Transition path to platform merchants: relying on the original strong direct retail system, core brands gradually open to join, helping designers to expand the S2B2C model, increase the proportion of consignment products, and the speed of store opening is expected to accelerate. The company transformed from a manufacturer to a retailer in 2002 and to a brand in 2014. At present, the company is gradually transformed from a retail brand to a platform. In 2019, the company's direct business revenue reached 3.653 billion yuan, accounting for 66%, and has 120000 + members, accumulated a large number of consumers, with more potential consumer base is the basis of the transformation of Taiwan businessmen. In the future, the company's core brands will gradually open up to join, expand designers to stay in stores and other new forms, and increase the display and sales of accessories products, take advantage of omni-channel digital advantages, and promote the transformation of omni-channel platform, which can reduce the cost of single-store display. The speed of store opening is expected to accelerate, which will help the company to grow into the fast lane.
Divest the loss-making business and brand, highlight the core category, and the net profit margin is expected to improve. The company currently has 7 domestic channel brands and 4 international wholesale brands, the company implements multi-brand strategy, focusing on the large-scale development of core brands. According to the company's annual report in 2019, the company will downsize its business in the future, dispose of idle, non-performing and inefficient assets, and reduce domestic loss-making brands and loss-making businesses. This will greatly concentrate the company's resources to develop core brands and improve operational efficiency. At the same time, the light-asset store expansion model, which is similar to the direct operation mode, will help to optimize the inventory cost and improve the operational efficiency of the store.
It is estimated that the performance for 20-22 years is 0.17 yuan per share, 0.30 yuan and 0.36 yuan per share respectively. We expect the company to achieve revenue of 52.06,66.30 and 7.896 billion yuan respectively from 2020 to 2022, with year-on-year changes of-6.8%, 27.4% and 19.1% respectively, and net profit of 2.92,5.23 and 639 million yuan, respectively, with year-on-year changes of-37.1%, 79.2% and 22.1%, respectively. Combined with the historical valuation of the company and the comparable valuation level of the same industry, the company is given a 2021 22xPE valuation, corresponding to a reasonable value of 6.6 yuan per share, maintaining "buy".
Rating.
Risk tips. The opening speed is not as fast as expected, the competition in the industry is intensified, and the mode transformation is not as expected.
