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九牧王(601566):业绩符合预期 战略聚焦头部及大众价位产品

King Jiumu (601566): Performance is in line with expectations; Strategy focuses on leading and popular price products

中金公司 ·  Sep 2

1H24 results are in line with our expectations

The company announced 1H24 results: revenue of 1.576 billion yuan, +12.50% year on year; net profit to mother 0.05 billion yuan, -45.88% year on year; deducted non-net profit of 0.128 billion yuan, -7.28% year over year. Among them, 2Q24 revenue was 0.636 billion yuan, +1.18% year-on-year; net profit attributable to mother was 0.058 billion yuan, after deducting non-net profit - 0.071 billion yuan. The gap between deduction and return of funds is mainly due to changes in fair value brought about by financial assets. The company's overall performance was in line with our previous expectations.

The main brand has grown steadily, and some franchised stores have switched to direct management. By brand, 1H24's main brand Jiumuwang/FUN/ZIOZIA's revenue was +15.0%/-10.2%/-2.5% to 1.43/0.06/0.06 billion yuan, and the number of stores was -14 home/-18 home/-3 to 2,183 home/76 home/92 compared to the beginning of the year, respectively. Among them, 2Q24 main brand revenue was +3.2% year-on-year. By channel, 1H24 direct/franchise/online channels were +34.7%/-0.5%/-8.5% to 0.76/0.59/0.15 billion yuan, respectively. The number of direct-managed/franchised stores was +10 home/-45 to 801 home/1,550 compared to the beginning of the year, mainly because the company switched some franchised stores to direct management.

Discount control drives up gross margin, and investment income affects net profit. 1H24's gross margin was +2.4ppt to 66.1% year-on-year, mainly due to the company's strict control of terminal discounts and increasing the proportion of direct operations. In terms of expenses, the 1H24 sales expense ratio was +7.2ppt to 41.6% year over year, mainly due to advertising and business promotion expenses of +40.35 million yuan year over year to target consumers of different age groups; management/R&D expenses were relatively stable, with -2.9pp/ -0.1ppt to 6.2%/1.5%, respectively. Furthermore, the 1H24 fair value change was -0.028 billion yuan year over year. Overall, 1H24 net profit margin was -3.4ppt to 3.2% year on year, after deducting non-net interest rate -1.7ppt to 8.1% year over year. In terms of operations, as of 1H24, inventory was +6.4% year over year to 0.834 billion yuan, and the number of inventory turnover days was +13 days to 299 days year over year. 1H24 net cash flow from operating activities was -79.3% YoY to 0.05 billion yuan.

Development trends

On the product side, the company plans to: 1) continue to focus on top products. We estimate that 1H24 “five pants” account for 29% of total pants sales; 2) strengthen the matching of pants and tops; 3) increase popular price products to meet rational consumption trends. In terms of channels, the company actively promotes urban Ole and new franchise models to cope with complex retail environments.

Profit forecasting and valuation

Considering the pressure on the terminal retail environment, we lowered our 2024/25 profit forecast by 32%/33% to 0.23/0.32 billion yuan. The current stock price corresponds to 2024/25 18x/13xP/E. Considering that the company's main business is still resilient, it maintains an outperforming industry rating. Considering the correction in the industry's valuation center, we adjusted the target price from 13.10 yuan to 8.91 yuan, corresponding to 23x/16x P/E in 2024/25, corresponding to the 2024/25 deduction of non-net profit 19x/16x P/E, with 25% upside compared to the current stock price.

risks

Terminal demand has recovered less than expected, marketing investment has exceeded expectations, and there is a risk of loss of investment.

The translation is provided by third-party software.


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