Bosideng (03998) To Increase Revenue And Brand Recognition To Wait For The Performance Of The Garment Industry In The Past Year

Event: Bosideng (03998) announced that in the first nine months of FY19/20 (2019/4/1-2019/12/31), the cumulative retail sales of Bosideng brand down clothing business increased by more than 30%. At the same time, the retail sales of other brands under the brand down clothing business increased by more than 40%. The company's brand down clothing business has shown a rapid growth trend both online and offline.

In the 19 years since the winter, the weather in the south is obviously warmer. Bosideng's brand down clothing business has maintained a rapid growth trend, which fully shows that the company's overall upgrading in brand, product, channel and retail operation is being recognized by consumers.

The company's brand remodeling plan continued to advance in FY19/20. In September, Milan fashion week Designer Series invited the famous model Kendal Jenner show and Nicole Kidman view show. At the same time, "Queen of goods" Yang Mi became the spokesperson of the designer series, and the October summit reached a strong response. In November, the designer and designer of the Hermes designer launched the joint down jacket in Shanghai, and continued to cooperate with the big European and American actors including Tom Hiddleston, Scarlett Johansson and so on, so as to enhance the image of the brand in the eyes of consumers.

In December 7th, as one of the activities of the second Hainan Island International Film Festival, "the fashion of extreme cold and peak -- Bosideng international fashion master joint show" was staged in Sanya, Hainan. Bosideng joined the international fashion designer Kenzo Takada (KENZO) and EnnioCapasa's 40 fashion down garments, which was also unveiled in December 23rd. At the same time, Tmall jointly launched Tmall's super brand day activities. From double eleven data, we can see that the consumer price of Bosideng's main brand down clothing continues to improve, while the proportion of young consumers has also increased rapidly. In December 20th, the company announced the share repurchase plan, which will provide funds for the repurchase action from the cash available from the business activities. The upper limit of the number of shares repurchased will be 10% of the issued shares in August 26, 2019, which further demonstrates the company's confidence in the development prospects of its own business.

Earnings forecasts and investment recommendations: In the warm winter season, Bosideng has maintained a relatively high income growth against the trend. We think this reflects the promotion of Bosideng brand's potential energy, and the continuous improvement of consumers' recognition degree with the continuous upgrading of channels and products. On this basis, taking into account the late spring festival of 2021, the peak season for sales during the new year and the Spring Festival is longer than that in 2020. The garment industry is expected to usher in a good performance year. We still have full confidence in the future growth of Bosideng. We maintain FY20/FY21/FY22 net profit of 1 billion 340 million /17.4 billion /21.3 billion performance expectations, an increase of 36.9%/29.6%/22.3% over the same period, corresponding to PE 20X/16X/13X, to maintain the "buy" rating.

Risk warning: Economic environment and weather changes make terminal retail demand less than expected.