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Zhou Dasheng (002867) annual report comments: 18Q4 growth rate has improved, joining channels continue to expand rapidly

20/03/2020

Zhou Dasheng (002867) annual report comments: 18Q4 growth rate has improved, joining channels continue to expand rapidly

Core point of view The company’s operating income and net profit increased by 27 in 18 years.

97% and 36.

15%, net profit after deduction is increased by 32.
.

53%, ROE reached 22.

18%; in the fourth quarter, single-quarter operating income and net profit increased by 21 respectively.

53% vs. 20.

01%, revenue and profit growth have improved from the previous three quarters, consistent with the trend of the gold and jewelry industry.

The company’s proposed dividend is 0.

65 yuan, 5 shares for every 10 shares.

The rapid growth of store openings and the growth of franchised single store bookings are the main driving forces for the company’s high growth. It has gradually opened 651 net stores (26 for direct sales and 625 for franchise) and about 23% of net opening.At the end of the year, there were a total of 3,375 stores, with franchised stores accounting for 91%.

In terms of different channels, the revenue from franchise business increased by 35 in 18 years.

14% (single store revenue increased by 11.

15%), of which restructuring wholesale income increased 38.

83% (single store growth of 14.

2%), representing a 26% increase in royalties from prime wholesale brands.

01% (single store growth of 3.

65%); revenue from self-operated offline increased by 10.

86% (single store revenue increased by 11.

(64%, prime replacement), and self-operated online revenue increased by 23.

69%, income ratio reached 7.

18%.

In 18 years, the company’s comprehensive gross profit margin increased temporarily1.

62 points, of which the gross profit margin of franchise business increased by 1.

36pct; during the period, the expense rate rose slightly.

45pct, better control, of which the sales expense ratio decreased by 1.

05pct, the management expense ratio and financial expense ratio increased by 0 respectively.

80pct and 0.

71 points.

Net cash from operating activities 南京桑拿网 for the 18 years increased by 3 per year.

3%, the company’s inventory increased 22 earlier at the end of the year.

93%, accounts receivable decreased by 13.
.

56%.

Deeply plowing into the low-line market, excellent long-term franchise operators, focusing on the diamond jewelry field to supplement younger marketing strategies will promote the company to fully share the dividends of domestic jewelry consumption personalization and structural upgrade in the future, rapid expansion of offline stores and high proportion of new storesIt provides a good guarantee for the company’s short-to-medium-term performance growth, and the e-commerce business also forms a good complementary effect with offline jewelry sales. Adequate capital and a sufficient incentive system will also ensure its subsequent better operation and development.

The company operates in a standardized asset-light model. In recent years, both gross profit margin and net profit margin have been on the rise. ROE performance over the years has been a marked average level among peers.

Financial forecast and investment recommendations Based on the annual report and the overall environment of consumption, we slightly lower the company’s revenue forecast for the next three years and raise its gross profit margin forecast. The company’s 2019-2021 earnings are expected to be 2 respectively.

04 yuan, 2.
45 yuan and 2.

88 yuan (Originally predicted that the expected income for 19-20 years will be 2.
02 yuan and 2.

43 yuan), with reference to the average valuation of comparable companies in 2019, giving the company 22 times PE in 19 years, corresponding to a target price of 44.

88 yuan, maintaining the company’s “Buy” rating.

Risk warning: the increase in the prices of raw materials such as gold, platinum, diamonds, the retail pressure brought by the macroeconomic downturn, and major defects in product quality.