Card Slave Road: Counter Trend Expansion Brings Three Quarter Bright Results, Operating Cash Flow Dropped 500.81% Over The Same Period Last Year.

Macroeconomic downturn

Industry growth is slow.

This year, the high-end menswear production enterprise landing on small and medium-sized boards has achieved high growth.

The company reported net profit growth of 61.8% over the first three quarters, which is clearly better than expected by the market.

Starting from the end of September, there was a wave of rising prices on the card road, but this week adjusted continuously.

In October 26th, canal NDI road closed 37.93 yuan, a 7.49% decline in a week.

In fact,

While rapid expansion has brought about high growth, accounts receivable and inventories all appear at a high level, showing that business efficiency has declined.

So how do we look at the investment value of the card slave road?

Low base three quarter revenue exceeded expectations

Three quarterly report shows that the company achieved 1~9 operating income of 395 million yuan, an increase of 38% over the same period last year, and the net profit of shareholders attributable to listed companies was 93 million 330 thousand yuan, up 61.8% over the same period last year, and the earnings per share were 0.93 yuan, slightly exceeding the expected growth rate of 40%~60% in the company's daily report.

Among them, the company achieved 109 million yuan in the third quarter of the single quarter, an increase of 68.1% over the same period, and a net profit of 16 million 400 thousand yuan, an increase of 136% over the same period last year.

"The first three quarters of the year grew well, which was related to the high-end positioning of the card slave road.

We see a lot of textile and garment enterprises facing the low-end market, such as inventory increase, gross profit decrease and so on, while the enterprises facing high-end market have performed well, and this field is in the initial stage for our country.

Liu Fei, partner of management consulting, said Mr.

He believes that the card slave road is an extension of the extension mode, the expansion of the backdoor store expansion, a large number of new stores to promote the growth of performance, especially the rapid development of franchisees, the book growth may be higher than the actual sales growth of the terminal.

According to the introduction, the low base last year is the main reason for the company's single quarterly revenue exceeding expected growth.

In the third quarter of last year, the company's single quarter revenue was only 64 million 880 thousand yuan.

In addition, the expansion of channel is also the main reason for the company's revenue growth.

By the end of the three quarter, there were 89 to 497 stores, including 54 outlets and 35 stores.

In addition, the company expects 2012 annual attributable to shareholders of listed companies net profit increased by 40%~60%.

Data show that the company's single quarter revenue in the fourth quarter of last year is the highest in the year. Therefore, analysts expect the fourth quarter of this year due to a higher base in the same period last year, so the growth rate may not be as fast as the three quarter.

The company positioning high-end men's clothing, gross margin has always been higher, the first three quarters of this year, the gross profit margin of the company increased 4.47 percentage points to 67.43% over the same period last year. In the quarter, the gross profit margin of the third quarter of the company was as high as 70.07%.

"In the next three to five years, terminal expansion is still the main driving force for the growth of the company's performance, but the growth will slow down gradually, and the gross profit margin will decline as a result of the expansion of the cost growth and the possible reduction of the price range."

Liu Fei thinks this is a chain.

The general rule of industry development.

Operating cash flow fell by 500.81% over the same period last year.

From the company's three quarterly report, the most obvious addition to the high net profit growth, we can also see that the company's operating cash flow has a sharp decline of 500.81% over the same period.

The company said that this is mainly due to the expansion of the company's business scale, the increase of shops, resulting in an increase in stocking costs and operating expenses, as well as a company's adjustment to the franchisee's credit policy, the increase of credit lines and the extension of credit period, and the decrease in cash flow from business activities.

In addition, the same is true.

The credit policy has been adjusted, and the accounts receivable increased by 108.06% at the end of the third quarter compared with the end of last year.

The company's inventories also increased by 73.15% compared with the end of last year.

According to Wind statistics, the days of accounts receivable in 2009, 2010 and 2011 were 24.02 days, 23.1 days and 27.58 days respectively. The number of accounts receivable rose to 31.42 days and 39.21 days in the first quarter of this year and 31.42 in the first half of this year.

From 2009~2011, the number of days of inventory turnover was 257.42 days, 257.94 days and 261.8 days respectively. The first quarter and the first half of this year were 242.85 days and 284.72 days respectively. Basically, they maintained a steady trend. But in the first three quarters of this year, the index jumped to 419.45 days. It is obvious that the company needs more than a year to digest its stock.

"The listing of companies provides support for the adjustment of dealer credit policies, which is conducive to the continuous rapid expansion of distributors' stores. However, this is a double-edged sword, which can leverage leverage to the maximum and rapidly expand business expansion, but if it is not well utilized, it may lead to backlog of channel inventory, loss of bad debts, increased financial costs and tight capital chain, which will cause damage to the normal operation of enterprises."

Liu Fei thinks.

Zhu Qinghua, a light industry researcher at CIC, said that this approach is a very effective strategy for the current situation. As the macroeconomic situation is low and the cost of franchisees is relatively tight, the company's adoption of the credit policy of franchisees can relieve the pressure of franchisees' repayment and promote the enthusiasm of franchisees.

The main risk is that the capital chain may break and drag the company's overall operation.

Watch out for high inventory traps

In fact, the fast and slow expansion of brand clothing chain enterprises is not easy to grasp.

We have been exposed to problems such as inventory.

"Despite the rapid expansion of American Apparel before 2008,

And inventory turnover did not encounter great problems. The recent inventory problem in Smith Barney clothing was the result of the radical expansion of the company from 2008 to 2011, especially the inventory of self owned stores, which accounted for a large part of the state's apparel inventory and dragged down the company's performance.

Liu Fei believes that in contrast, the card slave road is growing at a high speed and has a large market space. A second tier city is leading the pformation of consumer demand, which will accommodate the expansion scale of more than 100 stores every year. There will be no problem with the expansion of the scale.

But at the same time, he also believes that the problems of the enterprises such as Smith Barney have certain reference significance to the card slave road.

The development of the industry has a cycle, and from the growing stage to the mature stage, these common problems are bound to emerge.

Zhu Qinghua said that the American barrack dress can provide reference for the card slave road. In the early expansion stage, the credit adjustment strategy can bring more obvious benefits to the company, but in the later stage, if the risk erupts, it will cause serious obstacles to the company.

The card slave road can summarize the experience of American bond dress, and make appropriate strategy adjustment so as to minimize the risk of the company and avoid repeating the high failure of American state stock.

"Brand chain enterprises like card road road, after listing, raise funds to open stores quickly, and their performance can be improved in a short time.

Such enterprises can often confirm the income of the franchisees, but there is still some uncertainty about whether they are sold to consumers in the end.

Therefore, we need to carefully observe such enterprises.

A private person in Shanghai said.