Shenzhou International'S 70% Revenue Depends On Nike, Adidas And UNIQLO.

In Tao Yuanming's Peach Blossom Spring record, there is such a saying: "from the clouds to avoid chaos in the Qin Dynasty, the wife of the city came to this desperate situation and did not return to the outside world.

Ask what is this world, but not Han, Wei and Jin.

This description is very similar to that of Shenzhou International (02313), which has been founded for 30 years.

In the late 80s of last century, in order to solve the employment problem of new local residents, the Beilun district government of Ningbo prepared the Ningbo Shenzhou Weaving Co., and invited Ma Baoxing to be deputy general manager.

At that time, Ma Baoxing had no objection to being deputy general manager of the company, but put forward a simple request: move the children's account from the countryside to Ningbo, so that the children can be workers.

In 1990, Ma Baoxing brought his family members to Ningbo. At that time, Shenzhou capital was not in place, and the factory building still had debts. But Ma Baoxing had no way out and could only run the factory well.

Now Shenzhou International is not only listed on the Hong Kong stock exchange but also the largest export amount in China.

Manufacturing enterprises and top ranked enterprises of Chinese garment export enterprises.

Throughout the Shenzhou International listing 13 years of rising stock price trend of 100 times, saying that it runs through the ox bear is too much, a solid deduction of the capital.

The "Xanadu".

Source: Fu Road Securities

First class profitability, first-class customers

Why does Shenzhou International share price have such a terrible performance? The reason lies in the company's terrorist profitability.

Taking 2017 as an example, the total revenue of Shenzhou International period was 18 billion 85 million yuan, an increase of 19.8% over the same period, a gross profit of 5 billion 671 million yuan, a gross profit margin of 31.36%, a net profit of 3 billion 760 million yuan, a 27.6 increase in net profit and a net interest rate of 20.79%.

take the reverse into consideration

Second, Jingyuan International (02232), operating income of 2 billion 178 million yuan in 2017, gross margin 20.31%, net interest rate is only 6.82%.

To understand Shenzhou International investors, we should know that Shenzhou International is an enterprise integrating weaving, dyeing, printing, embroidery, cutting and sewing four complete processes. It is also China's largest vertically integrated knitting garment foundry enterprise.

The company has strong profitability, mainly because the company is known for its high-end product positioning and excellent operational efficiency, and these elements are also important "magic weapons" for the company to win internationally renowned customers.

As we all know, for OEM enterprises, customers are their parents, so the development prospects of clients largely determine the development prospects of OEM enterprises.

Zhitong finance and economics APP understands that at present Shenzhou International Business is mainly about the production of sports products. Such customers are mainly Nike, Adidas, PUMA and so on, followed by leisure products. Such customers are mainly UNIQLO.

These customers are international brands.

According to Shenzhou International 2017 earnings and related research reports, the company accounted for more than 10% of the company's revenue share of the brand three customers, including UNIQLO, Nike, Adidas, its revenue contributions were RMB 5 billion 300 million yuan (an increase of 36% over the same period), RMB 3 billion 700 million yuan (an increase of 10% over the same period) and RMB 3 billion 600 million yuan (an increase of 5% over the same period).

The revenue from these three brands accounts for 70% of the company's total revenue.

Therefore, the future performance of the company depends largely on the development of these three brands, so it is particularly important to understand the development of these three brands.

UNIQLO: Global stores will expand to more than 3500

First of all, UNIQLO, APP, understands that UNIQLO is the first major international customer signed by Shenzhou International. In 1997, Shenzhou International completed 20 production orders within 350 thousand days of UNIQLO, and has since won the trust and cooperation of UNIQLO.

It is understood that UNIQLO was founded in March 1949 in Yamaguchi, Yamaguchi, Japan. The company was founded by a small business called Xiao county.

In September 1991, the name of the society was changed from "small county commercial company" to "Fast RETAILING (fast Marketing)".

In fact, the development speed of UNIQLO in the 40 years after its establishment was not very fast, until 1994, there were only more than 100 outlets in the company.

In July 1994, fast selling entered the rapid development period after the Hiroshima stock exchange was listed.

In March 1996, the number of direct sales outlets exceeded 200, and the number of direct outlets doubled again in April 2000.

In recent years, the expansion of UNIQLO overseas is the biggest guarantee for fast sales growth.

In the 2017 fiscal year, overseas UNIQLO revenue was 708 billion 100 million yen, up 8.1% over the same period last year, operating profit of 73 billion 100 million yen, up 95.4% over the same period last year.

2018 for the first time in office, UNIQLO's overseas market revenue surpassed Japan for the first time.

Revenue grew by 29.2% to 507 billion 400 million yen, and operating profit rose 65.6%.

The growth of UNIQLO's performance benefited from the continuous expansion of the number of stores.

In fiscal year 2017, UNIQLO opened 20 new stores in Russia and France.

The Chinese market has also been included in the expansion plan.

In overseas UNIQLO stores, the number of stores in the mainland of China accounts for more than half.

The chief executive of UNIQLO Greater China has said that the Chinese market is expected to increase 100 stores a year.

As of the end of February 2018, the number of overseas stores in UNIQLO was 1029, an increase of 139 compared with the same period last year.

