Source: Beast Finance Author: Beast Finance
Monster Finance learned that Pacific Securities recently issued a research report to give 361 Degrees (01361) a "buy" rating. Pacific Securities stated in the research report that 361 Degrees, as the fourth largest domestic sports brand in China, has been deeply involved in the mass sports market for 20 years. After focusing on the main business in 2019, channel optimization and brand upgrading have been promoted simultaneously, revenue has ushered in rapid growth, and cost reduction and efficiency increase have driven profitability. We believe that under the industry trend of the rise of domestic products, the company's market share is expected to further increase.
We predict that the company's net profit attributable to the parent in 2023/24/25 will be 9.34/11.09/1.299 billion yuan, and the corresponding EPS will be 0.45/0.54/0.63 yuan. It is the fourth largest sports brand company in China. Founded in 2003, the company has been deeply involved in the mass sports market for 20 years. At present, it has formed three business lines of 361 degrees adult, 361 degrees children's clothing and 361 degrees international, of which adults contribute the main income. 361 Degree Adult adheres to the dual-drive strategy of professional sports + sports trends, and deploys product lines such as running, basketball, comprehensive training, and sports life. In 2022, the revenue of adults and children will increase by 13.7%/30.3% to 5.397/1.442 billion yuan , gross profit margins were 41.3%/40.9%. Against the trend, the company performed well. In 2022, the company's revenue increased by 17.31% to 6.961 billion yuan, and its net profit increased by 24.17% to 747 million yuan.
The sports industry is booming, and the rise of domestic brands is concentrated on the head: Compared with the traditional apparel industry, the sports shoes and apparel industry has a clear positioning and high universality, covering multiple age groups and multiple scenarios, with a large customer base and the ability to grow big brands , is a high-quality track for the apparel industry. The growth rate of the sports shoes and apparel industry is significantly higher than that of other tracks. The penetration rate of the national sports is rapidly increasing, the consumption capacity and fitness awareness are enhanced, and the superimposed policy support will continue to promote the increase of sports consumption. According to Euromonitor, my country's sports shoes and apparel industry will reach 371.8 billion in 2021, and CR3 will be 43%. The company's market share in 2021 will be 2.6%, ranking ninth/fourth among domestic sports brand companies. The short-term BCI cotton event catalyzes domestic products, and domestic products usher in development opportunities; in the long-term, Generation Z’s recognition of domestic products has increased, and cultural confidence has helped the rise of domestic products. As the fourth largest sports brand company for domestic products, the company’s market share is expected to further increase.
Product marketing channels are multi-dimensional, and children's clothing is expected to become the second growth point. (1) Product side: 361 Degree Adults adheres to the dual-drive strategy of professional sports + sports trends. Among them, the matrix products of running shoes are suitable for runners at all stages, and the technical iteration and performance improvement of basketball shoes combine professionalism with trends to help young consumers. Breakthroughs in group circles drive the improvement of brand power. (2) Channel end: 361-degree store upgrades help terminal efficiency increase, with 9th-generation stores accounting for 48.6%; by closing small stores and opening large stores to improve store efficiency, the annual store efficiency of 361-degree adult large stores will reach 1.44 million in 2022; The rapid development of online channels has captured the traffic dividends of emerging platforms such as Douyin. By the end of 2022, the number of 361-degree adult stores had recovered and increased to 5,480. (3) Marketing: cooperate with major events to rapidly increase the brand's international influence; cooperate with national teams and professional sports teams to strengthen the brand's professional genes; create its own IP to increase user stickiness; sign top athletes and celebrity spokespersons, and cooperate with videos The platform sponsors variety shows to increase the exposure of the brand among young consumers. (4) Children's clothing is expected to become the second growth pole: children's clothing will continue the main brand gene, and will increase by 30.3% to 1.442 billion yuan in 2022, and the gross profit rate will remain between 41% and 44%, which is close to that of adults. In line with the rapid growth of the children's wear market and the rapid increase in the penetration rate of sports brands in the children's wear market, the company's children's wear is expected to become the second growth pole.
The first inclusion in the Shanghai-Hong Kong Stock Connect is expected to bring valuation restoration: the valuation performance of the review company is affected by many factors such as the industry boom cycle, the company's own performance, and liquidity. Compared with comparable companies in the same industry, the company's valuation value is significantly lower. It is expected that the increase in liquidity after the inclusion of Shanghai-Hong Kong Stock Connect is expected to bring about valuation restoration, and the valuation deviation with comparable companies in the industry will gradually narrow.
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