XTEP'S Flattening Reform And Layout Of Southeast Asian International Market

Recently, the top research team entered the Hong Kong stock market together with the stock exchange.

The management of the company shared the issues of business pformation, income structure and profit timing.

The following is the survey of the survey:

1, does trade friction have any impact on the company?

Trade frictions will not have a direct impact on the group because we are domestically produced.

The supply is also from the mainland (foreign raw material companies are also setting up factories in the mainland). The products sold by large foreign sporting goods brands in the mainland are also produced in the mainland. A small number of imported goods have the chance to be affected by customs duties. We have a wait-and-see attitude and the whole industry has little influence. We are not affected by the exchange rate, and the income is basically based on the RMB.

2, what is the forecast for profit growth this year? Will gross profit margin increase?

We do not give any profit forecasts, but because 18Q3 has a lot of complements, it will drive sales growth in the second half of this year to exceed that in the first half.

We are confident that we can exceed the 16% growth expected by the market.

This is the sales situation, the profit is sure to continue.

In terms of gross margin, because we have a lot of bills, it is difficult to control the cost. It is difficult for us to grasp the cost. For example, the 19Q2 order will be held. After ordering, we can immediately lock in our cost.

For example, the order of 18Q3 should be at the end of last year, but in the 5 and June of June this year, when we put forward additional products, we need to find materials and so on. This kind of cost is more difficult to control. On the other hand, although the turnover has an impact on gross profit margin, it is good to turn over the list, which represents our business.

Under the condition that 40% gross margin is guaranteed, I will have a profit of 40 million for 1 hundred million of the turnover, and the net profit after tax deduction is about 30 million. Therefore, it is impossible for us not to make up the order to maintain gross profit margin.

The gross profit margin of the whole company is confident that we will do more than 43%.

3, in the past three years, XTEP has been making flat reforms. What has changed the group?

Our management team has made great changes. In the past, it was mostly local management. Now many of our team are international brands, especially from Adidas China.

We are now a professional management company, which is different from what it was three years ago.

No matter from the texture of the product to feel, or from the shop decoration display experience.

In 2017, the group made significant changes to the retail platform, from the role of distributor manager to retail network manager.

We have established a team of over 1000 professionals who directly manage the entire retail network composed of 6035 stores.

The Group determines the location and display of stores, unites the retail price tag, establishes strict product order guidelines, and discounts based on retail store level, and trains all retail stores.

Although we still adopt a fully wholesale business model with about 40 exclusive agents in the physical retail channel, we are responsible for most retail decisions, while the general agent is responsible for most of its capital investment.

4, what is the marketing cost of sponsoring more than 40 marathons and marathons this year? What is the overall marketing cost?

Sponsorship costs generally account for our budget 11%-13%, while marathon sponsorship costs account for 30% of the total sales cost, while the other 30% are sponsorship such as spokesmen and new rap in China. Among the remaining 40%, 20% are used in traditional media, such as central 5, Anhui satellite TV, Hunan satellite TV, and another 20% for Iqiyi, WeChat videos, etc.

5, in the China Daily, clothing revenue accounts for 33% of total revenue. Will the future share change?

Clothing revenue will gradually increase.

The change we made to clothing was later than the change in shoes. It was about a year and a half later.

The change of clothing basically changed from last year, and the design of clothing products this year has improved significantly.

Normally, we hope to achieve 64 ratio.

60% costumes 40%.

6, R & D expenses and R & D personnel situation, total staff number?

R & D costs account for less than 3% of revenue and more than 200 for R & D staff.

As of the first half of 2018, the group had about 8600 employees.

7, when will employee stock incentive expire?

This group of shares is not equity or stock, so there is no expiration date.

The shares were distributed in 5 years, and the first one was distributed in January 2018.

In 2017, we set up a trust. When the stock price is bad, the company will buy back, and then send it to KPI as a reward.

8, from the mid-term earnings report, we find that the company's current cash flow is relatively abundant. How much of the renminbi is there? Has it hedged in terms of exchange rate? What arrangements will there be for cash management in the future?

Our business is 99.9% in mainland China, 99.5% in cash and RMB in mainland China. The rest is in Hongkong, because we are listed in Hongkong and dividends are paid in Hong Kong dollars.

We do not have any foreign exchange risk. In our semi annual report, we can not see the loss of foreign exchange, including the procurement of raw materials. The mainland of China has been able to fully meet the raw material sources of shoes and clothing.

The future multi brand strategy requires cash, and we will not raise funds to the market regardless of the acquisition or cooperation.

On the one hand, we take a prudent attitude to choose the target. On the one hand, we have plenty of net cash, so there is little risk.

The Group believes that multi brand strategy is helpful to the overall future development and sales promotion.

9, will the gross profit rate of clothing products be stable in the second half of the year? Will there be room for improving the gross margin of footwear products?

