Song: Acquisition Of Electricity Generation Operators, Strengthen The Internet Gene

The company announced that it would buy 75% stake in Shanghai Pak Qiu network at 277 million 500 thousand yuan, and at the same time, through Bai Qiu network, it would indirectly control Bai Qiu, a wholly owned subsidiary of Bai Qiu network.

Bai Qiu network and its subsidiaries specializes in

On behalf of the operation mode, customers are positioned in the high-end international.

Brand, vertical clothing, luggage, footwear and other categories.

The network and its subsidiaries include operation planning, digital marketing, commodity planning, merchandise shooting, visual design, CRM, customer service and warehousing logistics.

Fang ERP and three party logistics companies conduct data docking and sharing.

At present, many brands of fashionable international brands have been operated by agents. The successful brands are Sandro, maje, FOSSIL, ELLE, luggage, Why, LeSportsac, achette, GEOX, C.P.U, WMF, Kipling, and C.P.U.

The company's performance grew faster. In 2014 and 2015, its operating income was 32 million 432 thousand and 100 yuan, 45 million 296 thousand and 400 yuan, net profit 13 million 794 thousand yuan and 21 million 344 thousand and 500 yuan respectively, the increase was 34.67% and 54.74% respectively.

Bai Qiu network generation service provider mode has higher net interest rate and customer stability.

Bai Qiu network has a high position in the industry, and is highly professional in the operation of clothing bags and bags. In 2013-2015, Bai Qiu network won six consecutive awards of Tmall gold medal Amoy, and was named Tmall five-star service provider in 2016 (only 7-8 in the country).

At present, the leading supplier of the domestic electricity supplier operation mode is Bao Zun, which has a large number of products, and Bai Qiu network mainly concentrates on vertical categories such as luggage, footwear and so on. This year, we began to expand the field of clothing and apparel, relying on the company's R & D capability to provide better service and efficiency.

2) in terms of profit mode, the revenue mode of Bai Qiu network is mainly based on deduction points, and the average rate of deduction is charged.

The company is a service provider rather than a retailer. It needs no self stocking and zero inventory risk. The main cost is labor cost, and the cost of advertising expenses is borne by the customer, without the cost of sales cost.

Overall, the company's net interest rate is relatively high, 2014 and 2015 were 42.53% and 47.12% respectively.

3) downstream customer cooperation, strong customer stickiness, low dependence on customers: high mobility of customers in the operation industry. For this reason, Bai Qiu network and its customers cooperate deeply to provide one-stop operation service, with high customer stickiness and little loss, maintaining 3-5 brand customers' growth every year. In addition, the company has developed new cross-border e-commerce business, and now operates Tmall international flagship store such as The Cambridge Satchel Company, Antipodes and so on.

The company's dependence on large customers is relatively low, and the revenues from the largest customers account for about 8-9% of the company's revenues. The revenues from the top ten customers account for 50%-60% of the company's revenue.

According to the data of the first half of 2015 and the first half of 2016, the contribution of old brand customers to 60%-70% and the contribution of new customers account for 30-40%.

The acquisition will strengthen the company's online operation capability, enhance the international brand resources advantages and contribute to the performance.

The main significance lies in: 1) the company's current channel is mainly based on offline channels, and this investment helps the company to take advantage of the Internet operation of the century line professional network to strengthen the Internet gene of the company. Not only can it promote the existing brand development of the company, but also help the company to manage many brands and develop sales and promotion channels through the Internet thinking; 2) the 100 autumn network focuses on the operation of high-end high-end international brands, and its brand promotion and operation experience can help the company to connect more international brand resources, constantly excavate the cooperation opportunities suitable for the realization of the company's strategic goals and enhance the synergy between brands; 3) the net profit of the 100 year commitment network is not less than that of 3500/4200/4900 million, and is expected to increase the performance of the company. The company has acquired many styles of international brands such as Laur, l, Ed Hardy, IRO and so on. This foreign investment is an international brand e-commerce provider.

Continue to optimistic about the company's high-end fashion brand group strategy to gradually promote, maintain buy rating.

We believe: 1) the company is committed to promoting the strategy of the high fashion group. At present, it has many high-end and middle fashion brands with different styles and positioning, such as main brand, Laur, l Ed, Hardy, IRO, etc., to meet the needs of market segmentation.

At present, the main brand is developing steadily, focusing on channel adjustment and upgrading store efficiency. This year, the target has achieved a single digit growth. The Laur l brand has opened 7 stores in the country, basically in the shopping mall, and has a good sales situation (the sales volume of Beijing Oriental Xintiandi store has reached one million). This year, the planned store will open to about 20 stores. It will accelerate the opening next year. It is expected that the profit and loss balance will be achieved in 2017. In the first half of the 16 year, the Ed Hardy is expected to complete the target of last year's annual quota. BABY Hardy is basically complete in its current design and is scheduled to launch next year; the 150-200 year plan for the IRO16-18 year is still under discussion.

And future online brands, make full use of group resources to enjoy mutual benefits, and promote the company's multi brand performance release; 3) increase the number of companies not exceeding 37.80 yuan / share to raise no more than 786 million yuan to invest in the Laur l l brand design and R & D center expansion project, the Laur l l marketing center construction project, and the acquisition of Tang Li International 65% equity interest is still in progress, which is yet to be approved by the SFC. 4) the strategy of the high fashion group continues to advance, the future M & A is expected to continue, and the further expansion of other areas such as luggage, footwear and other fields may be excluded; 5) shareholders holding more than 5% of the company's shareholding shares will be reduced by 7.19 pactions in the 7.25 months from the 7.19 pactions. 2) after the acquisition is completed, the company will focus on landing and combing existing brands, including existing offline brands.

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　　我們長期看好公司高端時尚品牌集團戰略的繼續推進,公司作為女裝行業堅守主業并積極拓展多品牌建設的公司,未來將受益于多品牌形成的規模效應強化、多風格多品類帶來的客戶群擴大以及女性經濟、粉絲經濟崛起帶來的市場份額提升,考慮到百秋網絡預計9月并表貢獻業績同時今年收購品牌整合方面一次性費用支出較大、明年隨著收購品牌全年并表以及Laurèl 品牌今年所開店鋪于17年進入成熟期貢獻業績,預計凈利端將在今年基數較低基礎上出現較大提升,調整16-18年EPS 為0.71、1.21、1.47元;考慮到IRO 品牌收購仍需通過公司董事會及股東大會通過,若進展順利可于9月并表、預計可進一步增厚業績至0.73、1.31、1.59元(若定增完成將攤薄);維持買入評級、建議逢低介入。