Anzheng Fashion (603839) Annual Report 2018 & 2019 First Quarterly Report Review: 18Q4 Pressure Conduction 19Q1 Improvement Improved and Consolidated Income Increase Obviously

Anzheng Fashion (603839) Annual Report 2018 & 2019 First Quarterly Report Review: 18Q4 Pressure Conduction 19Q1 Improvement Improved and Consolidated Income Increase Obviously

In 18 years, revenue increased by 16%, net profit increased by 3%, and consolidated revenue increased. The clothing business’s revenue since 18Q4 ranked 2018 the company achieved revenue of 16.

4.9 billion yuan, an increase of 16.

09%, net profit attributable to mother 2.

8.1 billion, an increase of 2.

96%, deducting non-attributed net profit1.

9.8 billion yuan, down 8.

60%, EPS is 0.

70 yuan was lower than expected, with a dividend payout of 3 per 10 shares.

50 yuan (including tax).

The growth rate of deducting non-net profit is lower than the increase 杭州夜网论坛 in income mainly due to the increase in costs (multi-product conferences and the use of spokespersons to increase the cost of about 3100 million US dollars, the related costs of new stores increased by about 9.19 million yuan, and the distribution incentive costs increased by 4.4 million yuan),The lower than the net profit was mainly due to the increase in income from entrusted management assets.

17Q3-18Q4 company revenue increased by 23.

87%, 12.

47%, 26.

84%, 13.

98%, 10.

48%, 14.

76%, net profit increased by 36.

95%, 7.

49%, 30.

09%, 20.

11%, 12.

29%, -50.


18Q3 Affected by weak consumption and the company’s regional reforms (previously the management team first divided by brand and then divided by region and converted by region and then brand, while the region is responsible for multiple brand sales to facilitate future brand expansion)Accelerating Relatively speaking, the growth rate of revenue in 18Q4 improved and rebounded mainly because the acquisition of e-commerce agency operating company Lishang Information was consolidated on October 31, 2018. Regardless of consolidated revenue, the revenue fell by about 16%, and the clothing consumption environment was sluggishThe change in the company’s brand management model affects its main business income.

In terms of profit, 18Q3 distribution incentive costs increased, and wealth management income at least decreased, leading to continued profit growth, and 18Q4 gross profit margin decreased by 10.

31PCT, the increase in asset impairment losses and the decrease in government subsidies have caused a serious shift in net profit.

2019Q1 company achieved revenue 5.

5.3 billion, an increase of 41.

46%, net profit attributable to mother 1.

2 billion, an increase of 10.

51%, deduct non-attributed net profit of 0.

9.5 billion, an increase of 12.

66%, EPS is 0.

25 yuan.

Income from the company’s main clothing business 3.

8.8 billion yuan, down by 0.

57%, e-commerce agency operating income is 1.

6.3 billion yuan.The lower-than-expected increase in net profit was mainly due to the consolidation of the acquisition of Lishang Information, which led to a decline in gross profit margin.

In 18Q4, the revenue of most brands temporarily decreased, and in 19Q1, the revenue of the main brand resumed growth. 1) In terms of business, the company’s clothing revenue in 2018 was 15.

1.4 billion, an increase of 6.

86%, revenue from e-commerce operations1.

3.1 billion yuan.

On October 11, 2018, the company announced the acquisition of 70% equity of Lishang Information, an e-commerce agency operating company in the maternal and infant sector. The equity settlement and consolidation were completed on October 31, 2018.Operating income.

2) In terms of clothing business by brand, in 2018, Qizi, Yin Mo, Fina Chen, Anzheng Menswear, Mosak, and Anna Kou achieved revenue of 10 respectively.

3.8 billion yuan, 2.

2.3 billion yuan, 1.

1.4 billion, 7487.

220,000 yuan, 3101.

210,000 yuan, 2305.

160,000 yuan, an increase of 10.

93%, 4.

10%, 11.

