Report Birds: Extension Expansion Drives Revenue Growth

A quarterly performance exceeded expectations. The birds announced a quarterly report in 2012, operating income grew 57.7% to 553 million yuan over the same period, and net profit increased 46.7% to 53 million yuan, corresponding to earnings per share of 0.09 yuan, higher than expected.

Extension and expansion drive high income growth.

In 2011, the number of news birds and St. Roma stores increased by 25%, and the total sales area increased by 46%. This is the main reason for the growth of 1Q12 revenue.

The cost of sales fell by 2.9 percentage points.

In 2012, the company planned to control the total cost of the total fees, adjust the cost structure, and control advertising expenditure.

The basic wage increase of employees has decreased, and the ratio of bonus to performance has been increased.

Impairment of assets and interest expense reduce operating profit rate.

With the substantial increase in revenues and increased support for franchisees, the balance of inventory and accounts receivable at the end of 1Q12 increased substantially compared with the end of 1Q11, and the loss of asset impairment increased correspondingly. The 600 million yuan debt issued last year significantly increased the interest expense of the current period.

Operating cash flow net outflow of 33 million yuan.

Increasing the credit sale amount of franchisees makes the rate of return slower than the income growth rate, and at the same time, wages and taxes and fees are greatly increased.

The trend of development needs to pay attention to the problem that the growth rate of delivery is faster than that of terminal retail.

The revenue of 4Q11 and 1Q12 increased by 91% and 58% respectively, but the 1Q12 terminal sales growth rate was more than 20%. If 2Q12 terminal retail did not improve significantly, the inventory and sales rate in spring and summer would be reduced.

The company allows partial returns, and the estimated returns have already calculated the estimated liabilities and reduced the cost of the current delivery cost. If the returned inventory is cleaned up through Oteri J and other channels, it may reduce the profit margin.

If the actual return exceeds the original estimate, it is necessary to reduce the current income.

If the actual returns do not exceed the original estimate, there will be a backlog in the channel, which may affect the order next spring and summer.

The order will be controlled in the autumn and winter of 2012, and the order amount will increase by 25%.

Annual revenue growth is expected to be around 30%.

Earnings forecast adjustment: maintain profit forecast unchanged, 2012/13 earnings per share were 0.80/1.02 yuan.

Valuation and suggestion: the current stock price corresponds to 2012/13's P / E ratio of 15.1 and 11.9 times respectively, valuations are not high, and prudent recommendation is maintained.