Hongdou Shares (600400) Company Dynamic Comment: Q3 Revenue Growth Increases, Expects New Product Down

Hongdou Shares (600400) Company Dynamic Comment: Q3 Revenue Growth Increases, Expects New Product Down
Event: The company released the third quarter of 2019 report, and achieved operating income in the third quarter of 201917.8.4 billion, an annual increase of 5.42%, achieving net profit attributable to shareholders of listed companies.44 trillion, down 16 a year.93%, realized net profit attributable to shareholders of the parent company after deduction.1.4 billion, down 16 a year.79%.The basic return is 0.06 yuan. Q3 revenue accelerates, and expenses increase affect performance growth: the company achieved revenue 17 in the first three quarters of 2019.84 ppm, a five-year increase of 5.42%; net profit attributable to mothers1.44 trillion, down 16 a year.93%; net profit attributable to non-attributed mothers1.1.4 billion, down 16 a year.79%.The company achieved revenue in the third quarter alone.40,000 yuan, an increase of 16 in ten years.95%; net profit attributable to mother is 0.49 杭州夜网 trillion, a decline of 20 a year.79%; net profit deducted from non-attribution to 0.30 trillion, down 14 a year.83%.Revenue growth picked up in the third and third quarters, mainly due to the rapid growth of the OEM business and Hodo’s menswear growth rate to increase sequentially. The increase in gross profit margin will increase expenses and improve operating cash flow: the company’s gross profit margin increased in the first three quarters of 2019.52pct to 31.57%, it is estimated that the suppliers in the “pull supply chain” will actively take advantage of the company’s profit and product conversion and upgrade.During the first three quarters, the company’s expense ratio was maximized4.74pct, in which the sales / management / R & D / financial expense ratios were increased.77 points 1.27pct / 0.03pct / 0.67 points.The increase in sales expenses was mainly due to the increase in sales personnel’s remuneration and advertising expenses; the increase in management expenses was mainly due to the increase in management personnel expenses and depreciation booth expenses; the increase in financial expenses was mainly due to the increase in short-term expenses and the decrease in expenses.The company’s cash flow situation has improved, and the net operating cash flow in the first three quarters was -0.380,000 yuan, an increase of 0 from 19H1.58 points. Hodo menswear is growing at a steady rate, and Q3 OEM processing is growing at a faster rate: in terms of business, in the first three quarters of 2019, Hodo brand menswear / Hodo professional wear / OEM processing / wool yarn printing and dyeing respectively achieved revenue of 12.92/0.98/3.09/0.8.6 billion yuan, the proportion of main business was 72.4% / 5.48% / 17.32% / 4.81%.Among them, the Hodo brand men’s clothing and OEM processing business revenue increased by 6 respectively.42% / 47.82%, an improvement over 19H1; the business attire and printing and dyeing business decreased by 42.twenty two.37%.In the fourth quarter, Hodo Menswear and the well-known European designer Fabio DelBianco’s “Dengfeng Series” down jacket will be listed in major cities, and with certain marketing promotion, it is expected to drive revenue growth. Online growth is slow, and offline extension stores are driving growth.In the first three quarters of 2019, the proportion of Hodo brand menswear direct sales / joining / e-commerce was about 5% / 77% / 19%, respectively. Among them, the proportion of franchising increased from 19H1. (1) Direct sales: In the first three quarters of 2019, the company’s direct sales stores achieved zero revenue.63 trillion, with a decrease of 5.45%, mainly because some stores joined the direct management or adjust the number of operating stores net reduction, the number of direct sales stores net reduction of 5 to 56 consecutively.(2) Franchise: The company’s franchised stores achieved revenue in the first three quarters of 20199.8.9 billion, an increase of 8.93%, mainly driven by extension stores, the number of franchised stores increased by 117 to 1,323 in ten years.(3) E-commerce: The company’s e-commerce channels achieved revenue in the first three quarters of 20192.400 million, an increase of 0.2%, the online growth rate is moderately slowed by the platform adjustment and destocking, but it is expected that the growth rate will increase under the replenishment base in the fourth quarter. In the long run, the online market will continue to expand to more platforms, such as YunjiSpace. Investment suggestion: The company is a well-known mass menswear company in China. After the implementation of supply chain and product reforms in 2014, the Hodo brand menswear is growing rapidly in multiple channels, and Hodo professional wear is also actively expanding. The company’s EPS for 2019-2021 is predicted to be 0.07 yuan / 0.08 yuan / 0.08 yuan, corresponding to PE 45X / 42X / 39X, maintain “recommended” investment rating. Risk reminder: The industry’s prosperity is lower than expected, industry competition is intensified, channel operating costs have risen too quickly, product quality risks, and channel expansion has fallen short of expectations.