Gree (603808) 2019 third quarterly report review： the main brand is flat, EDHARDY business adjustment dragged Q3 performance is less than expected
Gree (603808) 2019 third quarterly report review: the main brand is flat, EDHARDY business adjustment dragged Q3 performance is less than expected
Performance summary: In 19Q3, revenue and profit exceeded expectations. The company that exceeded expectations released the third quarter report for 2019 and achieved operating income of 18.
85 ppm, an increase of 8 in ten years.
57%, net profit attributable to mother 2.
7.5 billion, with an annual increase of 2.
62%, net of non-attributed net profit2.
39 ppm, downgraded by 7 per year.
The decrease in non-net profit was mainly due to the decrease in gross profit margin and the increase in expense ratio.
By quarter, 19Q1?
Q3 single quarter revenue increased by 8 for many years.
51%, net profit attributable to mothers increased by 11% and 24, respectively.
Stock fluctuations in a single quarter, 19Q2 revenue and profit growth significantly improved compared to Q1, Q3 major brands Gree, Ed Hardy, IRO overseas single-quarter revenue due to weaker revenue, lower gross profit margin, rising expense ratio caused net profit decline to exceed revenue.
Revenue share: The main brand Q3 was flat, the EH business was adjusted, and the range of change was breakthrough. The other brands and Baiqiu developed smoothly. The main business income of the first three quarters of the company16.
48 ppm, an increase of 3 in ten years.
94%, compared with 12 in the first half.
By brand: 1) The revenue of the main brand ELLASSAY still accounts for the proportion, and the revenue in the first three quarters is 7.
41ppm, accounting for 45% of total revenue, which is higher than value-added4.
Looking at the quarter, the main brand 19Q1?
19Q3 single quarter revenue increased by 6 respectively.
45% in the third quarter was mainly due to weak retail sales.
2) In terms of new brands, LAUREL’s revenue in the first three quarters was 79.91 million yuan, with a ten-year increase in value4.
53%, of which Q1 / Q2 / Q3 increased by -13, respectively.
17%; ED HARDY income 3.
15 ppm, a decrease of 17 per year.
17%, of which Q1 / Q2 / Q3 increased by 6 respectively.
53%, mainly due to the weakening retail environment, the company proactively provided one-time replacement support to distributors (previously sold out), which resulted in a decrease in recognized revenue;
35 ppm, an increase of 11 in ten years.
27%, third quarter revenue decreased by 18.
77% is mainly due to the impact of delivery rhythm (partial shipments in the second quarter, 79% increase in quarterly revenue), domestic revenue of 6,152 million, an increase of 181.
53%; VT brand revenue was 15.56 million yuan, and annual value added was 153.
59% is mainly due to cardinal toxicity; Jean Paul Knott brand revenue of 1.17 million yuan.
In addition, it is estimated that Baiqiu’s e-commerce revenue growth rate in the third quarter exceeded 70%, boosting overall revenue growth and profit growth of more than 50%.
From the perspective of different channels: 1) From the perspective of the online and offline channels, the offline ratio still accounts for 95% of the revenue, the online ratio is relatively low, and non-key development channels.
Offline income is 15.
6.7 billion, with an annual increase of 3.
26%; online income of 81.63 million yuan, accounting for 5%, increasing 19 years.
2) From the perspective of offline distribution of direct channels, the performance of direct-operated stores is better than that of distributors.
Direct sales store revenue 9.
8.5 billion, a previous appreciation of 14.
66%, distribution store revenue 6.
63 ppm, downgraded by 8 per year.
At 74%, the revenue of distribution stores accounted for 40% of offline sales.
Endogenous endogenous situation: The extension of net extension stores, the main brand stores rebounded at the end of June earlier. At the end of September 19, the company’s total number of channels was 598, earlier opened 71, closed 65, a net increase of 6 and an extension increase of 1.
01%, of which net openings are mainly new brands LAUREL, IRO domestic, VT, Knott, the main brand and ED HARDY contracted slightly.
In terms of direct sales and distribution, the company’s direct-operated stores increased by 35 to 310, accounting for 52% of the number, and the number of distributed stores decreased by 29 to 288 (closed stores mainly for the EH brand and the main brand, Gelishi).
In terms of brands: 1) The main brand continued to adjust and optimize. The earlier 312 stores decreased by 5 to 307, and the net extension decreased by 1.
60%, but up from 296 companies at the end of June.
The main brand ELLASSAY’s revenue increased under the background of extended net closures4.
22% is mainly contributed by the same store.
2) The net increase of LAUREL brand was 10 to 47, and the extension was 27.
03%, the terminal store budget has been profitable; it is expected to contribute marginally.
