AOKANG Expects The 2015 Performance To Reverse The "International Platform"

Recently, AOKANG has made great efforts to support the franchising system by using the capital raised after listing, exploring the direct battalion mode, and building a large professional shop against the trend.

Mainly engaged in the research and development, production, distribution and retail of men and women footwear industry, with AOKANG, Kanglong, red Firebird, beautiful beauty, VALLEVRDE (Wanli Wei) and other brands. The company has risen rapidly in the franchise mode. In recent years, efforts have been made to strengthen the construction of direct channel, in order to meet the needs of platform based terminals due to changes in consumption patterns, clear brand positioning and leading brand planning and promotion capabilities, so that the company will continue to maintain high popularity and reputation in the same industry.

The management of the company has a long-term vision of building a century brand. It has been deeply caring for the brand image and has been deeply recognized in the marketing system. The distributor has a strong sense of belonging to the company. After the successful listing in 2012, the strong willingness of the distributor and the company to develop together, the company's input in brand awareness, the attempt to build a large store, the development of leather goods business, and the exploration of the international brand agency business have strengthened the confidence of the distributor and the company in winning cooperation. Since the second half of 2012, the company has helped dealers adjust the terminal stores and share difficulties with the distribution system, thus further consolidating the stability of the distribution system.

Building an International Pavilion is built

Mode, the International Pavilion has been integrated and upgraded in the aspects of brand configuration, product display, service mode and so on. It provides consumers with more fashionable and more specific shopping environment. The International Pavilion integrates multiple brands in one pavilion to meet the one-stop shopping experience of consumers. Apart from its own brand AOKANG, Kanglong, red fire bird, beautiful beauty, VALLEVRDE (Wanli Wei), it also introduces famous international brands such as MARTINELLI (Martina Ali) and many other international brands from Spain, Italy and Britain to meet the diverse needs of different levels of consumer groups.

Through the International Pavilion, a number of brands will be gathered to satisfy consumers' one-stop shopping and experiential consumption while extending the influence of the dominant brand to other sub brands and agency brands. The more prominent shopping experience highlights the competitive advantage of the company, and also promotes the sub market that has not yet reached maturity to expand the market segments of the International Pavilion, and enhance the company's share in the regional market at the end of the relatively simple consumption of the terminal.

In addition, the business model of the International Pavilion can effectively reduce the rental cost per unit area and enhance the profitability of the company.

The International Pavilion is of strategic location.

We have built more than 170 international pavilions. We expect nearly half of the international pavilions to be profitable after more than 1 years of operation.

For shoes and clothing brands, shops are the core strategic resources that determine the fate of enterprises. The traditional chain stores are becoming narrower and narrower.

According to Swiss bank statistics, China has surpassed the United States and become the largest consumer of footwear. However, 99% of the domestic consumption of about 2000000000 pairs per year is independent production. Over the next ten years, overcapacity and individualized consumption demand will lead to more competitive competition in the domestic footwear retail industry.

There are more qualitative changes in the growth of domestic consumers' demand for shoes. Consumer demand has become more diversified, individualized and obviously class oriented. At the same time, a comprehensive demand for specialization, facilitation, comfort and entertainment has been put forward for the shopping environment. The traditional chain stores are becoming narrower and narrower.

1. single store traffic is difficult to upgrade: under the traditional store mode, brands are accustomed to opening more brand stores in the same shopping area to win the scale, but the same shopping place has a certain passenger flow. Effective passenger flow should eliminate repeated entry trips, and most of the shops have overlapping.

2. product and price homogenization: after the consumption demand tends to be fallow, demand for men's casual shoes is increasing. All major brands are investing more in leisure shoes, and products tend to be homogeneous in similar design directions.

In order to expand the share of men's casual shoes, brands also began to lengthen the product line quickly, lengthen the retail price between 300 yuan -1500 yuan, and then sell goods with a discount of 500 yuan or so.

