Hongdou Shares (600400) Company Dynamic Comment: Improved gross profit margin and refined management continued to advance

Hongdou Shares (600400) Company Dynamic Comment: Improved gross profit margin and refined management continued to advance
Event: The company released the semi-annual report for 2019, and achieved operating income in the first half of 201912.44 ppm, an increase of ten years.1%; net profit attributable to shareholders of listed companies is 0.95 ‰, a decrease of 14 per year.77%; net profit attributable to shareholders of the parent company after deduction of 0.84 ‰, a decrease of 17 per year.47%.The basic return is 0.04 yuan, a 20% decline each year. In 2Q19, the growth rate of men’s wear and professional wear increased, and the growth rate of performance was slower than that of income.The company achieved revenue 武汉夜网论坛 of 12 in the first half of 2019.4.4 billion, an increase of 1.1%; net profit attributable to mother is 0.9.5 billion, down 14.77%; net profit deducted from non-return to mother 0.8.4 billion, down 17.47%.Single and second quarter revenues4.8.4 billion, a decrease of 9.41%; net profit attributable to mother is 0.44 trillion, with a decrease of 30.88%; net profit deducted from non-return to mother 0.42 trillion, down 24.67%.The revenue growth rate of 19Q2 decreased earlier than that of 19Q1, mainly due to the Hodo brand men’s wear. The growth rate of professional wear revenue was replaced by the previous month. The decline in the growth rate of net profit gradually decreased due to the increase in expenses during the period. The gross profit margin continued to increase, and the expense ratio increased during the period.19H1’s gross profit margin was 31.36%, an increase of 4 per year.61pct is expected to be mainly due to the turnover of consignment products of suppliers under the “pull supply chain”.19H1 company period expenses 24.42%, an increase of 5 per year.68 points, of which the management and R & D expense ratio increased by 2.42pct to 8.59%, mainly due to the increase in management personnel compensation and depreciation and amortization expenses.The financial expense ratio increased by zero.89pct to 0.92%, mainly due to the increase in short-term borrowing interest.Selling expense ratio increased by 2.37 points to 14.49%, mainly due to the increase in sales staff salaries and advertising expenses. In the first half of 2019, the company’s advertising space landed at the Lujiazui subway station with concentrated passenger flow.The brand concept of “Red Beans Light Fashion” was promoted.In the second half of the year, the company will conduct new product launches and other promotional activities. It is expected that the sales expense ratio will continue to increase. Hodo’s menswear growth rate has improved, and professional wear is still more than optimistic.In terms of business, Hodo brand men’s wear / Hodo professional wear / OEM processing / yarn printing and dyeing have achieved revenue 9 respectively.81/0.44/1.60/0.5.9 billion US dollars, the main business accounted for 79% / 4% / 13% / 5% respectively.Among them, in the first half of 2019, the revenue of the Hodo brand men’s clothing and OEM processing business increased by 5 respectively.95% / 1.73%, but the growth rate in the second quarter of the single quarter has improved (respectively +2.75% /-17.twenty two%).In the first half of 2019, professional wear and printing and dyeing business decreased by 43.83% / 0.87%. Looking ahead, Hodo menswear brand revenue growth may be slower than last year due to the expected improvement in the speed of expanding stores since this year.Expenditure on professional wear has increased since last year, and it has operated as an independent department since this year. Although 19H1’s revenue has been extended due to the timing of order confirmation, it is almost impossible to see more. Online growth has improved, and offline growth is mainly driven by expansion stores.In the first half of 2019, the proportion of Hodo brand menswear direct sales / joining / e-commerce was about 5% / 74% / 21%, respectively. Among them, the proportion of joining and e-commerce has increased compared with 19Q1.(1) Direct sales: 19H1 company’s direct-operated stores realized zero revenue.51 trillion, with an increase of 10.39%, which is expected to be jointly contributed by store growth and endogenous growth. The number of directly operated stores will increase by 3 to 64 every net.(2) Franchise: 19H1 company joined the store to achieve revenue 7.2.8 billion, an increase of 7.38%, mainly driven by extension stores, the number of franchised stores has increased by 167 to 1,296 in ten years.(3) E-commerce: 19H1 company’s e-commerce channel realized revenue 2.30,000 yuan, an increase of 0.17%.Online growth has slowed down, mainly due to the decline in passenger traffic on the JD platform and the new policy of Vipshop’s depreciation. In the future, it will increase the presence of emerging platforms such as Pinduoduo, and promote cooperation in different industries to achieve two-way drainage. “Omni-channel + flexible supply chain”, refined operation management continued to advance.In April of this year, the company successively launched “omni-channel business” and cooperated with some high-quality suppliers in “flexible supply chain”. The refined management continued to advance.Among them, “omni-channel business” covers all scenes, all stores, all products, the goal is to achieve product access, order access, membership access, and marketing access; “flexible supply chain” strives to adapt to personalization through the quick response of some products, some kind ofThe degree of consumer demand improves the sales and turnover of products.Overall, “omnichannel + flexible supply chain” is an important step for the company to move towards refined management. 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 multi-channel force has grown rapidly, and Hodo professional wear has gradually become one of the new revenue drivers.The company’s EPS for 2019-2021 is predicted to be 0.08 yuan / 0.09 yuan / 0.09 yuan, corresponding PE is 41X / 39X / 37X, maintain “recommended” investment rating. Risk reminders: The industry’s prosperity is not as good as expected; the store expansion is not as 杭州桑拿 good as expected; the risk of slow supply chain upgrades; the risk of increased competition in professional wear;

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