Jiaxin Silk: Stepping Into The New Silk Road

Event:

The company announced in December 14th that it would change the "silk woven apparel project" in the recruitment project to " Jiaxin silk The domestic brand project will change the 60 million 500 thousand of the proceeds raised by the original project, all of which will be used for the production and sale of the domestic brand clothing. Details of the changes: the establishment of "Zhejiang Jiaxin silk brand clothing branch", which is produced and sold by branch direct marketing and chain affiliate mode. Domestic brand Silk garments are planned to open flagship stores, direct counters and franchised stores in three years. Franchised store A total of 142, of which 5 are flagship stores, 61 are direct counters and exclusive stores, 3 are online sales platforms, and 73 are franchisees.

Viewpoint:

1. the competition pattern of brand home industry is easy to build new brand.

The company's domestic brand "golden three tower" style is "elegant, natural and comfortable fashion", customers positioned in the high-end consumer groups, products positioning for silk household clothing, silk underwear and high-end fashion ladies. From the perspective of the life cycle of subdivision industry, we believe that the brand home apparel industry in China is still in the initial stage of growth, and the competition among brands is not intense. Therefore, although the company lacks experience in brand operation and channel management in the process of transforming the brand business, the disadvantage will be weakened by the fine subdivision of the industry competition.

2. product attributes leading the brand value of home furnishing industry are easy for manufacturers to transform.

The products of the household industry are mainly used in the bedroom. Therefore, the products are very effective in terms of consumer demand such as comfort, warmth and other functions, such as beauty and other traditional requirements, while giving consumers less utility in representing their identities, brands, and expressing their individuality and thoughts. Therefore, we believe that the traditional attributes of the brand evaluation standard of home textile industry occupy a greater weight. As a leading manufacturer of silk products, the company has accumulated many years of experience in international brand foundry, and its advantages in product manufacturing are outstanding. Based on the above logic, we are optimistic about the transformation of the company to the silk theme home dress brand.

3., the progress of brand and channel construction plan is faster.

After the implementation of the project, the company will vigorously develop the domestic direct marketing and franchise mode. In the first tier cities, we will set up direct flagship stores and direct stores and counters, and develop franchisees in the two or three tier cities. The first stage takes Shanghai as the core and radiates East China. The second stage is to radiate North China with Beijing as the core.

The initial plan is to develop its own flagship store to promote the development of special counters and general stores, while developing flagship stores as an image window to develop franchisees. Direct stores and counters were 66 in 2013. The scale of franchisees reached 73 in 2013, and 3 online shops including official sales platforms were set up online.

Shop layout plan in the first 3 years of the construction period: the total number of stores will reach 142 in 3 years, including 2 flagship stores in Shanghai, 1 ordinary outlets, 33 direct outlets, 1 1 flagship stores in Jiaxing, 6 ordinary stores, 3 outlets in East China, 3 stores in Direct stores, and 23 in franchised stores; There are 3 online shops, including official sales platforms.

Conclusion:

1., to enter the brand market is worth looking forward to. Considering the good competition pattern of the brand home industry, the industry characteristics of product attribute leading brand value, and the anticipation of brand and channel construction, we believe that the process of expanding the brand to the market will be more successful than other manufacturers' transformation.

2. profit forecast and investment rating: it is highly recommended that we expect the company's manufacturing sector to contribute EPS to about 0.62 yuan and 0.85 yuan in 10-11 years. It is estimated that the annual growth rate of manufacturing is about 20-25%, giving PE 23 times the price in 2011, corresponding to the stock price of 19.55 yuan. The domestic textile leading domestic household textile is currently worth about 10 billion yuan. The Jiaxin silk target is expected to reach the state in 10 years. Considering the competition pattern of the textile industry and the input of the company's brand building, the discount rate we give 25% is calculated at a reasonable market value of about 1 billion yuan, corresponding to the stock price of about 7.46 yuan. Based on the above analysis, we give the company the first target price of 27 yuan, and give the "highly recommended" investment rating.