Bosideng 2020 First Half Financial Year Performance To Maintain "Buy" Rating

Recently, Bosideng announced the 2020 first half financial year report, which achieved 4 billion 436 million (+28.8%) income and 343 million net profit (+36.4%), with a net profit of 354 million (+55.64%). The gross profit margin continued to rise to 43.5% (+1.2pcts), of which the gross profit margin of the down garment business was 54.2% (+1.4pcts). During the reporting period, the company actively invested in brand marketing, and the sales cost rate increased to 25.1% (+2.2pcts), and the management fee rate dropped to 7.54% (-2.5pcts).

CITIC Securities released research report, taking into account the company's performance in the first half of fiscal year 2020 bright, after entering the winter season, product innovation, consumer concerns continue to increase, the company's 2020/2021/2022 financial year EPS forecast to 0.13/0.15/0.17 yuan (original forecast 0.11/0.13/0.16 yuan), to maintain the "buy" rating.

CITIC said that the company's business structure continued to optimize, the main industry actively expand shop, continue to increase, women's clothing business has been slightly adjusted.

1. the main business of down jacket continues to increase: the down jacket business revenue is 2 billion 530 million yuan (+43%), accounting for 57%, and operating profit margin is 12.1%, mainly in the reporting period will be part of the down jacket income transfer to diversified business statistics, the actual operating profit margin remained stable, Bosideng main brand revenue 2 billion 280 million (+46%). During the reporting period, the company opened 533 stores to 5161 stores (429 of the main brands were open), of which 294 were from 294 to 239, and 1922 to 3239.

2.OEM business continues to grow, smoothing seasonal fluctuations in capacity. OEM business revenue of 1 billion 350 million yuan (+22%), accounting for 30.4%, operating profit margin of 12% (-1.7pcts). There is a very strong seasonal business in down garment business. OEM business can effectively help companies smooth production capacity and improve operational efficiency.

3. women's clothing business continued to adjust and diversified business improved year-on-year. Women's clothing business revenue of 500 million yuan (-6%) accounted for 11%, of which Jesse / bang Bao / corleano / Koroba and other sub brands earned 184 million /1.52 billion /0.76 billion /0.93 billion, respectively, down by 4%/6%/7%/8%. Men's clothing, home and other diversified businesses improved year-on-year, revenue 48 million 600 thousand yuan, an increase of 87% over the same period.

Product and brand upgrades are still continuing, and 2019-2020 years can be expected in winter. CITIC said that its products are becoming more fashionable and younger, and its products are becoming more and more diverse. During the reporting period, Milan, urban outdoor, puff, joint name, GoreTex high-end outdoor and other series are good performances. In October 27th, the company launched a joint series with the former Hermes fashion designer JeanPaulGaultier, and the products were further upgraded. At the same time, the proportion of high-end products using Goretex continues to improve. The average price of products in the 2019-2020 years is expected to continue to improve. The marketing side continued to make efforts to land in Milan fashion week. The exhibits were well received.

In addition, the company's online sales are also bright spots. In 2019, the sales of double eleven full channel exceeded 1 billion yuan, and Tmall flagship store achieved 650 million yuan (+58%), ranking the top of all luggage and footwear brand / shoes brand. CITIC believes that with the company's in-depth development in product research and development, store expansion and management, marketing planning and other aspects, 2020-2021 years will better harvest the fruits of reform.