Hailan House (600398): Steady Revenue Growth Multi-Brand Matrix Development Expected
The event company released its 2018 annual report. From January to December 2018, the company achieved revenue of 190.
90 ppm, a ten-year increase4.
89%; net profit attributable to parent company was 34.
55 ppm, a 10-year increase3.
78%; net profit deduction for non-return to mother 32.
68 ppm, a reduction of 0 per year.
18 years to achieve EPS of 0.
It is planned to distribute cash dividends to all shareholders for every 10 shares3.
80 yuan (including tax), dividend yield 4.
91% (March 29, 2019).
2018Q1-Q4 operating income increased by 12 respectively.
16% / 3.
09% / 5.
67%, the income gradually recovered since 18Q4; net profit attributable to the parent company increased by 11 respectively.
97% / 10.
20% / 4.
66% / 3.
Our Analysis and Judgment (1) The multi-brand matrix maintains the company’s stable growth. The CAGR of the main brand Hailan House in 2014 is 10-10.
59%, while steadily growing, actively cultivate a number of sub-brands, including Aiju Rabbit, Black Whale HLA jeans, AEX, OVV, etc., covering women’s clothing, business wear, children’s wear, light luxury goods, home furnishings, etc.
In terms of brands: 1.
Hailan House: 2018 revenue reached 151.
4.4 billion (+2.
62%), the growth rate slowed down year by year, accounting for 77% of total income.
In 2018, we increased our store openings. The number of stores increased by 594 from the end of 2017 to 5,097, of which 144 were directly operated stores and 450 were franchised and mall stores.
Due to the increase in the proportion of mall stores, gross profit margin increased by 3 in 2018.
06pct to 43.
40%, due to the increase in the proportion of buyout products, due to changes in the franchisee segmentation policy, it is expected that the gross profit margin in 19 years will increase steadily.
Aiju Rabbit: 2018 revenue reached 10.
9.8 billion (+22.
68%), 18Q4 growth slowed down, slowing down the growth rate throughout the year. At present, women’s clothing is still in a high-speed growth stage, and its proportion of total revenue has further increased to 6.twenty three%.
In 2018, the pace of opening stores slowed down. The number of stores increased by 231 from the beginning of the period to 1,281, of which 26 directly operated stores opened and 205 franchise and mall stores opened.
Due to the increase in sales promotion of women’s clothing brands, faster opening of stores and higher proportion of new stores, the gross profit margin decreased by 3 in 2018.
86pct to 23.
San Keno: 2018 revenue reached 21.
2.1 billion (+12.
82%), due to the further expansion of production capacity at the newly established production base in Qixian County, Kaifeng City, Henan Province.
Gross profit margin decreased by 0 in 2018.
88pct to 49.
25%, gross profit margin remained stable.
Other brands: 2018 revenue reached 3.
7.7 billion (+25.
78%), as most brands are still in the incubation stage, which has led to the adjustment of one store in Hainan, etc., the gross profit margin increased by 1 in 2018.
34pct to -24.
Among them, 1) Black Whale HLA Jeans: reached an official cooperation with the King Glory Professional League to provide official competition apparel.
In 2018, the content of King Glory’s practice event system exceeded 17 billion views, an increase of 65%; the number of single-day live views of the KPL Autumn Finals exceeded 3 billion, an increase of 26%, all hitting a record high.
The cooperation between the tide brand black whale HLA Jeans cultivated by the company and Tencent Games reflects the deep integration of the two tide cultures.
2) Light luxury brands: OVV and AEX target light luxury menswear and womenswear, and successfully cover the first and second tier markets.
Among them, the women’s OVV brand opened stores faster than expected, aiming to create a “feeling of high-end effort”.
AEX guides the creation of “new technology men’s clothing at affordable prices, providing a comfortable wearing experience and deepening” wearable technology fashion “.
3) Hailan Optimization: As the company ‘s newly-incubated home lifestyle brand, it benchmarks the domestic version of “MUJI”, including office, makeup, dining table, kitchen, bedding, care, travel, living, furniture, clothing, etc.SKU, to create a cost-effective home living museum, one-stop to meet consumer shopping needs.
4) Boys and girls (HEY LADS): The company achieved a holding (52% equity) of children’s clothing brand through capital increase in 2018. The target group is children from 6 months to 16 years of age. It is positioned for high quality, high cost performance, and intends to create another stop.The full category is at the same time, casual clothing brand.
Product styles mainly include cotton, linen, fashion casual, classic campus style, Korean style lady, outdoor sports and other twelve series.
5) Shares in the equity of the joint venture company to reserve resources for the company’s extended expansion: Hailan Investment, a wholly-owned subsidiary of the company, has a stake in Zhihe Trading.
10% equity, its main operating brands are HARD HARDY, ECKO, ENO, MU, LEE COOPER, SEAN JOHN and other mid-to-high-end brands; 18 years of increasing the British infant child 2
7027% equity, held a total of 45 as of the end of 18.
5173% equity, waiting for the company to fully start the integrated management of Ying’s infants and children; its participation in the 10% equity of Aibe Clothing, and its affiliated JEANS is an original denim brand in China, positioning mid-to-high-end, which can achieve synergy with the company’s brandseffect.
