Is Jiangnan Buyi Really A Clean Stream In The Clothing Industry?

Value will be late, but never absent.

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The performance of (03306) can make a lot of value seeking investors make a profit.

Jiangnan cloth headquarter is located on a busy main street in the west of Hangzhou city. Li Lin, the founder, feels that the building lacks imagination. She wants to build an imaginative building for the south of the Yangtze River.

According to the world clothing shoes and hats net, more than 20 years ago, by virtue of this desire to express and pursue self, Li Lin founded Jiangnan cloth dress, started with the design of women's clothing, and split into 6 in 20 years.

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They are: Design ladies wear JNBY, men's wear CROQUIS, children's wear jnbyby JNBY, women's wear less, teenage dress Pomme de Terre, home JNBYHOME.

The first wave of small business in Jiangnan began in the 2017 fiscal year announced in August 30th, and the 9 trading days rose by 34.58%.

After a short period of consolidation, Jiangnan cloth began to make second small sprint, which rose 34.11% again after the 10 trading days after October 3rd.

In the first two trading days of November, the cloth in the south of the Yangtze River rose by 11.51% again, with a turnover of more than HK $50 million.

Today, the market value of Jiangnan Buyi group has reached HK $5 billion 800 million.

Reporters learned that A shares listed apparel enterprises in the three quarter financial performance is not very good, with the "redesign + full channel + fans economy" multi wheel drive, as the leading brand of domestic designer Southern cloth, is it really a clear stream of the clothing industry?

High growth undervaluation

The performance of Jiangnan cloth has steadily increased in recent years. The sales volume of major brands has increased, the scale of online and offline has gradually expanded, and revenue and profits have increased year by year.

In fiscal year 2014-2017 (fiscal year June 30th is June 30th), the company's operating income increased from 13.83 to 100 billion yuan to 2 billion 332 million yuan, and CAGR was 19%, increasing year by year.

New gross margin brands (such as shorthand and less) and sales of online new products continue to increase, driving the company's gross profit margin to grow steadily year by year, from 58% in 2014 fiscal year to 63.2% in fiscal year 2017.

Benefiting from the increase in revenue, gross margin and the rate of expense brought by self employment, the company's net profit increased to 149 million yuan in the fiscal year 2014-2017, and the CAGR rose to 30.4%, and the net interest rate rose from 10.8% in the 2014 fiscal year to 14.2% in the 2017 fiscal year of 332 million.

Despite nearly two months, the valuations of the cloth in the south of the Yangtze River nearly doubled, but there are still many investors on the snowball: the rise is very fierce, but the price earnings ratio is only 13 times, the valuation is still cheap.

It is worth noting that 4-5 months this year, major shareholders in the market frequently increased holdings.

At present, the largest shareholder Wu Jian and Li Lin share 60%.

In addition, the current performance is distributed 75% profit dividends, the current dividend yield of 7.2%.

Management guidelines for the next three years: without considering the new brand, revenue increased by 18% and net profit increased by 20%.

In terms of assets, the company has no loans, cash and cash equivalents 490 million, and the initial deposit period is more than 3 months' time deposits, 200 million of which can be sold for financial assets 130 million, plus 730 million.

In addition, inventory and accounts receivable levels are relatively good.

The reason for the company's underestimation may be that foreign investors do not know the company, domestic investors do not like this industry, and the valuation of new shares in the Hong Kong stock market usually takes time.

However, since September, the number of foreign shareholdings has increased. The data from the Hong Kong Stock Exchange showed that by the end of November 1st, the number of HSBC holdings in Hongkong increased from 8.01% in September 1st to 8.72%, and the stake in Deutsche Bank jumped from 1.62% to 1.97%.

Unique design and numerous fans

In fact, there is no shortage of competitors in the domestic designer market. How does the South China cloth dress lead all the way? According to the prospectus published previously, in 2015, Jiangnan cloth clothing commissioned Hongkong consulting company CIC to do a survey on the brand recognition of domestic women's clothing designers. 35.5% of the 300 designers in China believed that JNBY was the most distinctive and identifiable brand.

