cooling, the performance is expected to be better than expected. In the medium to long term, while focusing on the development of down jackets, Bosideng is actively expanding functional categories such as lightweight down jackets, down jackets, and sunscreen, and has achieved good results. It is expected that it will continue to seize market share by expanding categories and scenarios in the future, and is optimistic about the company's growth potential. Furthermore, excellent channel operation and rapid supply chain response capabilities ensure the company's long-term steady and healthy operation. Due to the company's impressive sales during the peak season, the company's net profit for FY2024 to 2026 is expected to be $28.5/33.92 billion (previously $27.0/32.0/$3.75 billion), up 33%/18%/17% year over year. Due to the increase in profit forecasts and active expansion of new categories, the target price was raised to HK$4.6-4.8 (previously HK$4.3-4.6), corresponding to FY2024 16-17xPE, maintaining the “buy” rating. Focus on undervaluation, high growth, and high dividend allocation opportunities for leading down jackets.
Commentary:
Catalyzed by the cooling of the winter of 2023 and the rise of the outdoor sports trend, Bosideng e-commerce grew significantly and unit prices increased. The performance is expected to be positive for the 2024 fiscal year
The national policy supports the outdoor sports industry, and the target is that the total scale of the industry will exceed 3 trillion yuan by 2025. On October 25, 2022, eight departments including the State Administration of Sports and the Development and Reform Commission issued the “Outdoor Sports Industry Development Plan (2021-2025)”, 1) The total scale of the outdoor sports industry will exceed 3 trillion yuan by 2025. By 2035, the outdoor sports industry will be larger, better in quality, more dynamic and more dynamic. 2) Build 10,000 outdoor sports camps of various types by 2025 to enrich outdoor fitness and leisure products, optimize the supply of camping products, and cultivate outdoor sports market players.
Tourism in Northeast China exploded during the three-day New Year's Day holiday in 2024. Harbin Airport carried 205,000 passengers, an increase of 27% over the same period in 2019. The popularity of tourism in Harbin on the Tongcheng travel platform rose 240% month-on-month, ranking fourth in the country's travel popularity list.
Under the pan-outdoor boom, the sunscreen and jacket categories showed strong growth on e-commerce platforms:
1) Sunscreen clothing: Looking at the three platforms of Tmall, JD, and Douyin together (same below), sunscreen e-commerce increased +63%/+77% year over year to 4.1 billion yuan/7.2 billion yuan respectively in 2022/2023 (52% year-on-year growth rate in 2021). 2024Q1 is generally a low season for sunscreen sales, with a year-on-year increase of 13% on a high base.
2) Jacket: In 2020-2021, the year-on-year growth of jacket e-commerce was 4% and 30%, respectively. The year-on-year growth rate reached 72% in 2022, the year-on-year growth rate accelerated to 115% to 9.4 billion yuan in 2023, and 57% year-on-year increase in Q1 in 2024.
Bosideng's functional category expansion has had good results, contributing to anti-season sales. In 2023, Bosideng launched sunscreen clothing with innovative breakthroughs in fabric, which effectively boosted anti-season sales. At the same time, actively grasping the outdoor trend, the 3-in-1 detachable jacket was launched in August 2023, and became a hit, further increasing the proportion of lightweight down jackets. The company focuses on improving the management capabilities and operational efficiency of online platforms through the development of core categories, integrated brand campaigns, and refined management. In the first half of the fiscal year, the online revenue of Bosideng brand down jackets increased 24.8% year-on-year to 1.09 billion yuan.
During the Double 11 campaign, Bosideng's cumulative GMV rose to the first place in brand apparel, and continued to win the first place in the women's clothing category on Tmall at Double 11.
Third-party database statistics show that Bosideng e-commerce maintained positive growth, and prices increased slightly during the peak season. According to third-party e-commerce database statistics, the total sales volume of the Bosideng brand increased by 73.0%, 25.6%, 27.6%, and 16.3% in fiscal year 2023Q2-2024Q1, respectively. At the same time, during the peak winter season, 2023Q4-2024Q1 prices increased 4.7% and 10.1% respectively.
Investment advice: Strong sales during peak season, good results in category and scenario expansion, optimistic about high quality and rapid growth, and raise profit forecasts
In the fall and winter of 2023, Bosideng continued to grow rapidly based on healthy inventory and healthy discounts. Under the catalyst of the widespread outdoor boom and winter cooling, the performance is expected to be better than expected. In the medium to long term, while focusing on the development of down jackets, Bosideng is actively expanding functional categories such as lightweight down jackets, down jackets, and sunscreen, and has achieved good results. It is expected that it will continue to seize market share by expanding categories and scenarios in the future, and is optimistic about the company's growth potential. Furthermore, excellent channel operation and rapid supply chain response capabilities ensure the company's long-term steady and healthy operation. Due to the company's impressive sales during the peak season, the company's net profit for FY2024 to 2026 is expected to be $28.5/33.92 billion (previously $27.0/32.0/$3.75 billion), up 33%/18%/17% year over year. Due to the increase in profit forecasts and active expansion of new categories, the target price was raised to HK$4.6-4.8 (previously HK$4.3-4.6), corresponding to FY2024 16-17xPE, maintaining the “buy” rating. Focus on undervaluation, high growth, and high dividend allocation opportunities for leading down jackets.
Risk warning
The epidemic has had a serious impact on consumer demand and the macroeconomy; vicious competition in the industry has intensified; the establishment of corporate channels has fallen short of expectations; major brand image vicious incidents have occurred; and systemic risks to the market.