Nine Herding King: Product Line And Channel

What kind of company should be chosen to invest in the textile and garment industry? The answer may be the men's clothing brand.

From the recent market performance, men's clothing brand related listed companies in the entire clothing sector's trend is quite strong, far more than other types of clothing enterprises.

Among them, the recent listing of the nine Mu Wang (601566) trend is also commendable.

The company landed on the main board market in May 30th. The opening price on the first day of the listing was 21.30 yuan.

The stock price has been strong for some time, and as of July 15th, it closed 22.17 yuan, up 16% from 19.01 yuan in June 20th.

"In the clothing sector, I am most optimistic about men's clothing companies, mainly because compared with other fields, the competition in men's clothing market is not so intense, and the gross profit margin is higher."

Chen Jun, deputy general manager and chief investment officer of Shanghai silver sand Venture Capital Co., Ltd.

In fact, compared with other men's clothing listed companies, nine Mu Wang has obvious advantages in terms of gross profit margin, net interest rate and other related indicators of profitability. So how should we view the investment value of the company at the present time?

Vertical integration mode

It is understood that the company is the leading business casual men's wear brand business, with men's trousers and

"Compared with the listed counterparts, the company's direct investment and asset proportion are at a relatively high level."

Oriental Securities analyst Shi Hongmei believes.

It is understood that the "vertical integration" mode is adopted by the nine herding kings, which covers all aspects of men's product design and development, production, marketing, promotion and retailing. The products are mainly self-made, and the processing and production are supplemented.

In China, many garment brands, such as Smith Barney, Semir, and so on, all adopt the light assets operation mode, which mainly focuses on design, brand and other links.

The "vertical integration" mode of nine Mu Wang is unique in the A share brand clothing enterprises.

"Nine Mu Wang's business model integrates brand promotion, R & D, production and sales as a whole. It has a strong initiative in production design and channels, and can effectively enhance the company's ability to resist risks, even if it does.

GF Securities (000776, stock bar) analyst Ma Tao also believes that business vertical integration business model brings high value-added supply chain, making the king of nine farmers in the price increase at the same time can effectively control the rise of product costs, to ensure that the main business gross margin effectively improved.

Prospectus shows that in the past three years, the company's consolidated gross profit margin has increased steadily, and in 2008 ~2010 was 47.34%, 47.9% and 55.56% respectively.

In addition, analysts believe that the future growth point of the company lies in the extension of product lines, and on the other hand, the expansion of channels.

2010 data show that the company

"The company will extend to T-shirts, shirts and other related product lines in the future, and these products are expected to become a new profit growth point for the company in the future."

Ma Tao believes that in the next 3~5 years, the distribution of product categories will become more and more abundant, and the male trousers ratio will gradually decrease to about 30%.

From the perspective of channel expansion, the company will vigorously expand the two or three line market while focusing on the development of exclusive stores in the first tier and second tier cities.

By the end of 2010, the company had 645 self operated terminals and 2065 joined the terminal. In the first half of 2011, the company increased more than 200 retail terminals. It is estimated that in the next 2~3 years, the number of stores will increase to around 500 per year, of which 80% will join the terminal and 20% will be self operated.

The company said that after raising funds, it will invest 1 billion 647 million yuan for endogenous and extension expansion. It is expected to invest 327 million yuan in the supply chain system, design research and development center and information system construction. It will invest 1 billion 320 million yuan to build 338 new stores, and expand the company's strength from two aspects of endogenous and extension.

Profitability leading

It is understood that the company listed on the A share market men's clothing listed companies mainly include 002154.SZ, 002029.SZ, Hinur (002485) and Busen shares (002569).

"The profitability of the company is at a higher level in the industry. Its gross profit and net interest rates are higher than those of other listed companies in the industry. This is mainly due to the vertical integrated operation mode established under the efficient supply chain management, so that the company can fully share the profits in all aspects of the whole industry chain."

Shi Hongmei thinks.

In addition, she believes that the higher proportion of direct battalion makes the company's consolidated gross profit margin obviously higher than that of its peers. If the proportion of the direct operating battalion is relatively high, the rate of cost control during the control period will ensure that the company obtains a net interest rate that is obviously better than that of its peers.

Gross profit margin in 2010 showed that the gross profit margin of nine Mu Wang was 55.56%, while the gross profit margin of the 4 companies in the same period was 54.19%, 41.60%, 27.87% and 41.60% respectively.

From the same period net interest rate indicators, the company is also better.

The index in 2010 was 21.52%, and the above 4 companies were 19.29%, 13.15%, 14.32% and 7.85% respectively.

{page_break}

In addition, the company's ability to operate is superior to other companies. In 2010, the receivables turnover rate of the company was 19.85%, and the other 4 companies mentioned above were 6.51%, 7.8%, 14.54% and 6.88% respectively.

Analysts believe that this is mainly due to the company's use of "to the delivery" marketing strategy for franchisees, and for most shopping malls, monthly accounts receivable account for a relatively small proportion, so accounts receivable turnover rate is higher.

It is worth mentioning that, with the expansion of the company's sales terminals and sales activities, the company's sales expenses have also increased correspondingly.

The period cost ratios for 2008~2010 were 28.94%, 29.16% and 29.6% respectively.

The pressure of lifting the ban is not small.

"The company's recent market performance is good, more than the performance of many garment companies, but compared with the textile and garment sector, such as Lu Tai A (000726.SZ) and other companies, the price earnings ratio of the nine Mu Wang is still high.

In addition, as a newly listed company, the stock price of the company will still face considerable pressure on the lifting of the restricted shares in the future. Investors should take precautions against the risks.

Some industry insiders said.

Public information shows that the lifting time of the first batch of restricted shares of nine Mu Wang was August 30th, and the stock type was the first placing agency, and the number of shares lifted was 24 million shares, which accounted for 4.19% of the total share capital.

As of July 13th, a total of 49 agencies made a forecast of the performance of 2011 year old Mu Wang, with an average forecast net profit of 496 million yuan, an increase of 37.54% over the previous year. The average forecast earnings per share were 0.87 yuan, the highest was 1.20 yuan, and the lowest was 0.81 yuan.

Shi Hongmei believes that from the perspective of brand positioning and growth, the most comparable companies are seven wolves and wedding birds. Taking into account the texture of three companies and the compound growth rate of earnings in the next three years and other factors, it is more reasonable for the company to 25~30 times PE in 2011, and the corresponding reasonable price range is 21.25 yuan ~25.50 yuan.