Disu Fashion (603587): Terminal operation capability improved Q1 performance exceeded expectations

In 2018, revenue / net profit attributable 苏州桑拿网 to mothers increased by 7.

94% / 19.

59%, with stable operations.

The company achieved 21 trillion in revenue in 2018, an increase of 7.

94%; net profit attributable to mother 5.

74 trillion, with an increase of 19.

59%.

18Q4 revenue / net profit increased by 11 respectively.

80% / 2.

71%.

Gross profit margin decreased by 0 in 2018.

94pct to 73.

90%, sales expense ratio increased by 2.

37% to 33.

68%, the management expense ratio increased by 0.

85pct to 8.

75%, mainly due to shop rents, increased staff costs, and related expenses brought by men’s clothing training. In 2017, Anke Company accrued bad debts and returned 0 in 2018.

75 ppm, the comprehensive economic net interest rate increased by 2.

66% to 27.

33%.

The company plans to pay a dividend of 10 yuan for every 10 shares with a dividend rate of 69.

85%, dividend yield 3.

54%.

Improved terminal operation capabilities.

In 2018, the company strengthened terminal management such as member management and store staff training, expanded the store cautiously, and the revenue growth rate was mainly contributed by the same store growth.

In terms of brands, ①DA contributed revenue12.

3.1 billion, an increase of 7.

15%.

At the end of the period, it had 613 stores (directly operated 199 / distribution 414), a decrease of one.

② DZ contributes income 6.

9.4 billion, an increase of 6.

88%.

At the end of the period, it had 383 stores (direct sales 138 / distribution 245), a net increase of 15.

DZ locates mid-end women’s clothing and competes in opening stores. In the future, it will be the company’s main focus.

③DM contributes income 1.

700 million, an increase of 14.

77%, with 53 stores (a net increase of 7).

In terms of different channels, direct sales and distribution are equally important, contributing revenue9.1/9.

300 million, an increase of 5.

44% / 5.

39%; the growth rate of e-commerce is eye-catching, with an increase of 30.

76% to 2.

US $ 5.6 billion, mainly due to the increase in the proportion of new online products during the period and the launch of the micro-mall.

The company operates steadily.

The company’s accounts receivable turnover days in 2018 were 9.

76 days, unchanged from the previous year; inventory turnover days decreased by 11 days to 168 days compared with the same period of the previous year, and the inventory structure was healthy. The storage age accounted for nearly 70% of the inventory in a year (about 60% in 2017).Over 100%.

The company has stable cash flow and net cash from operating activities.

8.5 billion, unchanged from the previous year, accounting for 27 of operating income.

86%.

The performance of the first quarter of 2019 has grown rapidly, and the expansion of terminal operation capabilities is expected to continue to increase.

2019Q1 revenue increased by 13.

53% to 5.

8.4 billion, net profit attributable to mothers increased by 32.

58% to 1.

95 trillion, of which government subsidies affect 0.

3.5 billion.

As of 2019Q1, the company’s terminal stores were 1,048, a decrease of 14 from the beginning of the period. The growth in performance was mainly driven by the same store growth.

DA income 3.

3.5 billion (+10.

12%), DZ income 1.

9.4 billion (+14.

66%), DM income is 0.

4.8 billion (+21.

43%), RA contributed 4.6 million in revenue.

According to our estimates, the same-store growth rate in the first quarter reached double digits.

Looking ahead, we expect the company to open 10% of its stores, and the same store level will continue to improve.

Investment Advice.

As a leader in China’s mid-to-high-end women’s wear, the company has extremely powerful design capabilities, excellent supply chain control capabilities, continuous system refinement of expanded terminal management, and solid performance improvement.

The company’s profitability and operating capacity are at the leading level in the industry, and the family holdings have rich dividends.

It is estimated that the net profit for 2019/2020/2021 will be 6, respectively.

5/7.

65/8.

9 trillion, the corresponding EPS is 1.

62/1.

91/2.

22 yuan, corresponding estimates are 17/15/13 times, maintaining the “overweight” level.

Risk reminders: Weak consumption due to the macroeconomic downturn; weaker-than-expected new brand cultivation; and corresponding risks caused by supplier transfers.