The City Beauty Group Said Its Shares Could Also Rise By 25%.

In China, the city beauty has penetrated into every city. Its vigorous development of underwear products is a major brand in China. Recently, the city beauty group said its stock still had 25% room for improvement.

In the latest research report, Everbright Securities is optimistic about China's underwear industry. It believes that the industry is in rapid development, the overall market is dispersed (the top ten companies in the female market share of 14.5%), and the high-end brand concentration is relatively high. Under the background of female consciousness + consumption double upgrade, the mass market positioning of the low-end underwear market has great potential for development.

And in this field,

The position is stable, and a number of agencies have consistently recommended "buy".

Yesterday, there was market news that urban beauty will continue to cooperate with China blue TV to become a strategic partner of China's blue TV "running brothers".

With the unanimous optimism of many agencies, it is expected that its share price will continue to rise steadily and run for some time.

Expansion of scale and diversification of channels

Everbright Securities believes that urban beauty will achieve rapid development through sustained brand operation and channel expansion.

Societe Generale Securities also said it was optimistic about the continued expansion of the urban beauty market and the rapid growth of new brand franchises during the year.

According to the data obtained by Zhitong Financial Research Center, the size of urban beauty is far more than that of competitors in the mass positioning underwear brand. The scale advantage has significantly improved the company's profit margins.

The urban beauty has been developing for more than 20 years, and is the number one in the market of women's underwear market in China (4.2%).

As the largest selling underwear company in the country, the company is the largest consumer market in the consumer market (nearly 5 years CAGR23.5%), and the product has a high performance price ratio (2.5-3).

Behind the scale of the company is the continuous optimization of inventory and supply chain management.

After the survey, Everbright Securities said that the urban beauty adopted the mode of "join the direct + spot replenishment system", and through a B2B platform, opened up the front-end sales to the back-end management (sales, ordering, replenishment, cargo pfer, etc.), improving market sensitivity, optimizing inventory and improving the supply efficiency of fast fashion clothes. The turnover time was only 93 days (all peers were over 300 days).

In terms of supplier management, we use the finished product / semi finished product / raw material =4/3/3 principle to stock up, and achieve rapid response to the market.

In terms of sales channels, urban beauty channels cover e-commerce, shopping malls, street shops, community stores, pportation hub stores, etc.

Everbright Securities predicts that urban beauty will continue to sink in the future. It is expected that more than 1000 stores will be added every year, and 14300 stores will be realized by 2020.

Layout low, medium and high third underwear market

Urban beauty in the low, medium and high market, respectively with free time, urban beauty,

For example.

Everbright Securities said that in 2016, the company will vigorously support the "free time" of the Korean fashion quick fashion underwear, and the target market is 90% less than the urban beauty price bearing capacity of 10-20%.

At present, the brand of Japanese and Korean style underwear emerges rapidly in the second tier cities of China, but the three or four line city market is still relatively blank. Everbright Securities believes that the channel coverage ability of urban beauty helps to "free time" to achieve rapid coverage of the three or four line urban area and seize market share.

Everbright Securities estimates that the number of stores in 2016 will reach 360.

BOC also believes that although the price of Freeday is at 39-99 yuan per unit, it is relatively low-end, but the Korean trend plus brand and store decoration style is more suitable for shopping center environment.

At the same time, Bank of China pointed out that although Freeday has only 6 months' operating data records, the store's output rate is close to the level of 1 million 400 thousand yuan (direct store) and 900 thousand yuan (franchise) of each core store.

In 2015, Freeday achieved 175 million yuan in revenue from e-commerce. The management expects to double to 340 million yuan in 2016 through cooperation with Alibaba, Jingdong (JD.US) and vip.com (VIPS.US).

City beauty will also set up a new store for Ordifen, a high-end brand, with 100 new stores.

Agencies optimistic about the prospects of urban beauty, suggested buying

BOC believes that the market penetration of urban beauty is low, so the outlook is still bright.

Multi brand strategy can take good care of the different needs of customers.

It is estimated that the urban beauty will increase its brand investment, that is, the promotion cost will increase from 1.6% to 2%.

The increase in short-term market spending will limit the rise in net interest rates, but BOC believes that this will contribute to long-term sustainable development of the company.

BOE said that in view of the company's ongoing investment in channels and brands, it is expected that the profit growth rate will be reduced from 20% to 10-20% in the next two years.

However, the bank believes that management has strong executive power and leading edge, and can drive the long-term development of the company. Therefore, it maintains the buy rating and gives a new target price of HK $6.80 to reflect the 12% and 15% reduction of the 2016-17 year profit forecast.

Everbright

To maintain the urban beauty buying rating, the company expects 2016/17/18 EPS to be 0.34/0.40/0.47 yuan, corresponding to PE 14.1/11.9/10X, and the target price of HK $7.23, corresponding to 18 times PE in 2016.

Five day trend map

(five day chart)

Since the beginning of this week, the price of urban beauty has been rising steadily, with the week rising by 6.08%.

On Friday, it closed at HK $5.93.

(the trend of the first quarter of 2016)