Hongdou shares (600400) 2019 first quarterly report comments: clothing revenue growth pressures pressure on gross profit margin to promote growth in net profit

Hongdou shares (600400) 2019 first quarterly report comments: clothing revenue growth pressures pressure on gross profit margin to promote growth in net profit
In 19Q1, revenue increased by 9%, net profit increased by 7%, and net profit resumed growth. In the first quarter of 2019, the company 天津夜网 realized revenue7.6.1 billion, an increase of 9.14%, net profit attributable to mother 5097.660,000 yuan, an increase of 6.60%, deducting non-net profit 4224.410,000 yuan, down 8.79%, EPS is 0.02 yuan. The growth rate of deducting non-net profit is lower than income mainly due to sales, increase in management expense ratio and increase in asset impairment losses, while net profit mainly comes from entrusted wealth management income, and government subsidies included in the current profit and loss increase. In terms of quarters, 18Q1-19Q1 company revenue increased by 20.88%, -48.43%, 17.05%, 8.32%, 9.14%, net profit attributable to mother increased by 51.30%, -87.04%, -10.38%, -18.74%, 6.60%. After 18Q2, the impact of the divestiture of the real estate business was eliminated. 18Q4-19Q1 was affected by the severe weakness in clothing consumption, and its income grew rapidly. In 19Q1, gross profit margin increased, investment income increased, and net profit resumed growth. Offline channel expansion drives revenue growth, growth in store efficiency, and distribution of segmented businesses: 2019Q1 company Hodo Menswear, OEM apparel, and other businesses achieved revenue6.55 ppm, 7644.190,000 yuan, 2908.480,000 yuan, an increase of 6.55%, 26.53%, 65.68%. The company’s own brand of red bean men’s clothing stores continued to expand, driving the growth of Hodo’s men’s clothing revenue, OEM processing business, and other businesses (including yarn printing and dyeing) grew rapidly. In terms of channels: 2019Q1 company’s online (private brand), offline (including private brand direct sales, franchise and professional wear group purchase business, OEM processing clothing sales, etc.) revenue was 1.2.3 billion, 6.0.9 billion yuan, an increase of 1.01%, 9.95%.Online, affected by the growth rate of the e-commerce industry, the relative growth rate of revenue growth.In terms of offline channels, Hodo Menswear is directly operated by the company in Q1 2019, and its franchise income is 4,609.930,000 yuan, 4.6.3 billion, an increase of 2.19%, 10.39%, channel expansion led to revenue growth, and store efficiency was replaced by the weak clothing consumption environment and a high base in 18Q1; until the end of March 2019, the company had a total of 62 direct-operated stores, extending its value-added12.At 73%, the efficiency of directly-operated stores decreased by 9.34% to 74.350,000 yuan; joined 1,278 affiliated stores, increasing 21 times.14%, franchise stores decreased by 8.88% to 36.240,000 yuan. The gross profit margin increased significantly, the expense ratio increased, and the inventory fell earlier. The gross profit margin increased by 5 in 2019Q1.50PCT to 30.00%, mainly due to the company’s increased strategic cooperation with suppliers, improving supply chain management capabilities and supplier bargaining power.In terms of business, the gross profit margins of Hodo Menswear for OEM in 2019Q1 were 31.80% (+5.54PCT), 15.96% (+6.26PCT), of which Hodo Menswear is directly managed, with a gross profit margin of 48.34% (+8.53PCT), 27.91% (+7.89PCT), the increase was mainly due to the improvement of the company’s upstream bargaining power. Expense rate: Expense rate increased by 4 during Q1 2019.79PCT to 21.80%, of which the sales expense ratio increased by 1.40PCT to 12.08%, mainly due to the increase in the number of stores, the increase in sales staff expenditures and the increase in amortization costs of smart projects; the management expense ratio (considering research and development costs) increased by 291PCT to 8.96%, mainly due to the increase in research and development expenditure; the financial expense ratio increased by zero.47PCT to 0.75%, mainly due to the increase in short-term working capital borrowing interest. Other financial indicators: 1) The company’s inventory at the end of March 2019 was 2.37 trillion, down 13 earlier.19%, mainly due to the company’s winter clothing products digestion, inventory value decreased.In 1Q1, the company’s inventory turnover ratio was 2.09, 31.14%, 2 in the same period in 18 years.35, 33.91%, the inventory turnover rate is slightly incidental. 2) The accounts receivable of the company at the end of March 2019 is 3.43 trillion, an increase of 2 earlier.69%, mainly due to the expansion of franchise channels, increased support for franchisees, 19Q1 accounts receivable turnover investment 225, compared with 4.74 has improved. 3) Investment income increased by 94 in the first quarter of 2019.10% to 2029.220,000 yuan, mainly due to increased proceeds from idle funds raised to purchase wealth management products. 4) Assets impairment losses in Q1 2019 increased by 27,206.74% to 1409.640,000 yuan, mainly due to the increase in inventory depreciation provisions for inventory goods. 5) The net operating cash flow in Q1 2019 was -9698.940,000 yuan, -8608 in the same period of 18 years.480,000 yuan, mainly due to the increase in the payment of electronic bank acceptance margin. The growth rate of clothing revenue in 19Q1, and cooperation with Perception Group to promote the application of the Internet of Things. We believe that: 1) In terms of clothing revenue, due to the weak overall consumption in 2019Q1, the company’s clothing revenue growth rate was only 2 at the end of March 19, Lower than expected, the growth rate of online income narrowed.In the future, the company will continue to develop offline stores, sink to lower-tier cities, strengthen product management and digital supply chain capabilities, increase single store revenue, and drive clothing revenue growth.2) In 2019, the company strengthened the control of terminal prices, enhanced the bargaining power of suppliers, and promoted the recovery of gross profit margin. The rapid expansion of the number of stores led to the continuous increase in sales expense ratio.3) On April 3, 2019, the company announced that it has signed a strategic cooperation framework agreement with Perception Group to jointly cooperate in smart stores, smart storage, smart manufacturing model factories, etc., and promote the Internet of Things and other technologies in the production, storage, and sales of clothing retail enterprises.In terms of applications, Perception Group is the earliest domestic institution to conduct research and industrialization of the Internet of Things, and achieved revenue of 53 in 2018.90,000 yuan, net profit 2.3.6 billion. As the company’s revenue growth rate in 2019Q1 is relatively relative, we slightly lower the EPS forecast for 2019-21 to 0.09/0.11/0.13 yuan (previous average 0.10/0.12/0.14 yuan), currently expected to correspond to 42 times PE in 19 years, higher short-term increase, we are optimistic about the company’s focus on the main business, clothing performance continues to grow, and the Group’s clothing resources are rich, the future home furnishings, underwear and other clothing-related businesses are expected to inject listed companiesTo maintain the “overweight” rating. Risk warning: The store opening speed is slower than expected, terminal sales continue to be weak, and expenses have increased significantly.