Unlike traditional clothing brands, designer brands are highly recognizable because of their strong personal design style and design logo.

Compared with the traditional brand, its subdivision positioning has satisfied young consumers' fear of catching a shirt, and has become a competitive brand in light luxury market.

Once a customer accepts his style, he can easily become a loyal fan.

By the end of last fiscal year, Jiangnan cloth had 2 million members, 1 million 500 thousand WeChat members, 260 thousand active users, and 118 thousand members who had purchased more than 5000 yuan in the fiscal year.

Reporters visited the company's WeChat public number, found that the number of fans and the number of fans of the WeChat public number in the south of the Yangtze River ranked first in the high-end women's clothing. 100 thousand + articles often appeared, and the frequency of updates was fast, and fans interaction was good.

According to CIC consulting statistics and forecasts, the market size of Chinese designer brands in the 2011-2015 years is CAGR 26.25%. With the increasing popularity of brand and clothing design, it is estimated that the growth rate will not decrease in 2016-2020 years. CAGR will maintain a 26.74% growth, and it is expected to reach 91 billion 600 million in 2020.

Multi channel brand strategy

From the point of view of the channel, the company opened up a three wheel drive interactive platform for offline retail stores, online platforms and WeChat interactive marketing service platform.

In the opening of the whole channel, Jiangnan cloth clothing has realized the entity member electronic, establishes the unified service system, opens up the online and offline commodity system, and the marketing and marketing channel, establishes the unified brand cognition and the consumer mentality.

Offline, the company's terminal channel grew steadily year by year, and total number of stores increased from 955 to 1591 in fiscal year 2014-2017.

Among them, the mainland distribution shop as the main body, from 639 in fiscal year 2014 to 1049 in fiscal year 2017, the self operated store rose from 282 in fiscal year 2014 to 507 in 2017 fiscal year.

It is worth noting that starting from the opening of Tmall flagship store, Jiangnan Buyi will no longer limit its business to sales channels, but will help Tmall better communicate with consumers and convey the concept of brand value.

In the 2017 fiscal year, online business revenue rose 31.3% to 187 million yuan, and the gross profit margin in the 2017 fiscal year increased 9.7% to 48.3%.

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The company pays much attention to multi brand strategy and expands its products under the same product style. Its CROQUIS and jnbybyJNBY have maintained rapid growth in the 2017 fiscal year.

With the deepening of multi brand strategy, the company gradually has the ability to establish scale operation in various market segments, and the demand for young brands grows rapidly.

While keeping brand sales increasing year by year, the proportion of non JNBY brand income increased year by year, from 25.6% in fiscal 2014 to 41.4% in fiscal 2017.

2016, the new brand of Peng and JNBYHOME began to generate revenue. There is still much room for diversification of Future Ltd.

Can valuation repair continue?

Jiangnan Buyi, one of the pioneers of domestic designer brand, has pioneered the industry in the past 20 years. It has been accompanied by the increasing demand of consumers' personal needs, and the high-end luxury brand designers have been developing rapidly.

But looking at the fast fashion brands coming out of H&M, Zara, UNIQLO, and so on, the middle end which is acceptable to the public will probably generate faster and greater returns for shareholders.

Some investors will worry that designers who focus on design and constantly introduce new products are not a good industry. It is difficult to generate 10 times shares.

In addition, compared with the Hong Kong stock listed clothing industry, Lining is currently 18PE, Bosideng is 16PE, 10PE, La Natsu Bell (603157) 8PE, the current doubling of Jiangnan cloth valuation is not low.

However, in view of the high profit margin, high customer stickiness, strong brand uniqueness, almost no interest liabilities, and high score red, the investors are still concerned if the net profit growth rate can be maintained in the second half of the year.

In addition, in terms of technology, trading volume has been significantly enlarged in the past two days, and the stock price has reached a new high.

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