Over the past five years, the number of overseas stores in UNIQLO has increased by 737, an increase of 2.52 times.

Xun has said that by the end of August 2018, the number of stores in the world will be expanded to 3502, including 1246 overseas UNIQLO stores, 1425 global brand stores and 831 Japanese UNIQLO stores.

Adidas: new vitality after redemption

Let's take a look at Adidas, one of Shenzhou's most important sports brand customers.

Throughout the development of Adidas, we can feel the strong legend. In 80s of last century, the company lost Jordan's position in the industry, and it opened the road of redemption for decades.

Until 2002, Adidas saw the trend of people wearing sports products in daily leisure life, and decided to divide the products into two series: sports performance and sports classics.

To become a brand that integrates sports elements into the fashion lifestyle has reopened the steady development period of 10 years.

However, the ups and downs are still not far away. In 2014, Adidas's annual sales decreased by 28%, and its net profit decreased by 27% to 564 million euros from 773 million euros in 2013, due to multiple uncontrollable factors such as exchange rate fluctuations, political conflicts in Ukraine and weak golf market.

To add insult to injury, sales revenue has dropped by 6% in North America, the top three largest group in Adidas group.

The second place in the North American market has been handed over to Andemar, the sports brand rookie.

In March 26, 2015, Adidas launched the new 5 year plan "Li Xin" - the global strategic framework, with a focus on enhancing brand attractiveness and achieving strong sales growth and strengthening profitability.

Then, on the basis of the strategy of "setting up the new", Adidas group put forward 3 strategic principles: speed, key cities and resource opening.

The introduction of the three principles of "Li Xin" has brought instant changes to Adidas's performance, and its company revenue has been increasing for three consecutive years in -2017 in 2015.

Adidas's 2017 earnings report showed that excluding the exchange rate factor, the company's global revenue increased by 16%; in euros, Adidas's global income increased by 15% to 21 billion 200 million euros in 2017.

While sales revenue is growing, Adidas's profitability is also growing.

In 2017, Adidas's gross profit margin increased by 1.2 percentage points to 50.4%.

In addition, the operating profit margin increased by 1.2 percentage points to 9.8%, and operating profit increased 31% to 2 billion 70 million euros.

From a regional perspective, in addition to Russia, in 2017, Adidas achieved two digit revenue growth in all regions.

Excluding exchange rate factors, sales growth in the Greater China region and North America increased by 29% and 27%; Western Europe, Latin America, the Middle East, Africa and other parts of Asia grew by more than 10%.

In terms of channel, Adidas has achieved two digit growth in all distribution channels, especially e-commerce channels. The growth rate is faster, reaching 57%.

In view of this, Adidas is ushering in a comprehensive recovery. Perhaps the company can really become the most popular sports brand in the world in 2020 and complete Nike's surpass.

Nike: focus on Greater China

Nike really used Jordan's personal charm to sit on the top of the world of sports apparel, but the group's performance in recent years has been in a low growth state.

In the 2017 fiscal year, Nike's operating income was $34 billion 400 million, an increase of 6% compared to the same period last year; gross margins dropped by 160 basis points to 44.6%, and the gross margin of Adidas over 50% was further widened; however, Nike achieved a net profit of 4 billion 200 million US dollars in 2017, an increase of 13% over the previous year, which saved a little bit of face.

In March 23, 2018, Nike released its three quarter financial report in fiscal year 2018, showing that the group achieved revenue of $8 billion 984 million during the reporting period, up 7% from the same period last year. However, it was affected by the US tax reform act, and the group tax rate reached 179.5% in the current quarter, resulting in a net loss of $921 million in the single quarter.

This is Nike's first quarterly loss in 20 years.

APP noted that sales in North America dropped by 3%, 5% and 5.6% in the first quarter, the second quarter and the third quarter of the 2018 fiscal year, respectively, in Nike.

But the group's Greater China performance is very bright. In the third quarter, Nike's revenue in Greater China reached US $1 billion 336 million, an increase of 24% over the same period last year.

According to the insiders, as for the Chinese market, Nike has become a high-end product because of the price standard, so its main competitiveness is still in the brand premium.

At present, the positioning of Adidas and Nike is more like a "brand business". Nike's brand is still slightly better than its brand premium capability.

Looking ahead, Nike will also take measures to reverse the decline of its performance. It is learnt that Nike's new "consumer direct offensive" strategy will streamline the retail channel of products, and will reduce cooperation from 33000 retailers to 40 previously.

In addition, Nike is still seeking new growth points.

On the eve of women's day this year, Nike launched a brand Nike Unlaced specifically targeting women's market. It is estimated that the launch of Nike Unlaced is expected to become a new growth point for Nike.

In the view of Zhitong finance and economics APP, Shenzhou International has two high performance growth in addition to the above three core customers. A stable growth, Puma's fourth largest customer has also achieved good growth.

At the same time, the company's new customer development also provides impetus for the long-term f development of the company, including overseas new brands such as Ralph, Lauren, POLO and ELAND, as well as increasing the number of domestic famous brand orders, such as Lining and Anta. Under the premise of the release of the company's capacity and the low volatility of demand, Shenzhou is expected to cultivate more important customers in the new customers in the future.

And the company's share price traversing the bear will also become the future.