Seven Wolf Strategy To Adjust Inventory Brand Quickly

　　 Seven wolves The company's channel adjustment and stocktaking may not be over yet. The company continued to shrink over the past 14 years. We expect a net decrease of about 500 stores throughout the year, with a reduction in the number of 505 stores in 13 years. It is estimated that there will still be a certain degree of closure in the 15 year. In order to reduce the pressure on franchisee stocks, the company increased the inventory recovery and transferred a large number of stocks to the table. Inventory growth in the 14 quarter and the 3 quarter increased by 24.2%, and inventory turnover continued to slow down.

　　 Promoting brand remolding

In the adjustment period, the company promotes brand remolding and upgrading, including 1) product improvement, employing famous international designers, strengthening product planning and design planning functions; 2) changing the current electricity supplier function based on stock clearing, and 14 years of trying. E-commerce brand Wolf Totem introduces the ultimate shirt to create low rate and high quality men's clothing products; 3) strengthen the management of terminal: implement the channel optimization project, formulate corresponding support measures for different regions, and promote the construction and promotion of retail Standardization Implementation demonstration shop, and enhance the terminal store efficiency.

　　 Cash flow is abundant, layout investment business.

The company has made clear the strategic transformation direction of investment + industry: to optimize the investment of the fashion consumption field while optimizing the competitiveness of the main industry. We believe that the company's ample cash also provides the possibility for the strategy. The cash flow of business activities increased 18.3% in the 14 quarter of the previous three years, and it was about 3 billion 600 million yuan in cash in hand. The company's recent investment plans include the investment of 300 million yuan and the cooperation of Hong Zhang capital to launch the consumer industry fund, and 315 million yuan invested in the establishment of Qianhai reinsurance company, accounting for 10.5% of its registered capital.

　　 Valuation: raise target price to 9 yuan, maintain "sell" rating

We believe that the main business of the company is actively transforming, and with the gradual arrival of inventory, the profit margin will begin to recover in the second half of 15 years. We have raised the forecast value of 4.2%/4.8% from 16/17 to EPS yuan in the year of 16/17, and the investment business may bring about the extension growth point. We raised the target price to 9 yuan (8.2 yuan), and the current stock price corresponds to 26 times PE in 15 years, which is 16 times higher than that in 12 years. Maintain "sell" rating. Target price is based on UBS VCAM discount cash flow valuation model, WACC=8.5%.

　　 Extended reading:

Fujian seven wolf industrial Limited by Share Ltd

Company leading Garment development The "seven wolves" men's wear brand is a listed company with the core of brand management. The company is a large enterprise that operates seven wolves brand male casual wear, and is a high-tech enterprise recognized by the science and technology department. With three R & D centers in Shanghai, Hongkong and Tokyo, the world's advanced computer automation production equipment, the international standardization and closed Industrial Park, is the representative of the senior male leisure wear in China, and is among the top ones in the national casual wear industry, and is the vice chairman of the national casual wear Association.