Everbright Securities: Bosideng (03998) annual performance exceeded expectations Brand down jacket business sales outstanding

Zhitong Financial App learned that Everbright Securities released a research report that considering that Bosideng (03998) 21 fiscal year gross margin and profit performance is better than expected, continue to expect the brand upgrade effect to reflect, raise the 2022-23 fiscal year, the new 24 fiscal year EPS to 0.19/0.24/0.28 yuan (13%/13% higher than the previous profit forecast), corresponding to a PE of 21 times in fiscal 22, maintain a “buy” rating.

According to the report, the company recently released its annual results for the 2020/2021 fiscal year ended March 2021, achieving revenue of RMB13.517 billion (the same below), a year-on-year increase of 10.9%, gross profit margin increased by 3.6PCT year-on-year to 58.6%, and net profit attributable to the parent increased by 42.1% year-on-year to RMB1.71 billion, exceeding market expectations and the 40% growth rate previously forecast, EPS of RMB0.16 and proposed final dividend of HK$0.1 per share. Among them, the profit increase exceeded the revenue, mainly due to the contribution of gross margin improvement.

The bank said that the company’s main brand down jacket and main brand Bosideng sales are outstanding. In terms of business, in fiscal 2020/21, the revenue of the company’s main brand down jacket, OEM processing, women’s clothing and diversified clothing accounted for 81%/11%/7%/1% respectively, and the revenue increased by 14.5%/-4.7%/-3.7%/+72.7% year-on-year, respectively.

The brand down jacket business is further split: 1) According to the brand, the main brands Bosideng, Xuezhongfei, Bingjie and other revenues are 9.994 billion yuan (accounting for 74% of the company’s total revenue)/552 million yuan/147 million yuan/197 million yuan, respectively, +18.9%/+10.7%/-28.6%/-51.5% year-on-year; 2) By channel, self-operated, wholesale and other income accounted for 61%/18%/2% of the company’s total revenue, +46.2%/-29.2%/-51.5% year-on-year, respectively. 3) From the perspective of online and offline, the online revenue of brand down jackets reached 3.489 billion yuan, a year-on-year increase of 54.3%, and the revenue of this business accounted for 32%. 4) In terms of offline stores, the company had a total of 4,150 stores at the end of March 21, a net decrease of 716 or 14.7% from the end of March 20; Among them, there are 3686 (-3.3%), 307 (-38.5%) and 157 (-71.8%) brand stores in Bosideng, Xuezhongfei and Bingjie brand stores, respectively, the number of main brand stores is relatively stable, and small brands are in the adjustment period and stores are shrinking.

Everbright Securities said that the company’s gross profit margin has improved significantly, the expense ratio and inventory are controllable, and the cash flow is healthy. The company’s gross profit margin in fiscal year 2020/21 was 58.6%, a year-on-year increase of 3.6PCT; Among them, the gross profit margins of brand down jacket business, OEM processing, women’s wear and diversified clothing business were 63.7% (+3.9PCT), 19.6% (+1.1PCT), 72.6% (-1.8PCT), 0.1% (+16.5PCT), respectively; IN TERMS OF BRAND DOWN JACKET BUSINESS, THE GROSS PROFIT MARGINS OF BOSIDENG, XUEZHONGFEI AND ICEJIE WERE 66.2% (+2.8PCT), 38.9% (-1.9PCT), 35.2% (+1PCT), RESPECTIVELY. The company’s expense ratio increased by 0.9 PCT year-on-year to 43%, and the sales, management and finance expense ratios were 35.6%/7.6%/-0.1%, respectively, +0.5/+0.6/-0.1 PCT, respectively. Among them, the increase in sales expense ratio was mainly due to the increase in the proportion of direct sales channels; The increase in the management expense ratio was mainly due to the amortization of the implementation of equity incentives, which was basically flat after deducting the impact.

In terms of other financial indicators, inventory decreased by 2.9% year-on-year at the end of March 21 year-on-year, and the number of turnover days increased by 20 days year-on-year to 175 days, mainly due to the impact of factors such as the high initial inventory amount and the increase in raw material stocking, which were basically stable if the above two factors were deducted; Accounts receivable and accounts payable turnover days were -5 days and +39 days year-on-year, respectively. Operating net cash flow increased by 155.8% year-on-year to RMB3,133 million.

The report mentioned that the world’s leading down jacket experts are crafted. In 2021, for the 45th anniversary of the establishment of the Bosideng brand, the company also set a new three-year strategic goal, positioned itself as “the world’s leading down jacket expert”, continued to promote the continuous upgrading of the main brand Bosideng, strengthened product R&D innovation, promoted the continuous upward trend of average prices (online sales revenue of more than 1,800 yuan in FY20/21 accounted for 31.8%, a year-on-year increase of 4.3 PCT), promoted quick response optimization inventory (the proportion of first orders was reduced to no more than 30%), online and offline omni-channel integrated commodity operation management, and digitalization , new retail, channel quality optimization (opening large stores, image renewal, closing small stores, inefficient stores) and other measures, the above reform and optimization measures in 21 years will continue to be effective, and after 20 years of terminal destocking, distributors’ willingness to pick up goods is expected to usher in recovery, promoting sales revenue, discounts, gross margin, inventory turnover and other indicators continue to improve.

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