A company capable of designing fast fashion and mass-marketed fashion products
The company is a company with fashion product design as its core, mainly providing shoe service design, and also providing customers with integrated footwear supply chain services. In 2019, the company achieved revenue of 690 million yuan (+10%) and achieved net profit of 110 million yuan (+28%) to the mother. Currently, the main business includes shoe design business, supply chain integration business, and pattern design business. Among them, the supply chain integration business accounts for the largest share. The shoe design business is the company's main source of profit, and the pattern design business is a new business, which will develop rapidly in the future.
The capital raised this time will be used for projects such as design, display and marketing centers, the construction of an intelligent production base with an annual output of 2 million pairs of shoes, the construction of an R&D center, and supplementary working capital.
Large-scale design capabilities are scarce, and first-mover advantages and scale effects are obvious. Design ability is the company's core competitiveness in customer acquisition, and it is also the foundation and prerequisite for the development of other businesses. The company takes design as the lead and creates a business model that vertically integrates the front-end value chain of the footwear industry. Through centralized efficient ventilation, standardized R&D and design processes, and large-scale design capabilities, the company has formed mass-marketed design service capabilities. It is scarce in the industry (currently there are no large number of companies with mature design capabilities in the industry), and is an industry leader with a first-mover advantage in the shoe design industry. Currently, the company has the ability to mass-sell nearly 10,000 shoe samples per year, and has obvious scale effects and cost advantages.
R & D capabilities are outstanding, and technical and talent advantages are obvious. At present, the shoe design industry has entered the refinement stage. Design is not limited to basic aspects such as appearance, shape, and color, but research is carried out in various aspects such as fabric, fit, material, and ergonomics. The company's R&D team is experienced and has obvious technical advantages. By the end of 2019, the company had 913, 146, 4859 and 4 major patents, trademarks, artwork copyrights and software copyrights used by the company, respectively, with obvious technical advantages. There are 138 R&D designers, 68% of R&D designers with more than 5 years of work experience. The talent advantage is obvious.
Rich experience in supply chain management ensures design implementation and enhances customer stickiness. The company has the advantage of being located in a gathering place for the shoe industry and has rich experience in supply chain management. Because the footwear industry has a long industrial chain, is less widely distributed and has diverse process standards. The company is located in Wenzhou, the “shoe capital of China”. It has the advantage of being located in a gathering place for the shoe industry, has a large number of resources from high-quality footwear manufacturers, and has accumulated rich supply chain management experience, which can achieve design implementation after shoe design services, further improving cooperation efficiency and customer stickiness.
First coverage, giving a “buy” rating. The company is expected to achieve revenue of 665 million yuan, 776 million yuan, and 868 million yuan respectively from 2020 to 2022, compared with -2.96%, 16.59%, and 11.89%, respectively. The net profit achieved by the mother was 109 million yuan, 137 million yuan and 170 million yuan respectively, compared with 0.24%, 24.89% and 24.10% respectively over the previous year. Through calculation and analysis of the DCF absolute valuation method, we predict that the company's target market value in 2021 is 8.299 billion yuan, the corresponding target price is 34.58 yuan, and the corresponding P/E is 60.67 times.
Risk warning: High customer concentration risk; sharp deterioration in the business situation of small and medium-sized shoe companies; increased risk of market competition; failure to accurately grasp the design risks of changing fashion trends.