Core views:
The company and Adidas FCC have opened 32 exclusive series stores. According to 21 Economic Network and Adidas FCC, the company and Adidas FCC have opened 32 exclusive series stores, covering Anhui (3), Hebei (13), Henan (8), Guangzhou (1), Zhangjiagang (1), Yixing (1), Jiangsu (2), Shenyang (1), and Hunan (2). Adidas FCC is the Adidas Future City concept series line. According to Adidas China's official WeChat account, in 2024, in addition to major stores in Tier 1 and 2 cities, Adidas will increase channel layout and brand image building in emerging cities such as Tier 3. As a leader in the domestic menswear industry, the company's channels are mainly distributed in pedestrian streets, department stores, shopping malls, etc. in the core business districts of cities at the county level and above. In 2023, the company's Heilan Home series of stores totaled 5,976, and the company has strong retail operation capabilities in low-tier cities. In 2023, the company invested a total of 160 million yuan in SPOTS through its wholly-owned subsidiary Shanghai Hailan, held 40% of SPOTS's shares, boosted the sports brand management business, and reached a strategic cooperation with Adidas. According to the annual report, SPOTS had revenue of 597 million yuan and net profit of 85 million yuan in 2023. The results mainly came from the sale of Adidas end products at JD and Vipshop.
This year, the SPOTS business was extended offline. The future is based on the Adidas brand power on the one hand, and the channel power of Hailan Family on the other, with great potential for development. Furthermore, according to Tianyan Research, on May 5, 2024, Shanghai Hailan's shareholding ratio in SPORTS changed from 40% to 51%.
I am optimistic that the company's future performance will continue to grow rapidly. In addition to SPOTS, the company's main brand positions the public as being cost-effective and benefiting from rational consumption. The online business is expected to maintain high growth, and there is plenty of room to increase the share of revenue. The offline business optimizes store layout and further expands overseas markets in Southeast Asia. The group buying customization business is highly competitive and benefits from Sunshine Collection. Other brands such as OVV and Yingshi are progressing steadily.
Profit forecasting and investment advice. EPS for 24-26 is expected to be 0.71, 0.83, and 0.94 yuan/share, respectively. Referring to comparable company valuations, and considering the company's steady performance and high dividend rate, the company was given 15 times PE in 2024, with a reasonable value of 10.72 yuan/share, maintaining a “buy” rating.
Risk warning. Channel management risks, new brand development risks, extreme climate risks.