98%, 0.

10%, -12.

31%, -52.

57%, 18Q4 Yanzi, Yin Mo, Fina Chen, Anzheng Menswear, Mosak, and Anna Kou income increased by -13.

62%, -15.

53%, -33.

40%, -18.

46%, 46.

78%, -80.

At 32%, Mossack’s revenue resumed growth. The breakdown of other brands affected by the weak consumption of apparel production in 19Q1 increased by 8 for the above-mentioned brands.

25%, -10.

12%, -35.

58%, 3.

79%, -37.

68%, -50.

93%, the revenue of the main brand Fuzi resumed growth.

In 2018, the main brand’s revenue increased steadily, mainly benefiting from the increase in product prices. Signing spokespersons and holding multiple fashion shows to strengthen the brand’s influence brought increased store efficiency and rapid growth in online revenue.

At the end of 2018, there were 692 stores in Fangzi, an increase of 1 from the initial increase, and the direct store’s comparable store growth rate was about 2.


18Q4 income increased due to the downturn in clothing consumption.

In 19Q1, the company opened 2 net stores and 694 stores at the end of the period, and maintained rapid growth online, driving revenue to resume growth.

In terms of small brands, Yin Mo, Anzheng Menswear, Fina Chen, and Mosak directly operated stores increased by about -6 in 18 years compared with the same store.

86%, -12.

44%, -25.

20, -3.28%, the number of stores at the end of the period increased by 14 respectively.

44%, 27.

78%, 15.

29%, 106.

67%, the number of small-brand stores expanded, Mossacks merged the Fangzi franchise channel to resume fast opening, but affected by the clothing consumption environment income replacement.

In 19Q1, Anzheng menswear revenue grew at a low rate, and other small brands saw a decrease in revenue. Yin Mo and Finachen brand closed their stores.

2) In terms of channels, in 2018, the company directly operated, joined, and achieved online revenue6.

7.8 billion, 5.

6.2 billion, 4.

0.4 billion yuan, an increase of 4.

29%, -1.

55%, 106.

94%, e-commerce channel revenue maintained a rapid growth rate; 18Q4 companies directly operated, joined, and online revenue increased by -13.

63%, -40.

48%, 198.

67%, the offline income interval has been extended. In 2018, the double-eleven double eleven should reach 85.76 million times, an increase of 48%. The merger, acquisition, and gift information are consolidated to drive rapid growth online.

In 19Q1, the company directly operated and joined, and its online income increased by -9.

75%, -1.

84%, 350.

24%, the decline in offline revenue narrowed.

In 18 years, the company opened 56 net stores, with a total of 973 stores at the end of the period, with an increase of 6 in extension.

11%, of which 359 directly operated stores, an increase of 6.

85%, mainly for Yin Mo, Anzheng men’s clothing and other brands, new stores, direct sales same store 2 down.

39%; 614 franchise stores, an increase of 5.

68%, mainly due to the net opening of the Merchants, Mossack, Fina Chen and other brands merged, and the same store dropped 6.


In 19Q1, the company had 16 net closed stores, with a total of 957 stores at the end of the period.

The consolidation affects multiple financial indicators, with gross margins falling, inventory growth, and gross margins: gross margins for the same 18 years have fallen by 3%.

47PCT to 63.

27%, mainly due to the decrease in the gross profit margin of the apparel business and the low gross profit margin of the e-commerce agency operation.

The gross profit margin of apparel decreased by 1 in 2018.

50PCT to 66.

73%, the e-commerce agency’s gross profit margin is 24.


In terms of different brands, in 2018, the gross profit margins of Yizi, Yin Mo, Anzheng Menswear, Mosak, Fina Chen, and Anna Kou increased by -0.

30PCT, +0.

02PCT, +4.

49PCT, -9.

18PCT, -4.
11PCT, -12.
92PCT to 65.

00%, 76.

69%, 75.

50%, 52.

11%, 73.

13%, 22.


