Domestic Sports Apparel Industry Returns To Growth, Lining Revenue Achieved Five Consecutive Rise

Through further enhancing the influence of products, Lining combines sports with fashion, entertainment and leisure to create innovative design and enhance product competitiveness.

After the long-term impact of imported sports clothing products (Adidas, Nike), the sports apparel industry in China gradually stepped out of the trough and returned to growth.

As a leading domestic sportswear industry, Lining (02331-HK), which is familiar with 2017, has further enhanced the influence of its products.

Better combine entertainment and leisure, do innovative design and enhance product competitiveness.

In 2017, the company achieved operating income of 8 billion 870 million yuan (RMB, the same below), an increase of 10.7% over the same period last year, a net profit of 515 million yuan, a decrease of 19.9% over the same period last year, and a basic earnings per share of 21.47, a decrease of 26% over the same period last year.

Core brand Lining accounted for 99.4% of total revenue.

The company mainly produces and sells Lining shoes, accessories and accessories.

Products, accounting for 99.4% of the total group's revenue, amounted to 8 billion 819 million yuan, and the company's products were fully competitive, and business has entered a stage of slow growth.

1. the focus of running and training courses still showed strong growth trend, with a significant increase.

2., the company is committed to the development of mobile Internet business. E-commerce channels have developed rapidly, and sales have been increasing for third consecutive years.

Although the market competition is more intense and the growth rate is slowing down, the growth rate is still the highest among all the business channels of the company.

3. the development of Internet business may have eaten part of the market share of the original line business, and the company has strengthened control over the futures orders of self run stores. But with the gradual improvement of the retail operation capability, the direct sales operation has achieved a steady growth rate.

4. in order to ensure that the channel inventory can be maintained at a reasonable level, the company has strengthened control over the dealer's futures orders, which has slowed down the growth of the franchisee's business revenue.

The company's business continued to maintain steady growth, operating income continued to rise year on year.

Revenue growth of 10.7%, net profit fell 19.9%?

In 2017, the company achieved operating income of 8 billion 870 million yuan, an increase of 10.7% over the same period last year, and a net profit of 515 million yuan, a decrease of 19.9% over the same period last year. Why is that?

The cost of sales fell slightly: the total sales cost for the year ended December 31, 2017 was 4 billion 690 million yuan (2016: 4 billion 310 million yuan), and the gross gross profit margin was 47.1% (2016: 46.2%).

During the year, the company took effective control over the procurement cost. At the same time, with the improvement of inventory structure and the increase in the proportion of direct sales and e-commerce business with higher gross margin, the gross profit margin of Lining increased by 0.8 percentage points in 2017 compared with the previous year.

Distribution expenses: the total distribution expenses as at the end of December 31, 2017 were 3 billion 270 million yuan (2016: 29.7 yuan), accounting for 36.9% of total revenue (2016: 37%).

The company continued to optimize channels, increase investment in retail operations, and the corresponding depreciation of sales point assets increased substantially.

However, the company has further strengthened the reasonable control of advertising and marketing expenses. Therefore, although Lining's distribution expenses increased over the previous year, the proportion of revenue accounted for 0.5 percentage points.

Administrative expenses: the total administrative expenditure as at the end of December 31, 2017 was 501 million yuan (2016: 420 million yuan), and accounted for 5.6% of gross income (2016: 5.3%).

In 2017, the company actively introduced talents to the new business, so that the related labor costs increased this year. In addition, the company continued to increase investment in product design and research and development, and increased the expenses of research and product development. Moreover, it took the previous year's improvement with the dealer's business and turned back to the corresponding provision for bad debts, but it was obviously less than the amount pferred back last year.

Taking all these factors into account, Lining's administrative expenses accounted for a slight increase in the proportion of Lining's income compared with the previous year.

From the above, we can clearly see that all the costs of the company are kept reasonable. Why did the net profit go down? The reason is that the company's net profit increased by 313 million yuan in 2015, and the disposal of assets income is non recurring gains and losses.

If the net profit of the company was reduced by 313 million yuan in 2016, the net profit of the company dropped to less than 400 million yuan.

In 2017, the net profit of 515 million yuan was again compared to the 400 million yuan in 2016.

Company's location

The growth rate slowed down, but after a full competition, a number of enterprises with lower business barriers were eliminated, and their performance returned to the upswing.

In recent years, the company's revenue and net profit have kept steady growth in recent years, and share prices have bottomed out.

Taking into account the fierce competition in garment industry, limited industry space and easy devaluation of stocks, valuations should not be too high. It is recommended that reference be made to the home of Hai Lan, a domestic listed company in the same industry.