On the evening of June 23, Bosideng (03998.HK) disclosed its 21/22 performance report. According to the data, as of March 31, 2022, Bosideng's total revenue rose by 20.0% year-on-year to about RMB16.214 billion, achieving a compound growth rate of 18.9% for five consecutive years; Gross profit margin increased by 1.5 percentage points year-on-year to 60.1%, and net profit attributable to the mother rose 20.6% year-on-year to approximately RMB2.062 billion, achieving a compound growth rate of 39.4% for five consecutive years, a record high. Dividends per share were HK13.5 cents.
2021 is an extremely extraordinary year, the international pattern has evolved profoundly, market consumption has suffered a significant impact, and the global industrial chain supply chain is facing unprecedented difficulties and challenges. In March 2022, the retail sales of apparel in the mainland were 96.02 billion yuan, down 12.70% year-on-year, and the growth rate of most apparel companies slowed down quarter by quarter.
In the complex external environment, Bosideng's revenue and net profit have reached a record high for five consecutive years, and the revenue and net profit of the two core businesses, brand down jacket business and OEM processing management business, have reached record highs. The excellent performance shows bosideng's firm strategic direction of "focusing on the main channel and focusing on the main brand", locking in young consumer groups, and continuously upgrading the strong corporate resilience under the digital operation capability.
How does corporate resilience manifest itself? To be a fashion brand recognized by young consumer groups
According to the survey, the young people aged 16-30 are the main force of mainland clothing consumption, they pursue popularity and personality, more receptive to new things, clothing brands want to obtain long-term development potential, need to continuously improve the psychological cognition of young consumers on the brand.
According to the Ipsos report, Bosideng brand recognition and first mention rate are in the leading position in China's apparel industry, with a brand reputation of 9.11, becoming the preferred down jacket expert for more than 71% of Chinese consumers. For the second time this year, Bosideng was selected as the "2022 World's Most Valuable 50 Apparel Brands List" released by Brand Finance, the world's leading brand value evaluation agency, ranking 48th.
On 1 June 2022, Bosideng was included in the Hang Seng CSI Z Index. The Hang Seng CSI Gen Z Index tracks the performance of CSI and Hong Kong listed companies related to The behavior or preferences of Gen Z. It is reported that ANTA, Li Ning, Bubble Mart and other consumer goods and Internet giants loved by young people are among them.
On the basis of enabling young consumers to gain brand recognition, Bosideng has clarified the brand positioning of "the world's leading down jacket expert", and continued to consolidate the four core competitiveness of "brand leadership, product leadership, channel upgrading, high-quality and fast reaction", and strengthened the core of enterprise development.
According to the performance report data, the revenue of the company's brand down jacket business increased by 21.4% year-on-year to about RMB13.223 billion. Among them, Bosideng brand revenue rose by 16.3% year-on-year to about RMB11.618 billion, achieving a compound growth rate of 23.4% for five consecutive years, a record high. The brand revenue of Xuezhongfei was approximately RMB974 million, up 76.6% year-on-year, with a compound growth rate of 40.1% for five consecutive years.
In the 2021/22 fiscal year, Bosideng launched a variety of products that combine fashion and functionality for young and new consumer groups under the age of 35. Among them, the multi-functional jacket won the ISPO Award Global Design Award, and the composite structure camping down jacket and zero-pressure down puffs won the ISPO Global Design Award and the Red Dot Design Award respectively.
The trench coat down jacket pioneered by Bosideng broke the "separate" design of the traditional down jacket, and maximized the preservation of the classic design of the British trench coat by increasing the "down layer" and "integration", and the process skillfully adopted the innovative partition filling technology, each production required more than 52 pieces of clothing, took 960 hours, and went through 150 production processes; On the fabric, the final exclusive customization of unique fabrics, while achieving the characteristics of warmth, slimness, windproof and rainproof, and wrinkle resistance; In terms of version, the high-tech 3D stereoscopic human modeling was used for data analysis to finally create a trench coat version that conformed to Asians. And through the endorsement of top traffic Yang Mi and Xiao Zhan, this new category of down that has completed the comprehensive innovation in design, process, fabric and shape has been pushed to the business elite, and at the same time, the Bosideng brand has jumped to more than 1800 blank price bands.
Since then, the Dengfeng 2.0 series has been launched, using intelligent temperature regulation materials similar to the Mars probe Zhurong, and quadruple warm temperature control technology, which has increased the thermal performance by 15% and broken through the market base value. For the first time, aviation material technology was applied to the field of clothing, and the first application of "China Beidou satellite navigation system" in the field of down jackets was realized. It is a veritable "industry top match" and to help the Chinese Antarctic expedition team to carry out the 38th Antarctic scientific expedition.