Regardless of lengthening the product line or expanding the price line, enterprises are not aiming at meeting the needs of differentiated market segmentation, but rather increasing the brand and exporting more styles.

Large professional shops are the trend, and at the same time meet the needs of brand differentiation, brand competition, efficient market strategic layout and single store sales.

Large scale specialty stores have obviously won the store scale, store image and commodity choice. What's more, its single store capacity, cost control, management cost and management depth are more prominent than those of chain stores that are won by scale, and also conform to the competition rules of future retail formats.

There are two forms of multi brand professional shops: 1., multi industry brand expansion, that is, a large cross shop store with multiple brands, such as Nike's product line from sports shoes to sportswear, to sports accessories and sports equipment; while strengthening the original brand, breaking the trade barrier with the existing brand awareness, entering the market of leather goods, clothing and so on, and sharing the consumer group.

2. multi brand market development, that is, one product, multi brand professional shops, intensive cultivation; multi brand positioning in pursuit of differences among different brands of similar products, including functions, packaging, publicity, etc., forming the distinct personality of each brand.

In the fierce competition of the terminal, only when different brands are positioned in the market segments with large differences, each brand will have its own development space and the market will not overlap.

Mode change is not a change in brand or marketing details. Large professional shops are not simply expanding the shop area, decorating luxury, and more brand shoes. Any change of mode involves many aspects of the enterprise's changes. The one product multi card professional store mode needs a reasonable enterprise operation management system to support it. Only in this way can the resource waste and information shielding phenomenon of the multi brand between the simple branch management system be eliminated, and the fine management and professional operation can be truly achieved. At the same time, the effects of differentiated brand competition, efficient market strategic layout and single store sales force can be achieved.

Consumption dull, electricity supplier shocks, counter trend expansion, the company began to slow down and decline since 2011. In the 1 quarter of 2014, the growth of revenue and net profit reached cyclical bottom respectively. The decline of revenue side began to narrow in the 2 and 3 quarters of 2014.

We selected the comparable leading companies, including seven wolves, Luo Lai home textiles and Semir clothing, in the A share market. The enterprises are facing similar shocks. The adjustment steps are roughly similar. But considering the different strategic choices of different companies, the fluctuation rhythm of performance is slightly different.

The company has been vigorously supporting franchisees and increasing sales promotion efforts. Since 2011, the turnover rate of accounts receivable has decreased significantly, and the gross margin level has decreased significantly.

According to research feedback, consumption is flat, but it has passed the most sluggish period. The impact of e-commerce on offline entities has also normalized. It is expected that the company's income level will show natural growth after light load in 2015. The company's profits will slide in 2013 and 2014 after two consecutive years. With the gradual increase of the gross margin level in 2015, the performance will probably reverse.

Earnings forecasts and investment proposals.

The company's production base for virgin shoes, Wenzhou, has prominent industrial supporting advantages. The current self owned production capacity can guarantee the quality of the company's products. At the same time, when the product advantages are prominent, the company uses funds to counter the situation to build large specialized shops. We believe that the company's investment in large specialized shops conforms to the future development trend. From a commercial point of view, the long-term strategic investment of the company may bring about a higher cost rate in the short run, but the advantages of the company's sound management can provide certain guarantee for the success of the pformation.

As a platform mode, the International Pavilion will provide a strong guarantee for the company's steady growth in the future. We are optimistic about the company's future accumulation in the multi brand operation and store efficiency promotion. It is estimated that the net profit attributable to the parent company in the 2014-16 years is 2.28, 3.03, and 372 million yuan respectively, with the increase of -16.97%, 32.89%, and 22.79%, corresponding to EPS respectively 0.57 yuan, 0.75 yuan, 0.93 yuan. Taking into account the comparable PE range of the company in the 15x-45x interval, it gives the company 2015 30xPE, corresponding to the target price 22.64 yuan, and raised to the buying rating.