Hailan House (600398): Expansion of Focal Advantage Business with Weak Profitability
Investment Highlights: Event: The company announced that it intends to total the equity of its holder’s Aiju Rabbit Company as the price3.
US $ 800 million, 66% of which was transferred to Zhao Fangwei, executive director and general manager of Aijutu Garment Co., Ltd .; 15% to Dehe Management; 19% to Hailan Investment.
In addition, the company plans to change the construction project of the Aijutu R & D office building and the Aijutu warehouse project in convertible bonds, and will implement the original plan14.
$ 300 million permanent replenishment of working capital.
In the first half of the year, the company’s business was generally good. Aijutu was in the period of development adjustment. After the report, the company gradually concentrated its resources on focal advantages.
1) Aiju Rabbit has undergone several adjustments.
In 2015, the Aiju Rabbit brand re-established its positioning as a popular women’s clothing, and actively expanded. The number of brand stores increased rapidly from 306 to 1281 in 15-18.
2%, but gross margin continues to be below 30%, channel structure and brand image still need to be adjusted.
In the first half of 2019, the demand of the women’s clothing industry was weak, and the operation of Aijutu changed, and the brand realized revenue in the first half of the year2.
0 million yuan, a ten-year average of 9.
8%, the number of stores decreased by 40 to 1,241.
2) The profit side is still in the incubation period.
In 2018, Aiju Rabbit Company achieved revenue16.
9.7 billion yuan, net profit 3.
From the comparison of the disclosed information, after the merger of the listed companies in 2018, the Ijutu brand revenue was 10.
US $ 9.8 billion, which is different 杭州夜网论坛 from the revenue of subsidiaries. We believe that there is internal reorganization of the revenue end of the brand in actual operation, and that the listed company bears the operating expenses of some subsidiaries.
From this calculation, we expect that Ijutu will improve in 2018, and actual profitability may be possible.
From January to August 2019, the net allowance of the subsidiary was 25.36 million yuan, and the brand is still in the period of expansion and expansion.
3) Attempt to promote the company to concentrate resources.
We believe that the growth rate of women’s wear is extreme, the concentration is scattered, and the track attributes are relatively weak.
After the release of Aijutu, it is expected to increase the profitability of listed companies and reduce operating changes. Therefore, the company reduces inefficient allocation of resources and concentrates superior resources on new brands with better 北京夜网 development momentum, such as Hailan Select, OVV, and YingshiAnd boys ‘and girls’ two children’s clothing brands, etc., to protect the rights of listed companies and shareholders.
Multi-category, multi-brand, domestic and overseas channel layout landing, the focus of future resource input is clear.
1) Light luxury women’s wear has a good momentum.
According to the brand’s public account information, at the end of August, the number of light luxury brand OVV stores exceeded 60, and the brand successfully entered Shanghai Xintiandi, Lujiazui, Beijing Wangfu Central, Nanjing Deji Plaza and other head business districts.
We believe that the current consumption trend is favorable for the growth of cost-effective and light luxury women’s clothing brands, which is more suitable for prioritizing investment.
2) Home and living brands are in the second and third tier markets.
The number of preferred home and living brands of Hailan is close to 90. The brand has been opened in second and third tier shopping malls such as Wanda Plaza, Vientiane Exchange, and Vientiane City.
3) Both brands of children’s wear go hand in hand.
The company controlled Yingshi in June 19 and completed the layout of the high-end baby and children’s field. In September 18, it controlled the boys and girls and cut into the mass children’s clothing market.
4) Overseas expansion is smooth.
The company’s multi-brands have successfully settled in Malaysia, Thailand, Singapore, Vietnam and many other countries, and it is expected to deepen the crypto store opening in Southeast Asia in the future.
The revenue of major brands accelerated, product strength increased, explosive models frequently appeared, and the inventory turnover trend improved.
1) Operating data continued to improve.
In 19Q2, the revenue of Hailan House series brands increased by 9.
3%, the growth rate has been optimized quarterly since 18Q4.
Interim inventory size is 88.
400 million US dollars, 18 years of annual reports remain stable; and after the consolidation of British infants and boys and girls, the chain is still down by 7 compared with the first quarter.10,000 yuan, optimized operating capacity.
2) Positive changes in product power in 19 years.
In the first half of 19, the main brands successively launched hot-selling models of T-shirts, “Oxford” shirts, casual washed cotton singles, and fly-knit sneakers. In early September, they jointly launched Blizzard’s co-branded sweaters and attracted wide attention.Rebuild explosive models and promote product upgrading.
The company is a leader in the apparel industry. The Ijutu brand is expected to further enhance its profitability, expand its focal advantage business, and maintain a “Buy” rating.
The company’s cumulative dividend scale since 2013 has reached 10.1 billion US dollars, and it has reorganized its five-year (2018-2022) repurchase plan. It is planned to repurchase shares at 20% -30% of the net profit of the previous year.Strong margin of safety.
Taking into account the corresponding narrowing of this part after the release of Aiju Rabbit, we maintain the 19-year forecast and raise the 20-21-year profit forecast. It is expected that the EPS in 19-21 will be 0.
00 yuan (the original EPS for 20 and 21 years was 0).
99 yuan), corresponding PE is 10/9/8 times, maintaining the “buy” level.