"Lining" Revenue First Broke Tens Of Billions, The Broker Recommended Rating.

Recently, Lining (02331-HK), with its performance forecast exceeding expectations, led the company to increase its speed. Fangzheng securities offered a "highly recommended" rating.


Founder Securities issued comments on Lining's investment. Commented that the company's revenue further speed up, non recurring gains and losses increased. In the first half of 2019, the company's revenue is expected to increase by more than 30% over the same period. According to this forecast, the company's revenue in the two quarter of 2019 is expected to grow by about 35-40%.


As the 2019 two quarter accounted for a significant increase in the non operating profit of the joint venture company and other non operating special projects, the company's single quarter investment income is expected to exceed 200 million yuan. After the investment income was removed, the net profit of the parent company was expected to grow by 102% in the first half of 2019.


Among them, profitability has increased year by year and asset efficiency is higher. The cost of control and control is effective and the operating profit margin is raised. From 2014 to 2018, the ratio of operating expenses decreased by 11.23% to 41.72%, while the operating cost rate decreased by 3.43% to 51.85% during the same period, leading to a 14.66% to 6.43% increase in operating profit at the same time.


In 2014, the company's operating profit margin increased by 10.19% over the same period, rising by 1.49% in 2015-2018, and Founder Securities estimated that the company's operating profit will continue to improve in the next two years.


Net asset yield increase: 2014 to 2018, in the context of declining equity multiplier, corporate earnings improvement and turnover acceleration become the main reason.


From the trough to the recovery, Lining's rapid turnaround witnessed the strength.


In the six months ended June 30, 2019, the net profit of Li Ning Co increased by less than 440 million yuan compared with 269 million yuan in the same period last year, up by 160% over the same period last year.


Although the performance is gratifying now, there has been a time of low ebb.


In 2008, with the upsurge of the Olympic Games, Lining's sales continued to grow. By 2010, Lining's market share reached 9.7% of its peak, only 5 percentage points lower than Nike's. The company's turnover has reached an astonishing 9 billion 778 million yuan, and it has been sprinting to tens of millions of clubs.


In 2011, Lining targeted the target customers after 90, due to strategic constraints, resulting in a cliff breaking performance. Since 2011, Lining has been losing 3 consecutive years, losing more than 3 billion yuan, and the market value has evaporated about 76%.


In 2012, the Lining crisis began to spread, and more than 1800 stores were closed in one year, while the total revenue in 2010-2013 and three years declined by 3 billion yuan.


From the point of view of revenue, from 2012 to 2014, the performance of Li Ning Co has been in a state of loss. The amount of loss in three years was 1 billion 980 million yuan, 390 million yuan and 780 million yuan respectively, totaling over 3 billion 100 million yuan.


2015 is a special year for Lining. In this year, Lining realized the loss of profit. Mainly due to the increase in sales revenue and gross profit in 2015, as well as the decrease in expenditure ratio. This mainly depends on Li Ning Co's efforts to improve the business efficiency and profitability of the shops, strengthen long-term cooperation with channel partners and expand the business of e-commerce.


That is, in the fourth years after the turnaround in 2015, Lining finally reached his "ten billion agreement" 9 years ago.


The 2018 annual report shows that Lining's revenue grew 18.4% from 2017 to 10 billion 511 million yuan, net profit increased 39% to 715 million, and net interest rate increased from 5.8% to 6.8%. Gross margin increased by 1 percentage points to 48.1%, up 21% to 5 billion 53 million yuan compared with 4 billion 176 million yuan in 2017. Operating cash flow increased by 44% to 1 billion 672 million.


Compared with competing Anta, Lining still has many shortcomings.


In recent years, in terms of products, Lining's R & D investment has continued to bottom in the four major sports brands. Anta's R & D spending has been more than 5% for many years.


On the brand level, since Lining's brand was founded, Lining has long relied on Lining's image and his champion image. However, the cognition of new generation of consumers towards Lining is gradually weakening. Few people will pay for the champion's image.


Compared with Lining, Anta adopted a multi brand strategy. In China, Anta has the international brand of management rights, including sports fashion brand FILA, Korean outdoor brand Kolon, mountaineering brand Sprandi, winter sports brand Descente and children's wear brand Kingkow. FILA accounted for nearly 30% of the total revenue, and the acquisition advantage appeared.


In order to meet the diversified development strategy, Lining optimizes the channel structure and improves the channel efficiency. The Group continues to create a store image matrix, which is mainly located in high-end business circles from super large to second tier cities, attracting young and fashionable consumer groups. As of December 31, 2018, there were 23 stores in Lining fashion store in China.


Unlike Li Ning Co, Anta has not taken the "tide card" route, and the main consumer is still the domestic middle and low end consumers. Although Anta is also in transition, compared with the design of Lining international fashion week, it is far from amazing, but a financial data shows its strength.


By the end of 2018, Anta had 10057 main brands, including FILA1652, Sprandi104, Descente157 and Kolon181. Anta, whose annual revenue exceeded 24 billion 100 million yuan, is far ahead of Lining about 10000000000.


At present, Lining still has a certain gap compared with Anta, but Lining has not given up.


In order to seek the brand younger, Lining started the layout competition after New York fashion week triggered the "national tide". In October 2018, Lining formally worked with EDG E-sports club to become an official S8 partner of EDG's heroic alliance. At the beginning of this year, Lining, the parent company of China, also completed the acquisition of E-sports club Snake. In 2 and March of this year, Lining became an official sponsor of Newbee and an official partner of QGhappy.


For the future, with the focus of R & D, continuous innovation and solid products, Lining is possible.