With the rebranding and product upgrading, the product structure of Bosideng brand sales has shown a continuous upward trend; Therefore, the increase in the gross profit margin of the Bosideng brand has led to the improvement of the overall gross profit margin of the down jacket sector. Performance report data shows that bosideng group gross profit margin achieved five consecutive years of steady improvement, in the 21/22 fiscal year, reaching 60.1%; Up 1.5 percentage points year-on-year. Bosideng brand gross margin also achieved a five-year steady increase, reaching 69.4% in the 21/22 fiscal year, up 3.2 percentage points year-on-year.
Where does corporate resilience come from? Full-link digital operation, efficiency improvement is the key
Under the background of digital economy, the textile and garment industry has achieved upgrading and development through digitalization and intelligence, which has become an important way to enhance the competitiveness of the textile and garment industry. Bosideng since 2014 began to explore the full-link digital and intelligent transformation, in the 2021/22 fiscal year Bosideng released the IT top-level architecture in line with the technology trend of the times, based on the IT product life cycle management principles, comprehensively formulated the IT product offline, upgrade, integration, reconstruction, new three-year implementation plan, and finally achieve the goal of office mobility, business online, operation digitalization, decision-making intelligence, to provide a powerful technical solution tool or solution for the group's digital transformation.
On the basis of full-link digitalization, Bosideng has implemented and effectively implemented the reduction of the proportion of first orders, the continuous implementation of pull-type replenishment, and the integrated operation mode of omni-channel commodities, although under the test of uncertain factors such as weather and dot-like epidemic, it has effectively controlled the inventory level of finished products. As of March 31, 2022, Bosideng Group's inventory turnover days were 150 days, down 25 days from March 31, 2021. The decline in the number of inventory turnover days, on the one hand, lays a solid and easy inventory management foundation for Bosideng Group's sales in the next year, and on the other hand, it also highlights the strong operational resilience of Bosideng Group as a leading down jacket company in China in the face of uncertain negative factors.
In terms of offline channels, Bosideng pays more attention to the structural layout of channels and channel quality, locks beijing, Shanghai and 13 first-tier and new first-tier cities and mainstream business circles, "closes small stores, opens big stores" lays more and higher-quality stores in shopping malls, fashion business circles and the core of the city, and strengthens the layout of multi-level markets.
In the 2021/22 fiscal year, Bosideng's online channels were further transformed and expanded, and based on the online omni-channel layout, Bosideng Group achieved sales in more channels. At the same time, in addition to online direct channels such as Tmall, Vipshop, JD.com, and Douyin, Bosideng Group also focuses on improving the operational efficiency of online high-quality dealers through methods such as streamlining efficiency improvement and refined operation. As of March 31, 2022, the Bosideng tmall flagship store has achieved about 6.6 million members and more than 16.9 million fans; In the new JD.com and Douyin online platforms added in this fiscal year, more than 3.7 million new members and more than 7.8 million new fans were added; At the same time, the proportion of young and newborn consumer groups under the age of 35 has steadily increased.
Looking at the performance data of the 2018-2021 fiscal years, it can be found that on the basis of continuously building four core competitiveness such as "brand leadership, product leadership, channel upgrading, and high-quality fast reaction", Bosideng's operating efficiency has gradually improved, and for the fifth consecutive year, the company's net profit attributable to the mother has grown faster than revenue growth.
The investment double rating affirms the resilience of Bosideng development, and the securities firm recognizes the company's value potential
Since 2016, Bosideng has granted 954.7 million stock options to certain core employees and 364.5 million incentive shares to certain core employees; the total number of options and incentive shares is about 1,319.2 million. Excellent employee incentive policy lays a solid foundation for the symbiotic development of the company and employees. The centripetal force of key employees will also be condensed into a long-term driving force for enterprises to resist external forces and achieve long-term sustainable development.
Recently, two international authoritative rating agencies, Moody's and S&P, awarded Bosideng long-term credit ratings of "Baa3 (stable outlook)" and "BBB-(stable outlook)" respectively, making the company not only the first company in the Asia-Pacific brand apparel industry to obtain investment grade, but also the best international credit rating result in China's brand apparel industry so far. This also highlights the capital market's affirmation of Bosideng's prudent financial policies and sound financial performance, reflecting the stable development resilience of Bosideng Group in the business cycle.
Under the background of the rise of the national tide, domestic clothing consumption will usher in a golden growth period in the next decade. Bosideng's excellent corporate quality has led many research institutions to give buy ratings:
Orient Securities Research Report said that the international big names Moncler and Canada Goose have set a benchmark in the domestic down jacket industry, leaving ample space for the promotion of Bosideng brand potential. With the deepening of the trend of national tide and the excellent competitive pattern of the domestic market, Bosideng, as the most competitive domestic brand in the domestic down jacket industry, is optimistic about its long-term sustainable development in the future. Maintain buy rating with a target price of HK$5.4.
The latest research report of Cinda Securities said: Looking to the future, the company is committed to becoming the world's leading down jacket expert, and the volume and price increase is expected to drive revenue growth. The current stock price corresponds to 19.10/16.38/14.00 times PE in the 2022-24 fiscal year, the valuation is at a low level relative to its peers, and the future growth space is large, and the "buy" rating is given for the first time.
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