Where Is The Luxury Market That Investors Are Not Optimistic About?

As the first

After the listing of NASDAQ, the stock market can still feel the attitude of the capital market to its business and prospects.

On the first day of listing, the stock price of Temple store dropped from US $13 issue price to US $10, down by 23%.

It continued to stumble and fall, and the latest stock price was less than $9, and its market capitalization was only $400 million.

Temple library has been established nearly ten years ago, from the first second-hand sell to high-end luxury electric business, and then will sink to the middle and high income group, the flagship light luxury products.

However, due to

Jingdong and so on have occupied most of the market share of luxury electric business. The competitive advantage of temple library is not obvious, and investors are also luxury goods.

The overall trend of development is not optimistic.

We believe that the temple library online imagination is not large, the main point lies in the offline storefront construction.

Comprehensive comparison of vip.com and other e-commerce platform operation efficiency, and temple Library's own business performance and outlook, we give Temple valuation area of 21-24 billion yuan, slightly lower than the current stock price.

Ten years of grinding a sword

According to the world clothing shoes and hats net, in 2008, Li Rixue founded the temple Library in Ji'nan, started with secondhand consignment, and in 2011, the temple library was established in Beijing to establish the first luxury experience shop under the line.

At present, the temple library is based on its own luxury appraisal and maintenance center, providing services to users under the online and offline businesses, and expanding the business of luxury auctions, consumption staging and so on.

Up to now, there are 15 million registered users in Temple library, and 200 thousand active users are buying at least once in the first half of 2017. The age of users is between 28-37 years old, with an average age of 30.

Temple store products are mainly purchased from brand dealers, brand dealers and individual buyers or companies, while providing third party shopping mall services to other luxury partners.

In order to ensure the quality of products, the temple library has set up a brand identification center for authenticity identification, and provides one to one consultation for improving platform services and providing housekeeping services.

Correspondingly, temple revenue mainly comes from three parts: commodity sales, platform services and other services, of which merchandise self sales account for about 98%, and platform services revenue comes from the sales agent commission of cooperative businesses, while other services mainly refer to luxury maintenance maintenance and advertising service fees.

Judging from the type of merchandise sales, temple library is a typical luxury business platform. Watches and bags account for nearly 55%, followed by clothing and jewelry.

Domestic luxury market growth in counter trend

According to the world clothing and shoe net, after the 2008 economic crisis, the global luxury market began to slow down. The joint research conducted by BCG and the Italy Luxury Goods Association (AltagammaFoundation) shows that the growth rate of global luxury goods will be reduced to 2%-5%.

China is the main contributor to the growth of the luxury goods market, but with the decline in anti corruption and GDP growth in 2012, China's pulling force is weakening.

Even so, the total expenditure of Chinese luxury goods in 2016 is still close to 1/3 in the global market.

According to statistics, in 2016, about 7 million 600 thousand Chinese families bought luxury goods, with an average consumption of 71 thousand yuan, and the total market was about 540 billion yuan, of which 2/3 consumption was offshore.

According to the world clothing and shoe net, in 2017, some luxury market segments in China began to increase significantly.

Taking watches as an example, Swiss watches' exports to China fell continuously in 2015 and 2016, and grew by nearly 20% in the first 8 months of 2017.

The growth of domestic market is mainly due to the increase of middle and high income groups and the reflux of foreign purchasing power.

The sustained increase in China's middle and high income groups strongly supports the domestic demand market for luxury goods.

More importantly, the international luxury brands have lowered the prices of products in China, and the depreciation of the renminbi has also led to the loss of price advantage in foreign purchases, coupled with the government's import tariff policy, which has reduced the domestic price of luxury goods to a certain extent, and the spread of price differentials has driven consumers to return to their country's consumption.

Therefore, China's overall luxury market growth rate is very low or even down, but domestic consumption will gradually replace overseas consumption to become the mainstream.

At present, consumption in China accounts for 1/3, and the market size is about 180 billion yuan.

Compared with European and American countries, 90% consumer behavior occurred in the mainland, and neighboring Japan also exceeded 50%.

Therefore, the potential market for luxury goods in China is at least close to 270 billion yuan.

Nearly 100 billion yuan of market increments will be the main battlefield of temple library.

Online imaginary space is small

In order to ensure the quality of high-end services, luxury stores are dominated by offline stores.

But with the growth of the younger generation of consumer groups, luxury brands have begun to greet new business channels in addition to adding new styles to the product system.

Moreover, the original luxury stores 80% opened in a second tier city, the three or four tier cities long tail market can not be met, the electricity supplier has become an important channel.

Luxury electric business is mainly divided into three categories: luxury self owned electricity supplier, vertical electricity supplier and comprehensive electricity supplier.

Temple library is the representative of vertical electricity supplier.

The luxury goods business came late, and there was no Internet operation experience. There was no competition threat to the temple library.

Integrated electricity supplier is the main competitor of temple library.

Alibaba, Jingdong and so on have a large number of user traffic, have strong bargaining power with the brand, and have invested in the luxury sector.

The two major integrated e-commerce providers, based on their own user traffic advantages, choose to invest in e-commerce platform with brand resources, and enter the luxury sector.

