This report is read as follows:
In 2019, the clothing business of the company was sound, and the real estate business resumed growth, during which the expense rate decreased and inventory turnover increased.
Diversification is expected to hedge against the short-term impact of the epidemic, and is expected to grow steadily in the long run, maintaining prudent overweight ratings.
Main points of investment:
Maintain cautious overrating: taking into account the negative impact of the epidemic on clothing sales, downgrade EPS from 2020 to 2022 to 0.79 (- 0.14) / 0.87 (- 0.15) / 0.94 yuan, refer to comparable companies, give about 9 times PE in 2020, and maintain the target price of 7.09 yuan.
The gross profit margin of dual business has increased, and the cost rate of channel resource optimization has decreased. In 2019, the company achieved revenue of 12.421 billion yuan, an increase of 28.91% over the same period last year, and a net profit of 3.972 billion yuan (yoy+8.04%). The performance was in line with expectations. Gross profit margins of branded clothing and real estate development sectors rose 1.3pct/1.8pct to 66.99% / 48.35% respectively. Sales expense rate and management expense rate decreased 3.52pct/0.94pct, mainly due to the integration of resources, online and offline deep integration. Inventory turnover improved greatly, the turnover days decreased by 56.04days to 998.29 days, and the operating efficiency increased.
Clothing revenue grew steadily, and the performance of real estate development climbed. From the perspective of different industries, the revenue of brand clothing reached 5.598 billion yuan, an increase of 9.43% over the same period last year, and the growth rate increased by 3.27pct. At the end of the period, the total number of stores was 3414, with a net increase of 313. Among them, online sales increased by 71.39% to 327 million compared with the same period last year. The performance of real estate development increased rapidly, with revenue of 5.856 billion yuan, an increase of 56.08% over the same period last year, and the growth rate changed from negative to positive. New push, plus push Ningbo Jiangshang Garden, Jiulijiang Bay, Songjiangfu, New Lakeview Garden, Suzhou Zhijin Huating and other projects, a total of 356700 square meters of pre-sale, realizing the pre-sale amount of 10.196 billion yuan, an increase of 15.36% and 20.10% respectively over the same period last year.
Clothing digital marketing efficiency, the orderly expansion of real estate projects. During the epidemic, the company comprehensively launched a new model of WeChat Mall and live marketing to accelerate the pace of e-commerce development. The real estate sector has a good brand power in the regional market and is rich in follow-up reserve resources to support sustainable development.
Risk hint: the recovery of the epidemic is not as expected, and the return on real estate sales and investment is not as expected.