3) ED HARDY and ED HARDY X stores decreased by 8 nets to 173, and net extensions decreased by 4.
42%, combined income and earnings 17.
17%, it is estimated that the same store discount is 13%, which is related to the adjustment of the industry environment and the above-mentioned exchange business.
4) IRO International has a net reduction of 1 to 35 and an increase of 7 to 20 domestically.
5) 1 to 14 VT brand stores were added.
6) At the end of September, Jeans Paul Knott brand has established 2 directly operated stores.
7) The self-portrait brand newly acquired in 19 is expected to open stores next year.
Financial indicators: gross profit margin decreased, expense ratio increased, turnover and healthy cash flow gross margin: gross profit margin decreased in the first three quarters.
21PCT to 66.
07%, the gross profit margin of the main business is reduced by one level.
71PCT to 68.
Among them, the main brands ELLASSAY, LAUREL, EDHARDY, IRO International, IRO Domestic, VT, Knott gross profit margins are 69.
Among them, the decline in gross profit margin of the main brand is mainly due to the short-term downward adjustment of spring and summer product pricing in 19, autumn and winter products in 19, and the original pricing level of spring and summer products will be restored in 20;, Due to increased proportion.
In terms of different channels, offline gross profit margin decreased by 2.
49PCT to 69.
10%, gross profit margins of direct-operated stores and distribution stores were 71.
Looking at the quarter, 19Q1?
Q3’s gross profit margins were 64.
Expense ratio: The company’s expense ratio increased by 1 during the first three quarters.
36PCT to 44.
Sales, management, R & D, and financial expense ratios are 30.
The increase in financial expenses was mainly due to an increase in exchange losses and a decrease in interest income from inventory.
19Q1?Expense rates during Q3 were +0.
Other financial indicators: 1) At the end of September 19, the inventory increased 10 earlier.
54% to 5.
800,000 yuan, inventory turnover investment1.
16, compared with 1 in the same period last year.
14 is slightly faster.
2) The accounts receivable budget was downgraded earlier.
34% to 3.
03 trillion, accounts receivable turnover accumulated 5.
60, compared with 5 in the same period last year.
3) Asset impairment losses decrease by 16 each year.
36% to 34.15 million yuan, mainly due to the decrease in inventory losses.
4) The investment income increased significantly to 29.88 million yuan, with a net increase of 30.08 million yuan, which was mainly due to the increase in the liquidation distribution profit and wealth management income of the joint venture Fosun Changge Fund.
5) Government subsidies increased by 10.47 million yuan to 24.71 million yuan.
6) Ten-year appreciation of net cash flow from operating activities.
58% to 3.
Among them, the sales of goods gained a ten-year cash appreciation8.
03% to 20.
960,000 yuan, purchase of goods and labor services to pay cash for ten years of appreciation.
89% to 7.
The short-term main brand and EH brand affect performance. Focus on Q4 and next year’s performance. In the company’s 19-year report, the EH brand began business adjustments, and its 四川耍耍网 revenues shifted. Other brands performed well. In the third quarterly report, the EH brand business adjustment efforts changed, and the income fluctuation range alsoThere was an increase, and at the same time, the growth rate of the main brand’s revenue improved, and Q3 was more than flat.
We believe that: 1) Among the company’s major brands, the development of the main brand is stable, the number of stores rebounded in the third quarter, and the level of single stores is benign., It is expected that the People-to-People line will open its own store next year), which can maintain steady growth; 2) EH brand’s business adjustment in the second and third quarters, one-time changes and replacements to support franchisees to affect revenue recognition, and the franchise office’s Ole stores will be cancelledThese short-term 杭州桑拿网 business reforms affect performance, but are conducive to the unified implementation of long-term brand strategy and continued healthy growth. It is expected that the replacement will mainly focus on the third quarter, and the range will change in the fourth quarter.
In addition, the replacement of the direct sales of the Orai stores will have a certain role in increasing revenue in the future; 3) Other brands have developed steadily, and the current volume is not large, and the store has ample room for growth and growth;Will boost overall revenue growth.
Taking into account the weak retail environment, the quarterly transition of the main brand and the temporary adjustment of the EH brand business caused the performance to be lower than expected, reducing the company’s 2019?
The EPS in 2021 is 1.
70 yuan, 12 times PE in 19, continue to be optimistic about the long-term space of the company’s multi-brand international high-end fashion group strategy, as well as the main brand next year, the EH brand looks forward to efforts and the steady cultivation of small brands, maintaining a “buy” rating.
Risk Warning: Weak terminal consumption, weaker-than-expected growth in new brands, improper integration of mergers and acquisitions, exchange rate changes affecting the overseas business performance of some acquired brands