Hongdou Shares (600400): Men’s Wear Business Product Power Improves, Channels Improve Efficiency

Hongdou Shares (600400): Men’s Wear Business Product Power Improves, Channels Improve Efficiency
Investment Highlights Event: The company announced an interim report, and its revenue in 19H1 increased by 1.1% to 12.At 4 trillion, net profit attributable to mothers decreased by 15% to 94.8 million yuan, and net profit attributable to non-mothers decreased by 17% to 84.26 million yuan. In terms of categories, the main business of menswear is growing and profitability is improving.Hodo’s main business of menswear maintained a 2% revenue growth in the 19H1 sluggish consumption environment, and the reported income reached 10.26 ppm, gross profit margin extended by 4.6pp to 33.7%; OEM processing clothing business (business wear customization) slightly shifted, fell 4% to 1.60 ppm, but the 深圳桑拿网 gross profit margin is also 2.4pp improvement to 19.3%. In terms of different channels, offline channel performance is integrated online.19H1 company online income2.30,000 yuan, flat and slightly increased in one year, offline income increased by 1 every year.4% to 9.USD 8.3 billion, the highest online and offline gross profit margins have increased significantly, reaching 32 respectively.2% / 31.6%. In terms of offline sales, efficiency improvement of the menswear business channel is ongoing.Hodo’s men’s direct sales channel revenue has grown for ten years.4% to 50.81 million yuan. At the same time, the number of directly-operated stores had a net decrease of 2 to 64 at the same time.9pp to 45.5%; Hodo’s franchise channel revenue grows by 7 per year.4% to 7.28 trillion, the number of stores increased by 24 from the beginning 都市夜网 of the year to 1296, the scale of single-store pickup has also increased, while the gross profit margin extended significantly increased 8.3pp to 29.1%. Looking at the semi-annual financial situation, considering readjustment, 19H1 income increased by 1.1% to 12.4 ppm, gross profit margin increased by 4.3pp to 31.4%, the average gross profit increased by 17%, but due to the increase in sales and management costs (brand marketing, product innovation, and organizational management adjustment expenses), the period’s expenses increased by 32%, and the expense ratio increased by 5.7pp to 24.4%, quarterly profit has improved, and net profit attributable to mothers is downgraded by 15% to 94.8 million yuan each year. Profit forecast and investment rating: In recent years, the company has integrated the “Red Bean Light Fashion” brand style on the basis of the existing concept of “High Quality Red Beans, High Quality Life”, and launched red bean light suits, light jackets, light goose down, 3D high elastic pants, etc.A single explosive product with a sense of technology and fashion, and cross-border joint cooperation with IPs such as Angry Birds, Speed and Passion, to continuously improve product power; In terms of branding, it is in line with the tone of the brand and the audience, and links with online live broadcastPlatforms and offline campuses, including “Douying Challenge”, “Red Beans Easily Enlisted”, “Red Beans Easy T, May Fourth Youth”, etc., to release the brand potential with youthful and innovative marketing. Judging from the 19H1 report,Product and marketing innovation effects have been gradually reflected. We expect the company to maintain steady revenue growth in 19H2. Considering the company’s current store expansion speed and operating efficiency, the company’s 19/20/21 performance is expected to be 2.0 billion / 2.200 million / 2.400 million, the current market value corresponding to the price-earnings ratio of 43 times / 39 times / 36 times, considering the company’s account3.7.6 billion net cash (cash + other current assets-short-term borrowings) + 24.The investment of 200 million US dollars (or other equity instrument investment + long-term equity investment) and relatively stable performance expectations are given an “overweight” rating. Risk Warning: Retail sales are cold, store expansion is less than expected, product promotion effect is less than expected