Main points of investment

C2M industry Internet technology enterprises, large-scale personalized clothing customization leading the world. The company mainly takes C2M industry Internet basic scientific research as the core, clothing intelligent customization as the laboratory carrier, engaged in mass personalized customization clothing production and sales, the core business model is "demand-driven mass personalized customization" (C2M).

The company is mainly engaged in clothing and domestic business, with clothing / business services / epidemic prevention materials revenue accounting for 94.5% / 3.4% / 2.1% respectively, and domestic / overseas income accounting for 74% / 26% respectively. The clothing business is mainly based on the Internet platform of Coot C2M clothing industry, for B-end industrial customers such as global clothing brands, clothing entrepreneurs, fashion designers and clothing practitioners, provide services from intelligent volume, intelligent R & D and design, marketing planning, independent ordering, flexible production, intelligent manufacturing, logistics and distribution, such as the whole industry chain, personalized and flexible solutions. And its own brand red collar for C-end. By the end of the 21st year, the company has a total of 180 offline stores (5 direct outlets + 175 franchises), with an annual production capacity of 298000 suits and 180000 shirts.

Rapid growth 18 years ago, business growth has slowed in recent years. 1) 17 years ago: the company began to explore the field of clothing customization in 2003 and realized the initial transformation of the intelligent production line of customized clothing before 2007, which has a first-mover advantage over its counterparts. The income and net profit CAGR in 14-17 are 60% and 23% respectively, and the development speed is relatively fast. 2) 18-19: affected by the loss of orders from the two major customers of ODM in 18 and 19 (mainly due to insufficient production capacity, the company gives priority to small and medium-sized customers with higher fees), the revenue growth rate slowed to 1.2% and-9.4%, and the net profit growth rate was 8.6% and 8.0%, respectively.

3) the epidemic situation has caused disturbance in the past 20 years: the income structure affected by the epidemic has changed greatly, and the performance needs to be further recovered.

The 20-year revenue / net profit was + 16.9% / 30.7% respectively compared with the same period last year. Under the impact of the clothing customization business, the company quickly built an epidemic prevention material production line, which made a great contribution to the revenue. The 20-year clothing / epidemic prevention material income was 3.7 / 260 million yuan respectively (clothing revenue was-29% compared with the same period last year), accounting for 59% of the total revenue. 41% respectively. The decline in net profit was mainly affected by the decline in clothing sales (year-on-year-7.6pct to 32.4%), inventory price loss (mainly surplus epidemic prevention materials) and asset impairment (epidemic prevention material production equipment). The 21-year revenue / return net profit was-5.3% and 28.9% respectively compared with the same period last year, and the decline was mainly due to the rapid decline in the business of epidemic prevention materials. The income from clothing / epidemic prevention materials was 560 million yuan / 12.47 million yuan and + 52.5% respectively compared with the same period last year. 95.12%, the profit side showed a recovery mainly due to the improvement of gross profit margin due to the recovery of clothing business (year-on-year + 4pct to 36.4%). The domestic epidemic situation of 22Q1 was repeated, and the company's revenue and net profit were-7.23% and-6.78% respectively compared with the same period last year. Due to the rebound in capacity utilization, the gross profit margin further rebounded to 38.7% / year-on-year + 2pct.

C2M industry Internet is the company's strategy, which has formed three key development directions of "taking science and technology as the core, clothing as the laboratory carrier and capital strategic investment as the key driver". After more than 10 years of practice and exploration, the company has established three core business logic: 1) consolidate the demand-driven mass personalized customization clothing industry. Among them, the Internet platform of Coot C2M clothing industry serves B-end customers such as global clothing brands, clothing entrepreneurs and fashion designers, and can drive income growth by expanding categories and joining channels respectively. 2) based on our own practical experience, the Internet platform and digital governance platform for Coot C2M industry have been practiced and explored in nearly 100 enterprises in more than 30 industries, and it is expected to replicate and empower machinery, electronics and other industries in the future. expand the volume of service revenue 3) set up an industrial Internet development fund to make strategic investments in artificial intelligence, big data, intelligent manufacturing and other fields to realize the business of capital enabling companies and create investment returns at the same time. In October 21, the company invested 200 million yuan with Hainan Jinling (formerly known as Hainan Jinglin) private equity to set up Quzhou Coot as an investment platform.

Profit forecast and investment rating: the company is a leading company engaged in large-scale personalized clothing customization business in China. 18 years ago, it enjoyed the rapid expansion of industry development dividend performance. In recent years, due to customer changes and the impact of the epidemic, performance growth has slowed down, 20 years ago, the income structure has been adjusted, 21-year performance has not yet returned to the 19-year level before the epidemic, 22Q1 performance has declined slightly. With the main business of mass customized clothing as the cornerstone, the company will also focus on the development of industrial Internet and capital strategic investment in the future. We estimate that the 22-24 year-on-year net profit of homing will be + 2.4%, 16.1%, 20.4%, 20.4%, 0.26, 0.30, 0.37 yuan per share, respectively. Corresponding to PE35/30/25X, it will be given a "neutral" rating for the first time.

Risk hint: the domestic epidemic situation is repeated and the consumption trend is changing.