Semir Clothing: Children'S Clothing Continues To Grow Rapidly, Casual Wear Q3 Has Been Adjusted.

In the three quarter, leisure wear business has been adjusted and KIDILIZ has lost. The net profit in the first three quarters increased by 3%, slightly lower than expected. 1) in the 3 quarter of 19 years, the revenue reached 13 billion 260 million yuan, an increase of 35.8% over the same period last year, resulting in a net profit of 1 billion 310 million yuan, an increase of 2.8% over the previous year, and a net profit of 1 billion 250 million yuan, up 3.5% over the same period last year. Excluding KIDILIZ and the impact of the table (estimated losses of about 165 million yuan in the first three quarters), the original business revenue in the first three quarters was estimated to be about 11 billion 100 million yuan, an increase of 13% over the previous year, and net profit of about 1 billion 470 million yuan, an increase of 15.6% over the previous year. 2) 19Q3 realized revenue of 5 billion 40 million yuan, an increase of 19.1% over the same period last year, and realized net profit of 585 million yuan, down 3.2% from the same period last year. Excluding KIDILIZ and the impact of the table (estimated Q3 loss of about 55 million yuan), the original business Q3 realized income of about 4 billion 300 million yuan, an increase of 3% over the same period, and net profit of about 640 million yuan, an increase of 6% over the same period last year.

The acquisition and consolidation of the overall scale is obvious, gross margin and period cost increase significantly, asset quality is relatively stable. 1) combined with KIDILIZ, the gross and interest rates have increased significantly. 19 years ago, the gross profit margin of the 3 quarter increased by 5.6pct to 44.4% over the same period last year, mainly due to the KIDILIZ business gross margin over 65%, much higher than the original gross margin of the company's business. At the same time, due to the impact of the table, the sales cost rate increased by 7.8pct to 23.9% compared with the same period last year. The management fee rate (including R & D expenses) increased by 1.9pct to 6% compared with the same period last year, and the net interest rate decreased by 3.2pct to 9.8% compared with the same period last year. 2) asset quality still has room for improvement. The accounts receivable increased from 330 million yuan to 2 billion 280 million yuan in the 3 quarter 19 years ago, and the inventory increased by 870 million yuan to 5 billion 300 million yuan compared with the beginning of the year. 19 years ago, the net operating cash flow in the 3 quarter was -2.9 billion yuan, a decrease of 320 million yuan compared with the same period last year, but improved by 130 million yuan compared with the end of the two quarter.

The children's wear business continued to grow rapidly, and the leisure wear business was adjusted in the three quarter. 1) in the three quarter of 19 years ago, the growth of the original children's clothing business income was better, and the growth rate was expected to remain above 20%. In the three quarter, it maintained two digit growth, and the overall momentum was good. 2) 19 quarter three years ago, leisure wear business revenue is expected to maintain a positive growth, including three quarter adjustment, mainly due to the slowdown in all consumption under the line, and the delivery frequency of the company has some impact.

Under the line, the channel is steadily expanding, and the electricity supplier continues to grow at a high level. 1) the company's stores continued to grow, and the total number of stores is expected to continue to increase rapidly in the two quarter, with new stores mainly dominated by children's clothing. 2) the electricity supplier in the first three quarters is expected to maintain a growth rate of around 30%, of which the growth rate of children's clothing business is more than 30%, and the growth momentum is good.

The company's children's wear continues to pilot, casual wear is growing steadily, children's clothing brand strategic layout is perfect, continuous and rapid growth, to maintain the "buy" rating. The company accelerated its sales in 18 years and laid the foundation for 19 years' performance. The leading rate of children's wear market increased rapidly, and casual wear increased steadily. Taking into account the adjustment in the three quarter of casual wear business, we slightly lowered the original profit forecast. It is estimated that the net profit of the net profit in the 19-21 years is 18.7/22.1/25.4 billion yuan (originally 19.0/22.8/26.4 billion yuan), corresponding to PE 18/15/13 times respectively, maintaining the "buy" rating.