Investment advice: Considering the weak domestic consumer demand from Q2, the 2024-2026 EPS forecast was lowered to 2.00/2.40/2.86 yuan (2.11/2.51/2.97 yuan before adjustment). Considering the company's leading business performance industry, good performance flexibility and stable leading position, the two methods of comprehensive PE valuation and DCF valuation maintained the target price of 39.71 yuan to maintain the “gain” rating.
The international layout is one step further, leading high-end sports fashion apparel leaders have great potential. The company is a leader in high-end sportswear, with a 23%/25% increase in revenue/profit in 2023, leading the industry in terms of performance; it acquired international luxury brands CERRUTI 1881 and KENT & CURWEN in 2023. New products from the two major brands will be unveiled in the fall and winter of 2024, and the international layout will go one step further. Judging from industry trends, in recent years, the golf apparel scene has gradually expanded into everyday leisure, commuting, and business. With the rapid rise of the middle class, the high-end fashion sports market space has further opened up. At the same time, social demand has spawned more consumer opportunities, and there is much to be done as an industry leader.
The company has outstanding competitive advantages and firmly occupies the consumer mentality. On the product side, the company's products are both functional and fashionable, using high-end international fabrics, and the product design is continuously upgraded to high-end and youthful. On the channel side, the company has maintained a relatively rapid growth rate of store expansion in recent years (CAGR of 9% for 2013-2022), and is expected to accelerate further in 2024. At the same time, the company will increase SKUs such as footwear and accessories, and create a super t-shirt product strategy to increase connection rate and consumer stickiness, thus driving up store efficiency. On the marketing side, the company increased its brand influence through multi-level marketing such as building a joint IP for the Imperial Palace, event sponsorship, and celebrity endorsements, and ranked first in the country in terms of market share.
The ten-year plan anchors the direction, and the collaborative development of multiple brands can be expected. In 2023, the company proposed a “revenue exceeding 30 billion by 2033” development plan, corresponding to a CAGR of about 24%. The company will focus on internationalization and high-end, continue to enhance brand competitiveness, and promote the collaborative development of multiple brands through differentiated strategic positioning and layout. In the medium to long term, the company's market share is expected to increase steadily.
Risk warning: The cultivation of newly acquired brands falls short of expectations, and the results of expanding stores fall short of expectations.