Zhitong Financial APP learned that Guoxin Securities issued a research report saying that to maintain the Virgin (02199) "buy" rating, due to the negative impact of overseas inflation on orders and the duration is slightly longer than expected, the net profit for 2022-24 is expected to be 4.7 shock 7.6 / 970 million yuan (compared with the same period last year), and a reasonable valuation is reduced to HK $4.80-5.20. In the medium and long term, the company has better growth potential to benefit from the development of women's sports boom and yoga categories. At the same time, with the improvement of human efficiency and employment rate, the profit margin has more room for improvement. The bank is optimistic about the company's medium-and long-term profit growth flexibility.

The company's full-year revenue is expected to be flat or slightly lower, with great potential for medium-and long-term profit growth, the report said.1) short-term guidelines:Under the pressure of high inflation, the inventory of core brands has risen, and management expects annual income in the second half of the financial year to fall by nearly 20% (flat or slightly lower for the whole year), with lingerie and sports products falling by 10-20% and other businesses by 30-50%. Under the influence of higher interest rates in the United States, the amount of financial expenses in the second half of the fiscal year will be similar to that in the first half of the fiscal year. But at the same time, FY24Q1 (April-June) orders have stabilized and improved significantly compared with FY23Q4 (January-March).

2) medium-and long-term points:first,The promotion of product process optimization and automation system will help improve human efficiency, and the slope climbing of factory capacity utilization in Vietnam will reduce the depreciation ratio and jointly drive the improvement of profit margin.Second,After the establishment of a joint venture with Victoria's Secret China, Virgin's efforts in brand marketing, product innovation and new retail helped it achieve beautiful performance in 618 and Singles Day (double 11 Tmall GMV growth of 139% to more than 120 million yuan).Third,The yoga category of the company doubled in the first half of the fiscal year, using seamless new dispensing technology instead of traditional sewing, and gradually established cooperation with Nike Inc, Adi and Lululemon, which was recognized by major customers. at present, yoga accounts for 5% of the income and has a broad space for growth.