In the past two or three years, the gross profit margin of shoes and clothing has been rising steadily. In the first half of this year, there was only a slight pressure on gross margins because of the reasons for making up the bill.

The gross profit margin of clothing fell in the middle time. It was because at the end of 2017 and early winter of 2018, the replenishment orders increased more than the original plan. Therefore, the gross profit rate of clothing products had a slight effect, but some of them were highly offset by the increase in the gross margin of footwear products.

Gross margins remained stable at 43% to 44% levels.

10. What is the reason why the inventory and inventory turnover days have increased?

Because of the popularity of the products of Q1 and Q2 in the past 18 years, the sale rate of terminal is very high, and the confidence of the general agent is very high. Therefore, a lot of 18Q3 supplements have been added.

These orders have been issued to the total generation in July 2018, and will be converted into group income in the second half of 2018, so there is no provision risk.

Because of the increase in the supplement, we expect that the sales growth rate in the second half of 2018 will be higher than that in the first half of 2018.

11. In 2018, how many percent will the company's online sales account for?

In the first half of 2018, our e-commerce business still ranks high in China's leading e-commerce platform Tmall.

Sales topped the list.

The electricity supplier accounts for more than 20% of the total revenue, and will remain at this level throughout the year.

12, does the company have statistics on the attrition rate of end users?

We didn't go to see the wastage rate, because the rate of wastage was hard to calculate, instead, it was to see the rate of repeat purchase.

In addition to the repeat purchase rate, we will give agents and franchisees many KPI checks. For example, there are closed-circuit television in the stores. We can count the number of people in a day, how much the turnover rate is, how much water they buy, how much water they buy, and how much each person buys.

At present, our rate of re purchase is about 50%.

13, has the conversion rate been counted, that is, the consumption conversion rate after consumers enter the store?

About 6 percent.

We also carry out relevant training for employees and make corresponding assessments.

14, the level of salesperson wages?

In the industry, we pay higher wages in the upper and middle levels.

15, big data analysis of opening a store, is it outsourcing or company?

Big data analysis is done by ourselves. In fact, we manage about 1000 people in the terminal retail management. We do the analysis of this big data, responsible for how to display the shop, what goods to be ordered, when to discount, whether we keep our image according to the specifications, and so on.

We now require shops to upload photos every month for feedback so that they can maintain the image of a good store.

As for the role of the general agent and franchisee, it is basically an investor. They are responsible for rent, decoration, ordering goods, and sharing profits. The specific daily management is still their own, but the staff training and ERP system are all provided by us, so we are doing the output of brand management training.

16. Are there any considerations in the international market, such as in Southeast Asia?

We have just completed the strategic reform of 3 years ago. We didn't have the strength before. But we have already had the layout since the beginning of this year, such as Vietnam, Philippines and India. This year, we opened the first store in India.

17, will future factories migrate to Southeast Asia?

Not for the time being, because we are mainly domestic.

Migration depends on circumstances.

There is also no need to have a scale of its own factories.

Our direction is not to open factories as much as possible, we will have a certain capacity to do "fast reverse", and will also research and development and the core technology in their own hands.

18, how about the development of children's wear?

Children's clothing business has also started this year. We have also made deep reform, set up a new management team, and changed the strategic direction of children's wear.

In the past, our children's clothes had nothing to do with sports. They were all series of princesses and princesses.

We have redeployed XTEP children and XTEP adult department resources, integrating operation management, brand promotion, new product development, material procurement and production, retail management system and retail network.

Now children's business is only a small part of the company's business. We are optimistic about our business prospects, but we will develop cautiously and optimize the interests of shareholders.

As of June 30, 2018, there were about 300 retail outlets.

Most retail outlets are stores in larger XTEP stores.

It is expected to reach about 400 this year.

19, how much is the shop opening fee?

The cost of opening a shop depends on the size of the store and in which area.

To give you a reference, in addition to flagship stores, usually between 500 thousand and 2 million.

20, how much is the franchisee?

Franchisees account for about 40%, but they are expected to slow down.

We also need franchisees at this level, because, for example, the general agent in Guangdong Province, they are only familiar with some cities in Guangzhou and neighboring cities, and in a remote place, they can not control the rent and how to control the cost of decoration.

So we are still looking for some franchisees who are more familiar with the local situation. They take the goods to the general agent. Usually these franchisees have only 2-3 stores or 3-4 stores.

The order and training of franchisees are directly managed by us directly, but the daily management, distribution, exchange, support and so on are general agents.

21, what will be the way of acquisition? What will be considered recently?

We may do it in 3 ways: joint venture in China, 100% acquisition, or 20 to 30 years of long-term authorization.

Basically, all kinds of ways are discussed now. There is no final result, so it is not convenient to answer here.

On the basis of retaining the original brand, we will operate another high-end brand that complements our core XTEP brand.