Core views
Sanfu Outdoor is a leading outdoor sports footwear and equipment chain retailer in China. After 2021, it formed four core brand matrices through the acquisition of X-BIONIC domestic brand rights (estimated revenue of about 200 million yuan in 23) and the establishment of a domestic joint venture with Panshan Mouse's parent company at the end of 23 (estimated domestic revenue of nearly 100 million yuan, the joint venture company holds 40% of shares), etc., from an outdoor professional channel provider to high-end outdoor brand operation, combined with Italian handmade ingenuity to inherit footwear CRISPI and the Nordic outdoor aesthetic brand Houdini . The company is benefiting from the outdoor boom and accelerated brand operation. X-BIONIC, HOUDINI, and CRISPI brands will host the 2024 Fall/Winter Order Fair in December '23, and the development of distribution channels is expected to rapidly increase the company's performance.
summary
Sanfu Outdoor: A pioneer in the retail chain of professional outdoor sports footwear and equipment in China. The company started operating a channel collection store specializing in outdoor products in 1997. After going public in 2015, the company went through two transformations. After 2021, it moved from an outdoor channel provider to a high-end outdoor brand operation through the acquisition of X-BIONIC domestic brand rights, etc. The company's current brand operations focus on its own brand X-BIONIC, the joint venture brand Klattermusen Mountain Climber+ outdoor professional footwear CRISPi + Nordic outdoor aesthetic Houdini. Benefiting from the rise of the outdoor boom and the acceleration of the company's brand operations, the company's revenue in Q1-3 in '23 was 540 million yuan/ +49.7%, and net profit to mother reached 12 million yuan, turning a loss into a profit for the first time in nearly 4 years.
With its own brand X-BIONIC, SKU quickly developed into mid/outer products in 2022, breaking the circle from professional outdoor to multi-scene. The core product of the X brand is compression garments, which mainly absorb sweat and keep warm, and are suitable for outdoor scenes such as skiing and off-road. After acquiring its domestic IP in 2021, the company enriched the mid/outer product line. 23H1's revenue was 80 million yuan/ +50%, and the sales share of mid/outer layers is expected to reach 60% +. In the future, the company will further focus on the core business district, upgrading the brand zone of Sanfu's original integrated stores (nearly 20 were initially completed in 2023), e-commerce, professional channels, etc., to further enhance brand influence and break the circle.
Domestic joint venture brand Klattermusen Mountain Climber, exclusive agent for outdoor professional footwear CRISPi + Nordic outdoor aesthetics Houdini, etc. are expected to contribute to the increase. 1) Mountain Climber is a Swedish high-end hiking outdoor brand, focusing on mountain wear. Since 2018, the company's general agent, a joint venture was established at the end of 2023 (the company holds 40% of the shares) and began joint venture operation in 2024, with 23H1 revenue of 40 million yuan/ +300%; 2) CRISPI: Obtained exclusive agency rights for CRISPI (Italian high-end casual hiking shoe brand, focusing on comfort and zero run-in) in China in 2023; 3) Houdini: obtained in July 2023 Exclusive agency rights for Houdini (Nordic outdoor aesthetic brand) in China.
Profit forecast: The company's revenue for 2023-2025 is expected to be 8.0, 11.6 billion yuan, and 1.54 billion yuan, +42.5%, +32.7% year-on-year, and net profit to mother of 0.29, 0.62, and 93 million yuan, +188.6%, +111.6%, and +49.0% year-on-year, corresponding to 24-25 PE of 35X and 24X, covered for the first time, giving a “buy” rating.
Risk warning:
1) Risk that the X-BIONIC brand operation falls short of expectations: The X-BIONIC brand developed well in 2022, and the brand's technological and functional advantages helped the brand grow rapidly. However, as a new brand, it still takes a long time to improve the product structure, expand brand awareness, and expand sales channels. At the same time, in the face of multi-brand competition in the market, there is a risk that operations will fall short of expectations. The X-BIONIC brand accounts for about 30% of the company's revenue. If the X-BIONIC brand revenue is -5%, -10%, or -20% year-on-year, it may cause the company's overall revenue to decline by -1.5%, -3%, and -6%.
2) Consumer demand falls short of expectations: The current business environment and supply chain in domestic and foreign markets will also face uncertainty, causing uncertainty in achieving the company's production and operation goals.