(2) E-commerce channels are gradually gaining strength, and offline store openings are smoothly viewed from the overall channel. In 2018, online and offline revenues reached 11 respectively.
51 ‰ (+ 9).
880,000 yuan (+4.
83%), the proportion of main business income was 6 respectively.
86%, gross profit margins were 54.
67%, an increase of -2 per year.72, 2.
The decrease in online gross profit margin was mainly due to the annual cargo festival in the first half of the year. The 618 promotion activity broke through and the discount was controlled in the second half of the year. As a result, the online growth rate slowed down, but the revenue share increased to 6.
The company’s existing nearly 3,500 stores have launched an omni-channel retail system to implement online ordering and delivery models at nearby stores, and deepen the exploration of online and offline linkage O2O models.
In terms of offline channels, offline franchise operations in 2018 saw franchise revenues of 6 respectively.
7.1 billion (+118.
4.7 billion (+1.
93%), the proportion of main business income was 4 respectively.
96%, gross margins were 60.
Due to the rapid expansion of offline stores in 18 years, leading to direct operation, the efficiency of franchised stores has decreased.
At present, the company’s overseas stores cover Malaysia, Thailand, Singapore, Vietnam and other countries. The number of overseas stores reaches XX, and it is expected to further expand to markets such as Indonesia and the Philippines in the future.
Store addresses are mostly distributed near Uniqlo, H & M and other brands.
The expansion of overseas markets, while increasing brand awareness, has also expanded the company’s profitability.
(3) 2018 results bottomed out. It is expected that the inflection point will be restored and the net interest rate will remain basically stable and the company’s profitability will be sustainable.
2018 net margin decreased by 1.
03% to 18.
10%, the net interest rate remained stable, not as fast as revenue growth and net profit growth.
Specifically, Q1-Q4 in 18 were 19 respectively.
55% / 22.
12% / 18.
56% / 13.
69%, the weakness in terminal consumption since the third quarter has brought about a decline in the company’s net interest rate.
The scale of inventories and receivables increased, and the net operating cash flow decreased due to the incubation of new brands.
As of the end of 2018, the scale of inventory increased by 11 each year.
55% to 94.
74 million, the inventory turnover days increased by 9 days to 286 days, the increase in inventory size was mainly due to OVV, Hailan preferred, AEX, boys and girls and other brands increased inventory.
The scale of accounts receivable has increased in ten years.
17% to 6.
USD 8.5 billion, the turnover days of accounts receivable remained stable at 12 days; mainly due to the increase in new brand incubation expenses, resulting in a decrease in net operating cash flow.
98% to 24.
Affected by the increase in marketing activities, the expense ratio (including R & D expense ratio) increased during the period.
The cost rate increased by 13 per year during 2018.
10% to 15.
43%.Among them, selling expenses, management expenses and selling expenses are 9 respectively.
43% / 6.
02%, change 10 every year.
75% / 3.
Affected by factors such as brand expansion, increased advertising and marketing, and increase in direct sales stores, the increase in the sales expense ratio; the promotion of new brands leads to an increase in research and development costs, which results in an increase in management costs (including research and development costs); and changes in the deposition structureIndex income decreased, and the final income of interest-bearing 3 billion convertible bonds increased, and financial expenses still showed positive returns.
As of the end of 2018, the company’s asset-liability 杭州夜网论坛 ratio was 55.
75%, increasing by 0 every year.
51%, still maintained at a reasonable level.
In July 2018, 30 trillion convertible corporate bonds were officially issued, and they entered the conversion period on January 21, 2019.
(IV) Young coach Zhou Lizhen leads the brand to become younger. In 2017, Zhou Lizhen led the company from the audience of his father Zhou Jianping to the post of Hailan Group, leading the company to continuously tap the young people’s in-depth demand for fashion in order to increase brand awareness.
In the past 18 years, the company has launched in-depth cooperation with multiple IPs to launch targeted products such as “Fat Westward Journey Series”, “Pacific Rim Series”, “Stimulating Battlefield Series”, and “Transformers Series” to broaden the brand’s popularity among young people.Influence, attract more and wider consumer groups.
On April 1, 19, the domestically produced classic IP “Trouble in Heaven” series of T-shirts was launched. Together with six young children, Lin updated. Suda (Director of Shanghai Fine Arts Film Studio) reshaped the classics of China and gradually built them.19 spring and summer explosion models.
Investment suggestion The company is a leader in the field of casual menswear. New categories, new brands, new marketing and new retail have injected new vitality into the company and continue to maintain a “recommended” rating.
Expected revenue for 2019-2021 is 204.
21 trillion, once every ten years.
19% / 8.
40% / 7.
84%, net profit attributable to mother is 40.
17 trillion, EPS is 0.
117 yuan, the company’s current sustainable corresponding PE for 2019-2021 is 11.
In view of the fact that the company has been surpassed by MSCI’s large-cap stocks, the total market value and liquidity are at the forefront of the industry. Since the listing of the backdoor in 14 years, the cumulative dividend has exceeded 9 billion U.S. dollars under a stable operating background, taking into account the category and the possibility of brand growth.We maintain our “Recommended” rating for the premium.
The risks indicate the market risks of new brand development, the uncertainty of the end-consumption environment, the progress of the incubation of the new brand is less than expected, and the inventory is significantly increased or there is a risk of impairment.