CHINA LILANG(1234.HK):GUIDANCE CUT AMID UNCERTAINTIES IN 2H24E
CHINA LILANG(1234.HK):GUIDANCE CUT AMID UNCERTAINTIES IN 2H24E
Maintain BUY but trim TP to HK$ 4.85. We revise down FY24E/ 25E/ 26E net profit by 16%/ 17%/ 16% to factor in: 1) slower-than-expected sales growth, 2) DTC transformation and 3) surge in opex. Our new TP is based on 10x FY24E P/E (unchanged), still supported by 8% sales/ 10% OP CAGR during FY23-26E. The counter is now trading at 9x FY24E P/E but has a highly attractive FY24E yield of 9%.We have now turned rather cautious about China Lilang in 2H24E, due to both macro conditions and company specific reasons like the DTC transformation and the surge in opex. We still maintain a BUY but that was solely due to its attractive yield (9%) and valuation (9x FY24E P/E).
由於宏觀環境和公司自身問題，如DTC轉型和運營支出激增，我們現在對中國利郎在2H24E變得謹慎起來。儘管如此，由於其有吸引力的股息率（9%）和市盈率（9倍FY24E P / E），我們仍然保持買入。
Turned more cautious about 2H24E, even though the Company is still making progress for product and brand upgrades. Management has revised down their FY24E retail sales growth target to 10% (from 15% in the beginning of year), despite some positives like the robust new retail sales growth was at 37% in 1H24E, and in fact the target was actually raised to 30% (up from 20%). We are also kind of cautious about 2H24E, because of: 1) the high base last year, 2) still unclear momentum (retail sales growth was weak during Jun- Jul 2024 but slightly improved in Aug 2024), 3) potentially more DTC transformation (perhaps in the northeastern China and the size could be higher than that in 1H24), which will result in sales and net profit cut, 4) potential slowdown in smart causal sales growth (already slowed down to just 17% in 1H24 from 35% in FY23), 5) cut in net new store openings (from 100 to 200 in FY24E, to just 50 to 100), etc.. Also margin-wise, we do see more uncertainties, such as: 1) the jump in staff numbers and costs in 1H24 may sustain into 2H24E, 2) the surge in D&A expenses may also last, 3) the renovation plan of 400 stores in FY24E is still intact, but costs as % of sales may increase (as the sales came down more than expected).
儘管公司仍在爲產品和品牌升級取得進展，我們對2H24E的態度更加謹慎。管理層已將其FY24E零售銷售增長目標下調至10％（從年初的15％），儘管有一些積極因素，如1H24E強勁的新零售銷售增長爲37％，實際上目標已經提高到30％（從20％） 。我們在對2H24E持謹慎態度，因爲：1）去年同期的基數較高，2）仍然不明確的動力（零售銷售增長在2024年6月至7月期間疲軟，但在2024年8月略有改善），3）可能會進行更多的DTC轉型（可能在中國東北部，規模可能高於1H24），這將導致銷售額和淨利潤下降，4）智能休閒銷售增長可能放緩（已從FY23的35％下降到1H24僅爲17％），5）淨新門店開業數量的削減（從FY24E的100到200，到僅50到100），以此類推。此外，我們還看到更多的邊際不確定性，例如：1）1H24中員工人數和成本的增長趨勢可能會持續到2H24E，2）D&A支出的激增也可能會持續，3）FY24E中400家商店的翻新計劃仍然存在，但銷售佔比可能會增加（由於銷售額下降超出預期）。
The multi-bands strategy has finally released. On top of the 1H24 earnings release, China Lilang has also announced its partnership with Descente (8114 JP, NR) to develop the Munsingwear brand in China by forming a JV which China Lilang will invest RMB 150mn and own 54% stake. China Lilang will also own the trademark of Munsingwear brand in China, with the rights to design, market and distribute products. Munsingwear is a historic golf apparel brand known for its penguin logo, and was founded in the US for over 130 years (while the trademark in Asia was bought by Descente). We do believe the Company's expertise in apparel, supply chain and about the China market will provide a strong boost for Munsingwear in golf wear industry in China, which in turn will also benefit its own growth.
多品牌策略已經正式發佈。除了1H24業績發佈外，中國利郎還宣佈與Descente（8114 JP，NR）合作，通過組建一家JV來開發Munsingwear品牌，中國利郎將投資1.5億元人民幣並擁有54％的股權。中國利郎還將擁有中國Munsingwear品牌的商標，並擁有設計、市場和分銷產品的權利。Munsingwear是一個有着企鵝標誌的歷史高爾夫服裝品牌，在美國已有130多年曆史（而亞洲商標則被Descente購買）。我們相信公司在服裝、供應鏈以及中國市場方面的專業知識將爲Munsingwear在中國高爾夫服裝行業提供強大支持，進而也將有助於其自身的增長。
Maintain BUY but trim TP to HK$ 4.85. We revise down FY24E/ 25E/ 26E net profit by 16%/ 17%/ 16% to factor in: 1) slower-than-expected sales growth, 2) DTC transformation and 3) surge in opex. Our new TP is based on 10x FY24E P/E (unchanged), still supported by 8% sales/ 10% OP CAGR during FY23-26E. The counter is now trading at 9x FY24E P/E but has a highly attractive FY24E yield of 9%.
保持買入，但將目標價調低至4.85港元。我們將FY24E / 25E / 26E淨利潤下調16％/ 17％/ 16％，以考慮：1）增長速度低於預期，2）DTC轉型和3）運營支出的激增。我們的新目標價基於10x FY24E P / E（不變），仍由FY23-26E期間8％的銷售/ 10％的OP CAGR支撐。該股現在正在以9倍FY24E P / E的市盈率交易，但其FY24E收益率非常有吸引力，爲9％。
譯文內容由第三人軟體翻譯。
