Jiangnan Cloth Clothing To Maintain 20%+ Performance Growth Continues To Push The New Brand Gross Margin Drop

3306.HK, which released its mid-term results at noon yesterday, soared up to 14.53% to HK $14.98 in the afternoon and rose to 250 average.

Since its listing in Hong Kong in 2016, Jiangnan cloth has maintained its 20%+ growth, and the recent 2019 half year is no exception.

In the first half of fiscal year ending December 2018, the Zhejiang designer brand and retailer achieved a revenue of 2 billion 27 million 300 thousand yuan (RMB, the same below), an increase of 22.6% over the previous year's 1 billion 654 million yuan, mainly due to the expansion of the retail network, the rapid development of e-commerce and new business, and the steady growth of 3.4% compared with the same store and the member plan and inventory sharing and distribution system.

Over the past six months, the size and sticky growth momentum of the members of Jiangnan Buyi continued to be strong, and the number of member accounts increased by 600 thousand. The sales contributed by more than 3 million 100 thousand members accounted for 70% of the total retail sales of the group.

The number of active members reached 395 thousand, and the number of member accounts purchased over 5000 yuan in 2018 increased by 30% to 182 thousand, and their total retail sales amounted to 2 billion 170 million yuan, an increase of 30%.

On the other hand, the incremental retail sales generated by the inventory sharing and distribution system increased to $402 million 200 thousand from 367 million 800 thousand yuan in the same period last year, accounting for 13.6% of the total retail sales.

The group has now divided its eight brands into three major businesses.

The income of the mature brand JNBY increased by 19.1% to 1 billion 155 million 900 thousand yuan, still accounted for 57% of the group's sales; the growth brand revenue increased by 26.8%; the growth rate of Croquis's sketches, JNBY by JNBY and less were all above 20%; among them, the children's wear brand JNBY by JNBY was promoted by 33%; the growth of the new brand was 22.6%; the business included the pioneer professional men's wear brand SAMO, the fashion environmental brand Reverb and the designer brand collection shop launched by the group in April 2018, June and December, and the medium-term loss of the business was more than 16 million yuan.

Just yesterday, Jiangnan Buyi announced the launch of the new men's designer brand A Personal Note 73, and invited the Italy designer Andrea Pompilio to design two series of Chinese made fashion series with Italy quality and taste each year. The designer's identity in Jiangnan Buyi is yet to be determined.

A Personal Note 73 is targeted at the contemporary youth group. 58% of men's clothing is priced below 2000 yuan, while the proportion of children's clothing is less than 1000 yuan, which is 61%.

Management revealed that the brand will open 10 stores in the financial year, of which 1/3 will be located in the first tier cities.

As of the end of December 2018, Jiangnan Buyi has 1994 independent retail outlets in China and 17 other countries and regions in the world, a net increase of 163 stores over the end of June.

The revenue from offline channels increased by 19.2% to 1 billion 804 million 800 thousand yuan over the same period, while the growth of online channels reached 57.1%. The income of 220 million 300 thousand yuan increased from 8.5% in the previous year to 10.9%.

However, due to the low gross margin of e-commerce, the overall gross profit margin in the medium term dropped by 120 basis points to 61.4%.

Net profit rose to 22.1% to 380 million 900 thousand yuan on a yearly basis, driven by strong revenue growth.

The interim dividend announced by the board of directors is 0.28 yuan (equivalent to HK $0.32), which is 40% higher than that of 0.20 yuan (equivalent to HK $0.25) in the same period of the previous year.

3306.HK on Wednesday reported HK $14.44, an increase of 10.40% on the whole day, and the stock fell 6.36% in the past 12 months.

Author: Lin Biying