American Apparel: Inventory Cleaning Is About To Be Completed.

< p > inventory is coming to an end, and stock structure tends to be reasonable.

In 11 years, the company cleared inventory through channels such as electricity suppliers and discount stores. The stock size dropped from 3 billion 200 million of 11Q1 to 1 billion 900 million of 13Q1, and the turnover days dropped from 229 days of 11Q1 to 141 days of 13Q1. It is estimated that inventory will drop to 17-18 billion by the end of 13.

New products account for about 2/3 in one year. The company adopts the integration mode of new and old products, effectively promoting the digestion of old products and the sale of new products.

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< p > "product is king" is in line with the trend of the industry. The diversified channel structure has taken shape.

(1) products: domestic a target= "_blank" href= "http://www.91se91.com/" > clothing < /a > enterprises at the early stage of development, with the help of fast track expansion of horse race enclosure, recently, enterprises such as a href= "http://www.91se91.com/news/index_f.asp", "seven wolves", "/a", "a", "Semir" and "etc." have entered the stage of product adjustment. The United States attaches great importance to product research and development, and its products are superior to other brands of leisure wear, and has formed a distinct brand segmentation market. The product design and development will be divided according to the temperature zone in the future. At the same time, the "experiential" shopping mode will be implemented in the three quarter, and the service will be improved to enhance consumer recognition and brand influence.

(2) channel: this year, the loss of stores is expected to have a positive impact on profits. Future Ltd plans to enter the shopping center format.

The diversified channel structure of the company has already taken shape: A. direct battalion: the direct battalion occupies a high proportion (about 45% of revenue), which makes the policy implementation rate higher; B. accession: there are more than 1000 franchisees at present, the level is flat, which makes the product adjustment easy to implement; C. e-commerce: it has the self built platform "state purchase network", and at the same time, it builds up the whole channel brand flagship store on the three platform of Tmall to digest the seasonal stock.

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< p > 13 years, the new management team is basically in place. It is estimated that the equity incentive plan will be launched later.

The organizational structure of the company is pformed from the vertical brand division to the horizontal functional management, which is conducive to the centralized resource control cost.

Since last year, a number of top executives with multinational backgrounds have been introduced, including director of supply chain management, human resources director, and interior design director.

For example, Mr. Lin Haizhou (served as deputy director of product supply department of P & G Greater China, 18 years' experience in foreign enterprises) focused on supply chain integration management of MB and MC.

The company is expected to introduce new business executives later, and 13 years of management change will be basically completed.

We believe that executives have played an important role in the growth stage of the company. The addition of fresh blood is conducive to the expansion of the company's international vision and the enrichment and improvement of business philosophy.

It is estimated that the equity incentive plan will be launched in 13 years, and it is believed that the new high managers want to use the "three fires" to enhance the company's profitability to prove their self worth.

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< p > 2013Q4 performance is expected to be reversed, and its valuation is obviously underestimated by peers.

At present, the market value of Semir is 15 billion 500 million, the United States is 10 billion 900 million; in 13, Semir PE is 19.5 times, PS is 2 times, < a href= "http://www.91se91.com/news/index_f.asp" > "/a" PE is 14.5 times, PS is only 1 times, and the structure of Smith Barney is better than Semir, but the valuation is obviously lower than that of peers.

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< p > with the launch of management team and equity incentive, considering the low 2012Q4 base of the company, the performance has already taken a big bath. The company's 2013Q4 performance is expected to increase significantly, and it is expected to improve in 2014.

It is estimated that the EPS will be 0.75/1.00/1.20 yuan in 13-15 years (the original forecast is 0.80/0.90/1.04 yuan), corresponding to PE is 14.5/10.9/9.1 times, and the target price of half year is 14 yuan, with a 30% rising space to maintain the increase.

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< p > risk hint: terminal sales are sluggish, and the performance of China Daily is still under great pressure. Net profit is expected to drop by nearly 50%.

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< p > catalyst: equity incentive plan is launched; 13Q4 performance is expected to turn sharply, and 14 years have exceeded expectations.

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