Incidents:
Bosideng announced on June 26 that FY2024 Group's revenue was +38.4% YoY to RMB 23.21 billion, operating profit +55.6% YoY to RMB 4.398 billion, net profit to mother +43.7% YoY to RMB 3.07 billion, gross margin +0.1 pct to 59.6% compared to the same period last year, net profit margin +0.5pct to 13.2% compared to the same period last year, final dividend of HK20 cents per share, and annual dividend +38.9% YoY to HK25 cents per share.
Investment highlights:
Revenue and profit achieved impressive growth, and profitability improved markedly. FY2024 Group's revenue was +38.4% YoY to RMB 23.21 billion, net profit to mother +43.7% YoY to RMB 3.07 billion, gross margin +0.1 pct to 59.6% compared to the same period last year, and net profit margin +0.5pct to 13.2% compared to the same period last year. By business: 1) Brand down jacket business: FY2024 revenue increased 43.8% year on year to 19.52 billion yuan, accounting for +3.2pct to 84.1% compared to the same period last year, and gross margin -1.2pct to 65.0% compared to the same period last year. Among them, Bosideng brand revenue was +42.7% YoY to 16.78 billion yuan, gross margin was -1.2pct to 69.6% compared to the same period last year, Yue Zhongfei's revenue was +65.3% YoY to 2.02 billion yuan, gross margin was 46% flat compared to the same period last year, Bingjie's revenue was +15.9% YoY to 150 million yuan, gross margin +5.6 pct to 39.2% compared to the same period last year; self-employed/wholesale/other revenue was +38.4%/+67.9%/+23.2% year-on-year. 2) OEM business: FY2024 revenue increased 16.4% year-on-year to 2.67 billion yuan, accounting for -2.2pct to 11.5%, and gross margin +0.7pct to 20.6% compared to the same period last year. 3) Other business: FY2024 women's clothing revenue was +16.6% year-on-year to RMB 8.2 billion, and gross margin was -1.1 pct to 67.5% compared to the same period last year.
Diversified clothing revenue was +0.3% to 200 million yuan, and gross margin was -5.5 pct to 20.2% compared to the same period last year. The four main businesses of FY2024 have all achieved stable and high-quality growth, and continue to consolidate the image of the world's leading down jacket expert.
Continuously optimize channel quality and focus resources on building a benchmark TOP store. 1) Offline: As of March 31, 2024, Bosideng brand channel streamlining was being promoted, the number of specialty stores decreased by 134 to 2,286, of which direct-run stores decreased by 152 to 669, and the number of third-party distribution stores increased by 18 to 1617; Bosideng's consignment outlets decreased by 52 to 711; 2) Online: Online revenue for Group brand down jackets was +41.3% to 6.84 billion yuan. Online multi-platform efforts were made to achieve rapid high-quality growth; the Group continued to steadily improve the existing channel structure, layout and quality As well as terminal image, through the systematic and refined management of hierarchical markets and store operations, channel management capabilities and operational efficiency are steadily improved, and selected benchmark stores are operated and managed in a systematic and systematic manner; through the construction of more than 250 projects, covering about 500 sales outlets, the rapid and effective growth of top stores is achieved.
The efficiency of inventory management has improved, and the number of inventory turnover days has decreased. The efficiency of the company's operation and management has improved. As of March 31, 2024, the Group's inventory turnover days were 115 days, down 29 days from the same period last year, and the number of accounts receivable turnover days was 19 days, down 4 days from the same period last year. Cash flow from operating activities was strong, and net cash from operating activities increased sharply by 140.6% year over year to 7.34 billion yuan.
Profit prediction and rating: In the future, the Group will continue to iterate and innovate products, expand incremental business, further upgrade channel quality, and improve the efficiency of single-store operations. We expect the company's FY2025-FY2027 to achieve revenue of RMB 26.59, 302.1 and RMB 34.16 billion, net profit to mother of RMB 36.0, 41.4 and RMB 4.72 billion, and a closing price of HK$4.87 on June 28, 2024. The corresponding PE valuation for FY2025-FY2027 is 14/12/10X. Over the long term, we are optimistic that the company will achieve an increase in profit margins and maintain a “buy” rating as its product strength and brand strength continue to improve.
Risk warning: risk due to macroeconomic fluctuations; risk of industry competition; risk of consumer preference; risk of product launch falling short of expectations.