Main points of investment

The company issues a 23H1 performance forecast:

It is estimated that the net profit of 23H1 is 8200-98 million yuan, which is a year-on-year return to profit (a loss of 59.99 million yuan in the same period last year). After deducting 120-144 million yuan, the net profit is 137% higher than the same period last year.

It is estimated that the net profit of 23Q2 in the same period of 22 years will be-15.22 million yuan, 2.53 million yuan respectively, and the net profit after deducting 1812-42.12 million yuan will be 5.481 million yuan respectively in the same period of 22 years.

The main business has improved significantly compared with the same period last year, and investment losses have dragged down the performance.

We expect revenue growth of major brands to accelerate month-on-month. With reference to the business trend of 23Q1 (revenue from major brands / FUN/ZIOZIA + 5.5% Maxim 38% Maxim 18%), we expect Q2 major brand revenue to achieve double-digit growth on a low base, while sub-brand revenue still declined significantly due to large-scale store closures last year.

Deducting non-net profit to reverse losses compared with the same period last year, the month-on-month decline is mainly due to seasonal factors. The net profit after deducting non-23Q2 is 1812-42.12 million yuan, compared with-3465 million yuan in the same period in 22nd year, which is the first profit in Q2 off-season since the company's strategic reform and increase in expenses, but it is still lower than the 42.39 million yuan in the same period in 19 years. The non-net profit of Q2 deduction is significantly lower than that of Q1, which is mainly due to: 1) the accelerated pace of Q2 advertising and store expansion and transformation, and a substantial increase in sales costs; 2) the increase in the proportion of used goods inventory in autumn and winter in 22 years has led to an increase in the inventory price of Q2.

Investment losses are a drag on performance and will gradually return to the main business in the future. The fair value change loss of financial assets held by 23H1 is about 7500-90 million yuan, of which Q1 loss is about 32 million yuan and Q2 loss is about 4300-58 million yuan, which is a drag on the performance. 22 at the end of the year, the company's financial assets are about 2.2 billion yuan. At the 22-year shareholders' meeting, the company said that it plans to sell financial assets at the right time, return to the main business, and improve performance stability.

Reverse the trend and start the strategic reform, which is expected to realize the brand transformation.

In 2020, Jiu Mu King cooperated with Junzhi Consulting to start the reform of brand strategy: 1) strategically, put forward the "focus on men's pants category" to consolidate consumers' core cognition; 2) on products, jointly named top designers, launched young, modern and rich Chinese characteristics products, signed contracts with five major international fabric manufacturers, and created popular style items of high-tech fabrics. 3) in marketing, changing the Chinese brand logo, landing in International Fashion week many times, and reaching a strategic cooperation of 100 million yuan with focus Media to accurately reach mainstream consumers; 4) in the channel, a new "Ten Generation Store" has been opened or renovated (there are more than 850 stores by the end of 22 years, accounting for nearly 40%), which embodies "men's pants experts" in product display and store decoration.

The proportion of shopping malls increased from 8% to 23%.

Profit forecast and investment advice:

The company has a strong determination to change its strategy, and it is expected to regain its vitality after brand reshaping. It is estimated that in 23-25, the company will achieve an income of 30.4 million yuan, an increase of 16%, 14%, 13%, and a net profit of 2.5 yuan, 3.9%, 450 million yuan, and a profit of + 56%, 15%, corresponding to PE 27-17-15. Considering the remarkable flexibility of the company's performance, the "Buy" rating is maintained.

Risk hint: the brand marketing effect is not as good as expected; the improvement of the store efficiency of the tenth generation store is not as expected.