The percentage of online income of the low-margin brand of Fangzi brand increased, and the gross profit margin decreased slightly; the sales price of Anzheng menswear design was optimized, and the improvement of discount control led to the improvement of gross profit margin.

In terms of different channels, in 2018, we directly operated and joined, and the gross profit margin of online channels increased by -0 respectively.

43PCT, 0.

26PCT, -3.

76PCT to 72.

53%, 67.

30%, 42.

40%, the decline in online gross profit margin is mainly consolidated by Li Shang information.

18Q1-19Q1 gross margin was 68.

71% (-1.

72PCT), 67.

90% (-0.

47PCT), 66.

32% (-0.

02PCT), 52.

90% (-10.

31PCT), 53.

80% (-14.

91PCT), 18Q4-19Q1 consolation information, the gross profit margin decreased by 19Q1 clothing gross profit margin was 68.

03%, basically flat for one year.

Expense rate: Expense rate (including research and development expenses) increased by 0 during 2018.

70PCT to 45.

14%, of which the sales expense ratio increased by 0.

39PCT to 31.

76%, mainly due to the increase in the number of direct-operated stores, shopping mall turnover and advertising expenses increased; management expense ratio (including research and development expenses) increased by 0.

13PCT to 13.

42%, mainly due to the consolidation of the information on the acquisition of fashion gifts, employee compensation increased; the financial expense ratio increased by zero.

18 PCT to -0.

04%, mainly due to the decrease in interest income from bank deposits.

During the 19Q1 period, the expense ratio (including research and development expenses) decreased by 9.

72PCT to 29.

91%, of which the sales, management, and financial expense ratio decreased by 6.
55PCT, 2.
45PCT, 0.

73 PCT to 21.

98%, 8.

83%, -0.

82%, mainly affected by the consolidation of gift information.

Other financial indicators: 1) Inventories in 2018 increased by 66 compared to the beginning of the year.

88% to 7.

USD 9.1 billion, due to the increase in the number of stores and sales of the company, the increase in production and stocking; and the acquisition of Lishang information increased inventory1.

5.8 billion yuan.

18-year inventory turnover ratio, inventory income ratio is 0.

96, 0.

48,17 for the same period in 2017.

11, 0.

33. The company’s inventory turnover has made a breakthrough.

At the end of 2018, the company’s storage age accounted for 84% of its stock in two years.

61%, an increase of 9 from the beginning of the year.

61PCT, the inventory structure is abnormally healthy.

At the end of March 2019, the company’s inventory was downgraded earlier1.

77% to 7.

7.7 billion yuan, 19Q1 inventory turnover rate, inventory income ratio is 0.

33, 1.

41, 0 from earlier 18Q1.

27, 3.

52 has improved.

2) Accounts receivable at the end of 2018 increased by 30 compared with the beginning of the year.

77% to 1.

US $ 3.6 billion, mainly due to the expansion of sales and consolidation of gift information, the turnover days of accounts receivable was 26.

16 days, increase by 1 every year.

24 days.

Accounts receivable at the end of March 2019 increased by 3 from the beginning of the year.

68% to 1.

4.1 billion, accounts receivable turnover days22.

52 days, down 3 at the same time.

64 days.

3) Asset impairment losses increased by 34 in 2018.

23% to 6012.

610,000 yuan, mainly due to the year-on-year increase in the company’s inventory loss.

In 2019Q1, asset impairment losses also increased by 0.

50% to 954.
460,000 yuan.
4) Investment income increased by 86 in 2018.

27% to 7961.

09 million yuan, mainly due to a significant increase in wealth management income.

The return on investment in Q1 2019 decreased by 10.

06% to 814.

180,000 yuan.

5) Operating cash flow in 2018 also decreased by 70.

04% to 9509.

510,000 yuan, mainly due to the company in the off-season production of autumn and winter clothing in advance stocking and out-of-peak procurement of fabrics, payment exceeded the increase in payment.

