Anzheng Fashion (603839) 2019 Third Quarterly Report Review: Small Brand Revenue Growth Improves Acquisitions and Consolidates Multiple Impacts on Multiple Indicators
In January-September 19, revenue increased by 54%, net profit increased by 13%, 19Q3 net profit growth accelerated in January-September 2019, the company realized revenue of 17%.
9.1 billion, an increase of 54.
13%, net profit attributable to mother 2.
7.8 billion yuan, an increase of 12.
55%, deducting non-net profit 238.
7.4 billion, an increase of 20.
73%, EPS is 0.
The lower growth rate of net profit was mainly due to the decrease in gross profit margin and the decrease in investment income, while the non-profit deduction was mainly due to the decrease in government subsidies and entrusted investment income.
In terms of quarters, 2018Q1-19Q3 company revenues increased by 26.
64%, net profit increased by 30.
At the end of October 2018, the company’s acquisition of Lishang Information consolidated the balance sheet, driving the growth rate of revenue in Q1 to Q3 in 2019, excluding the consolidation, which affects the company’s revenue in Q1 to Q3 in 2019 to increase by -0.
20%; In 19Q2, the company’s clothing revenue growth rate is relatively high. At the same time, the company strengthened price control. The gross profit margin of the apparel business increased. The gross profit margin of e-commerce operation was relatively stable.
In 19Q3, the overall apparel consumption was still severely weak, and the company’s apparel revenue was at least basically flat. The growth rate of net profit was relatively mainly due to the clearance of apparel inventory, the decline in gross profit margin and the decrease in investment income.
In 19Q3, the revenue growth rate of small brands improved, and the online revenue growth was significant. 1) From the perspective of brands, in January-September 2019, Zizi, Yin Mo, Fina Chen, Anzheng Menswear, and Mossac achieved revenue8.
5.8 billion yuan, 1.
5.1 billion yuan, 6,968.
40,000 yuan, 5,205.
870,000 yuan, 1,628.
800,000 yuan, an increase of 6.
91%, -5.97%, -14.
36%, of which 19Q3 Zanzi, Yin Mo, Fina Chen, Anzheng Menswear, and Mosak also increased their income by 1.
77%, the growth rate of the revenue of the main brands improved, and the growth rate of the small brands Yin Mo, Fina Chen, Anzheng Menswear, and Mosak improved.
As for the main brand, at the end of September 19, there were a total of 674 stores in Changzi.
46%, channel structure is optimized, direct sales in January-September 19 can increase by 7 compared with the same store.
At 12%, the Fangzi brand has strengthened its design, marketing and promotion to increase its influence and drive the store efficiency to keep growing for several years.
In terms of small brands, at the end of September 19, Yin Mo, Fina Chen, Anzheng Menswear, and Mosak directly operated stores grew by -11 in ten years.
18%, direct sales in January-September 19 can increase by 5 compared with the same store.
67%, Yin Mo, Fina Chen, Anzheng Men ‘s Direct Sales Channel closed the store, the income was extended, and the Mosak brand was optimized to quickly expand the franchise channel, driving the return to growth.
2) From the perspective of channels, from January to September 2019, it will directly operate, join, and achieve online revenue4.
7.6 billion, 4.
4.1 billion, 8.
6.9 billion yuan, an increase of -4.
22%, the combination of Lishang information led to a significant increase in e-commerce revenue; direct sales in 19Q3, franchise, and online revenue increased by 13.
86%, the effect of the company’s direct channel organizational structure adjustment, attracting outstanding management talents, revenue resumed growth, some products were delivered to 19Q2 in advance, and some franchisee adjustments caused 19Q3 companies’ franchise income to decrease.
At the end of September 2019, the company had a total of 917 stores, with the extension down by 4 as well.
18%, of which 328 are directly operated stores, and the extension is down by 6.
82%, mainly because small brands closed stores to strengthen profitability, joined 589 stores, the extension also decreased by 2.
In January-September 19, the company directly operated the same store and increased by 2.
05%, the channel optimization effect gradually appeared, the same store to join the same drop 5.
The combination of Lishang information affects multiple financial indicators: reduced gross profit margin, lowered expense ratio, and increased cash flow. Gross profit margin: January-September 19, gross profit margin decreased by 13 as well.
76PCT to 53.
86%, mainly due to: 1) the proportion of low-gross margin e-commerce operating income increased, and 2) the gross profit margin of the apparel business declined.
In terms of brand, from January to September of 19th, the gross profit margins of Menzi, Yin Mo, Fina Chen, Mosak, and Anzheng men’s clothing increased by -1.39PCT, -0.
41PCT to 64.
64%, the stock of the brand is cleaned up, and the increase in the proportion of low-margin online revenue has led to a decline in gross profit margin. Feina Chen strengthened the discount control. The brand adjustment effect appeared, the gross profit margin gradually increased, the adjustment of the Mosak brand ended, and the gross profit margin resumed growth, Anzheng menswear design style is optimized, discount control is improved, and gross profit margin is reduced and increased.
