Bosideng International Steady Performance In 2011

　　 Bosideng The annual performance as at March 31, 2011 was released. Revenue rose 22.7% to 7 billion 38 million yuan, which is higher than our expected 3%, mainly from Down Jackets Strong growth in business led to a year-on-year rise of net profit of 18.3% to 1 billion 276 million yuan and earnings per share of 0.16 yuan, which is 5% lower than we expected, mainly due to a larger decline in gross margin. The company proposes to send a final interest of 0.068 yuan per share. Taking into account the merger and acquisition of item company in the coming years, the company also announced a special interest rate of RMB 0.06 yuan per share, with a dividend payment of 0.193 yuan and a dividend payout rate of 118%.

　　 brand Down garment business is still the largest source of revenue for the company, accounting for 80.7% of the total revenue, the rest 10.7% and 8.4% of the revenue comes from outsourcing business and non down garment business, three business increased by 21.1% annually, 18.8% and 46.5% to RMB 5 billion 678 million yuan, 769 million yuan and 585 million yuan respectively. The growth of the brand down garment business is expected to drive the overall sales growth, which is mainly driven by the price increase and the flexible adjustment strategy in the peak season. However, due to the increase of raw material prices and outsourcing costs, the cost of down garment business increased by 28% in 2011, while the average selling price increased by only 18.8%, making the down rate of gross wear down 3.7 percentage points to 50.4%, dragging down the gross gross margin by 3.4 percentage points to 46.9%, partially offset the increase in sales and the decrease in sales and administrative expenses, resulting in a decrease of 1.5 percentage points and 0.7 percentage points to 19.5% and 18.1% respectively in operating profit margins and net interest rates.

Operating in 2011 cash flow A sharp decrease of 97% to 49 million 500 thousand yuan was mainly due to the increase in the amount of advance payments made by suppliers in order to obtain more favorable prices and to stabilize the supply of raw materials. It is estimated that the advance payment can reduce the total cost of the 2012 fiscal year by 0.5% or 150 million yuan, which is conducive to the improvement of gross margin in the future. Overall, the company's financial position is still healthy, net cash amounted to 3 billion 478 million yuan, similar to last year. During the period, inventories increased by 41% annually, of which raw material reserves doubled, and finished products increased by 30%, mainly due to the increase in the price of down garments by about 20%. If calculated according to inventories and the 2010 fiscal year, the inventory turnover days could be reduced by 8 days. We believe that with the implementation of the order system, the inventory level of the company will be improved significantly in the next few years.

In the future, the company will continue to give full play to its brand advantages and integrate its brand positioning, design, research and development and sales channels. By the end of March 2011, the total number of down and down clothing stores reached 7579 and 1856, with a net increase of 1959 and 1097. In terms of down garments, the company will continue to integrate and optimize sales channels, eliminate dealers and shops that are not performing well, increase the number of self operated stores, and open large flagship stores in major cities. In addition, we are also optimistic about the prospect of Bosideng's online sales. In the 2011 fiscal year, the revenue from online sales reached RMB 110 million yuan, increasing by 2.2 times annually. The company adopts the network channel joining system, cooperates with many well-known e-commerce websites, and launches 40-50 exclusive styles on the online sales platform. We believe that the company can benefit from the rapid development of online shopping and further expand sales channels.

Non - down clothing will accelerate the expansion of sales network, especially men's clothing, will set up more proprietary stores and first class agents. In fiscal year 2011, the number of men's clothing shops in Bosideng was 979 (95 self operated, 159 franchised and 725 dealers), with a net increase of 200 in the year. The company plans to open at least 110 stores in the first half of the 2012 fiscal year, bringing the total number of men's clothing shops to 1100. Based on orders of 47% and 36% in spring, summer, autumn and winter in 2011, which accounted for about 80% of the total orders of men's clothing, the rest is a supplement. We believe that Bosteng men's clothing will remain one of the main driving forces of the company.

As for other non down garment brands, the company will set up shop in Beijing, Shanghai, Hangzhou, Tianjin and Chongqing respectively, and set up more than 300 independent shops or stores in the next two years. Bosideng RICCI dress, located in a 20-40 year old city woman, will open 80 stores in eastern China in fiscal year 2012, and plan to cover the whole country in the next 3 years. However, we believe that the sales of these two brands and the early acquisitions of Rambo children's clothing are still small, making it difficult to make substantial contributions to the performance of the 2012 fiscal year.

We set the target price at 3.10 yuan, equivalent to 14 times the expected price earnings ratio in 2012. We have conservatively predicted that the composite growth rate of EPS will be 10% in the next 3 years, because the down season business still accounts for 80% of the total revenue, and not the down business is still in the initial stage of investment. Therefore, the growth of the 2012 fiscal year will mainly be driven by price. achievement Or no surprise, strategic transformation and brand mergers and acquisitions can become a driving force for further revaluation of the stock. At present, the stock price is equivalent to 12 times earnings in fiscal year 2012, and the interest rate is 8.6%. Valuations still have some attraction and keep buying.