2019Q1 operating net cash flow was 6,332.

770,000 yuan (-480 in 18Q1).

590 thousand yuan).

Optimize the apparel marketing system, actively expand the company’s optimized marketing system to the mother and infant area, and strengthen the management ability of the main apparel industry.

In 2018, the company changed from a single-brand self-built marketing system to a multi-brand marketing and sharing system. From brand-by-region management to regional unified management of all brands at the same time, it will join resources to open up unified management and use large brand resources to drive small brands.Achieve superior resource sharing.

The company continued to promote regional profit sharing mechanisms, regional authorization and empowerment and other measures to improve channel management capabilities.

The company actively expands into the field of mothers and babies and expands performance growth points.

The mother and baby industry has better growth and great potential for development. In February 2018, the company established a holding subsidiary to operate the British luxury brands Stella McCartney and Stella McCartney Kids in China. In October 2018, it acquired the e-commerce agency operator in the mother and baby sector.Shang information, in December 2018 shares in children’s clothing brand Frog Prince, forming a multi-brand layout.

The company has mastered the operating experience of mother and infant standard products, and its future progress will further extend to the fields of cosmetics (makeup, skin care), jewelry and other fields.

The main clothing industry is expected to resume growth. Lishang Information consolidated the profit level. We believe that: 1) In terms of income, affected by the economic environment, the company’s revenue growth rate has improved after 2018Q2, and the revenue of many brands has decreased in 18Q4. The company adjusted its management model.Use major brand resources to drive small brands to open stores.

In Q1 2019, the revenue of the main clothing industry improved month-on-year. Among them, the brand of Zizi has matured, the income rate has ended and adjusted to resume growth, and the high growth of online channels has continued.

In terms of small brands, Yin Mo has a contradictory income volume and relatively stable growth. Fina Chen still needs to optimize product design, cost performance, and other aspects. Revenue is still expected to be adjusted. Anzheng menswear product style adjustment is basically in place. Revenue growth is expected to continue.After picking up, Mossack ended its product and positioning adjustments, replacing Xunzi’s franchisee resource store and resumed expansion.

2) In terms of profitability, 2018’s equity incentives, new product launches, store image upgrades and other benefits affect the company’s profit. In 2019, the company will control discount control efforts, strengthen cost control and improve the profitability of the main apparel industry.

Lishang Information achieved net profit of 6281 in 2018.

340,000 yuan, fulfilling performance commitments (net profit is not less than 55 million yuan), but affected by the expense recognition and consolidated net profit is only 157.

Contribution amount is 490,000. In 2019, the scale of Lishang information is consolidated, and the committed net profit is not less than 66 million, which is expected to increase the company’s profit level.

3) On February 1, 2019, the company plans to repurchase shares for 40 to 80 million shares, and the repurchase price does not exceed 15 yuan / share, and the repurchased shares are calculated at the upper limit of 533.

330,000 shares, accounting for 1 of the total share capital.

32%, the repurchase period is February 18, 2020.

Share repurchases will be used for equity incentives and employee stock ownership plans, demonstrating share confidence.

As of March 13, 2019, the company repurchased 59.

120,000 shares, accounting for 0 of the total share capital.

15%, the repurchase amount is 715.

850,000 yuan, the average repurchase price is 12.

11 yuan / share.

Considering that the company’s clothing main business revenue growth exceeded expectations, we lowered its EPS forecast for 2019-20 to 0.


07 yuan (previous average 1).


46), the EPS is predicted to be 1 in 2021.
20 yuan, currently expected to correspond to 14 times PE in 2019, the company’s main clothing industry has a large room for growth, and gradually extended to the field of mother-to-child and other fashion standards. It is estimated that the relative performance growth rate is at a deviating level, and maintain a “buy” rating.
Risk warning: weak 佛山桑拿网 consumption, shop opening progress is not up to expectations, inventory risks, acquisition targets, and unfulfilled performance promises.