Alibaba 2015 strategic investment charm, August 2017 on-line LuxuryPavilion; Jingdong in June 2017 became the largest shareholder of Farfetch, in September September Jing Zun reached high-end pport services.

Compared with comprehensive electricity providers, luxury vertical providers have no competitive advantage.

Therefore, in the field of luxury electric business, temple library is destined to be the third place after Alibaba and Jingdong.

Temple library GMV nearly 3 billion 500 million yuan in 2016, accounting for 60% of the luxury e-commerce market share, and more than 60% of the market share was divided by Alibaba and Jingdong.

Online, the temple library has little imagination.

The future competition is offline.

According to the distribution of total retail sales of consumer goods in China, online retail sales accounted for 15.5% in 2016.

The trend of luxury electric business is lower than that of mass consumer goods. It is expected that online penetration will reach 15% in 3 years.

In view of this, the scale of domestic luxury electric business market will be 40 billion yuan in the future, and the scale of stores under the line still has 230 billion yuan.

Therefore, although luxury goods have 100 billion market increments in the future, the ceiling of the electricity supplier market is only 40 billion yuan, so larger increments must come from offline channels.

The imaginary space of temple library also comes from a more decentralized line.

Temple library to get through online and offline channels, the biggest bright spot is precise user positioning.

At present, temple library has 15 million high-end consumer users, and the unit price of 3600 yuan is much higher than that of other electronic business platforms.

For brands, monastery users have higher gold content, and more consistent with brand positioning for consumers.

Another bright spot is the low cost of acquiring customers.

The acquisition cost of temple library decreased from 48.6 yuan / person in 2016 to 41.7 yuan / person in the first half of 2017.

Compared to 3600 yuan per unit price, the efficiency of the temple library is very high.

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At the same time, temple library opened the offline experience store in 2011, and has accumulated 6 years' experience of offline shop operation.

In 2016, the temple library established a partnership with Biguiyuan and Malaysia YTL group to establish more offline experience stores in its domestic, Southeast Asian and Australian shopping centers and hotels.

The real estate channel facilitates the temple library to quickly establish more consumer contacts at home and abroad, and reduces the cost of building alone.

But the efficiency of the offline stores is still the main problem.

According to statistics, the domestic luxury stores have increased 3.3 times in 2008-2016 years and only 2.3 times the income.

Although the temple library can be pferred from line to line, the pformation effect is difficult to measure at present. The expansion effect of temple Library under the line needs further verification.

There are 2 points to raise gross margin.

The luxury industry is dominated by brand dealers. Most of the profits are eaten by brands, and the gross profit margin of circulation is not high.

China's new three board listed treasures network, less than 10% of gross profit margin in the long run, and was purchased by its upstream suppliers in early 2017, and its gross margin rose to 20%.

Temple library to maintain neutrality, will not accept brand equity, so its gross margin is difficult to reach 20%.

In 2014, in order to popularize mobile terminals, the increase of commodity discount resulted in a decline in gross margin.

In the past two years, by adjusting the product mix and reducing the discount, the monastery has raised gross margin to 16.8%, which can only raise 2 percentage points.

Operational efficiency has reached its limit.

The business cost of electronic business includes warehousing, logistics, sales, R & D and management.

In this regard, vip.com is a model of operational efficiency, and the GMV scale is more than 10 times the size of the temple library. The limit of operation efficiency of temple library can be referred to vip.com.

In terms of warehousing and logistics, vip.com is all self logistics, so the proportion of logistics costs is high.

The temple library uses third party logistics, and the proportion of warehousing and logistics costs is about 3%.

Sales expenses are the highest proportion of operating expenses.

The sales cost of vip.com accounts for about 5%, which corresponds to hundreds of millions of registered users.

Temple library only 15 million registered users, the first half of this year sales cost has dropped to 6% in the early stage, we expect to rebound in the future.

Similarly, the future will rebound in R & D and management costs.

In the first half of 2017, the proportion of temple library related expenses was only 4.1%, while that of vip.com was more than 6%.

Once the Temple store starts shop plan, the proportion of backstage operations and technical personnel will rise, and the proportion of related expenses will rebound.

On the whole, the operation efficiency of temple library is the highest, and the expansion period will be worse.

Valuation analysis of income, temple library revenue growth in the first half of this year has dropped to 30%.

In the future, due to the ceiling, the growth of the offline business will depend on the opening of the store and the growth rate will not be very high.

We expect that the revenue growth of temple Library in 2018 will be 20-25%, about 40.5-42.2 billion yuan.

In terms of gross margin, temples mainly improve the gross margin by adjusting product mix and increasing brand suppliers. Listing has a positive impact on the introduction of brand dealers.

However, the gross margin has little room to raise, and gross profit margin is expected to be 18% in 2018.

In terms of operating expenses, the future funds will be more used in the experience shop, warehousing construction, advertising and R & D investment under the new line. The proportion of operation cost of temple library will be increased on the basis of the current basis, and the proportion of operating expenses in 2018 is expected to be 15-16%.

According to the above calculation, the net profit of temple Library in 2018 was about 0.8-1.2 billion yuan. In view of the development period of temple library, it was given 20-25 times PE, valued at 21-24 billion yuan, slightly lower than the current stock price.

More interesting reports, please pay attention to the world clothing shoes and hats net.