In terms of channels, from January to September of 18, it was directly operated and joined, and the gross profit margin of online channels increased by 0.
51PCT to 73.
18%, the consolidation of the Li Shang information led to an increase in the decline in online gross profit margin.
Looking at the quarter, the company’s gross profit margin for the 18Q1-19Q3 was 68.
38PCT), 18Q4-19Q3, due to the combination of gift and fashion information, the decline in gross profit margin was biased. In 19Q2, the apparel business strengthened price control, the decrease in gross profit margin decreased. In 19Q3, the stock inventory of brands such as Zizi cleared up, and the decline in gross profit margin expanded.
Expense rate: During the period from January to September of 19, the expense rate of the company also decreased by 10.
27PCT to 33.
65%, of which the sales expense ratio decreased by 5.
88PCT to 24.
41%, mainly due to the consolidation of information on the acquisition of Lishang information; the management expense ratio (including research and development expenses) also decreased by 4.
42PCT to 9.
30%, mainly due to the consolidation of information on the acquisition of Lishang information; the financial expense ratio also fell to 0.
03PCT to -0.05%.
Other financial indicators: 1) The inventory at the end of September 2019 increased by 35 compared with the beginning of the year.
61% to 10.
7.3 billion, mainly due to the expansion of sales scale, the increase in stocks on Double Eleven Online.
Inventory turnover ratio from January to September 2019, inventory income ratio is 0.
60,18 for the same period in 2018.
57. The acceleration of inventory turnover was mainly due to the impact of consolidation.
2) Accounts receivable at the end of September 2019 increased by 15 from the beginning of the year.
76% to 1.
5.7 billion yuan, accounts receivable turnover days were 22.
13 days, 5 reductions per year.
In 28 days, the turnover rate has improved.
3) The asset impairment losses from January to September 2019 increased by 13.
96% to 3580.
910,000 yuan, mainly due to the 杭州桑拿 expansion of inventory scale, increase in provision for impairment.
4) Investment income from January to September 2019 decreased by 13.
87% to 4067.
610,000 yuan, mainly due to the decrease in investment income from the sale of financial assets.
5) Operating cash flow from January to September 2019 increased by 324.
59% to 4,940.
650,000 yuan, mainly due to the increase in clothing sales and the consolidation of gift information.
Clothing consumption is still weak and we continue to optimize multi-brand operations. We believe that: 1) In terms of revenue, due to the relatively sluggish clothing consumption, the company’s clothing revenue has grown rapidly after Q2 2018. Among them, the brand development is quite mature. In 2019, the revenue rate will first be adjusted to achieve growth.In the future, the company 杭州桑拿网 will continue to strengthen the investment of the main brand and promote the continuous growth of revenue. For small brands, Yin Mo has a contradictory income volume and stable income performance. Fina Chen optimizes product design and cost performance, and returns to growth in 19Q3.Product style adjustments were basically in place. Revenue growth picked up in 19Q3. The adjustment of the Mossac brand was over. Through the renewed expansion of the resources store of Fangzi franchisees, revenues increased again. Lishang Information cooperated with more than 20 well-known domestic and foreign brands to develop online operations.Revenue maintained rapid growth.
2) In terms of profitability, the company ‘s online information has driven the company ‘s online revenue to maintain rapid growth, which has dragged down the overall gross profit margin. In the future, the company will strengthen discount control on apparel business, close stores, optimize channel structure, and promote profitability of the main business.
3) On February 1, 2019, the company plans to repurchase shares for 40 to 80 million shares, and the repurchase price does not exceed 15 yuan / share, and the repurchased shares are calculated at the upper limit of 533.
330,000 shares, accounting for 1 of the total share capital.
32%, the repurchase period is February 18, 2020.
As of September 30, 2019, the company had repurchased a total of 535.
10,000 shares, accounting for 1 of the total share capital.
33%, the repurchase amount is 6283.
650,000 yuan, the average repurchase price is 11.
74 yuan / share, repurchase has not been completed.
In October 2019, due to the departure of some employees in the equity incentive plan, the company repurchased and replaced the restructured shares17.
As the company ‘s gross profit margin fell more than expected, we lowered its EPS forecast for 2019-21 to 0.
13 yuan (previous average 0.
21 yuan), currently corresponding to 17 times PE in 2019, the company’s main clothing industry is gradually optimized, through mergers and acquisitions, agents and other areas involved in mother-to-child, children’s clothing, luxury goods and other fields to create a fashion industry group, the future growth space bearing capacity, maintaining “Buy “entry” level.
Risk warning: weak consumption, shop opening progress is not up to expectations, inventory risks, acquisition targets, and unfulfilled performance promises.