(Report Producer/Analyst: BOC International Securities Hao Shuai Ding Fan)
. Company profile: Focusing on the high-end apparel consumer market, focusing on the main business of sports and leisure. The company was founded in 2003. It is a leading enterprise in domestic high-end sports and leisure apparel. It is mainly engaged in the R&D and design, brand operation and marketing network construction of men's casual apparel.
company anchors the positioning of high-end fashionable sportswear and implements a multi-brand development strategy. It owns two branches of high-end sports and leisure clothing brand Biyinlefen and vacation travel clothing brand Venice Carnival. As of 2022, H1 has a total of 1,125 stores, covering department stores, shopping malls, airport high-speed rail stations, golf courses and other channels nationwide. The company was listed on the Shenzhen Stock Exchange in December 2016. Since its listing, its operations have been stable and its performance has grown rapidly. From 2017 to 2021, its revenue CAGR reached 26.43%, and its net profit CAGR reached 36.33%.
.1 Development history: Golf experts have entered the high-end leisure market. In the past 20 years, the business division has been engaged in a diversified expansion period.
started from professional golf apparel and gradually established its leading position in the high-end casual apparel market. When
was founded, the company focused on the R&D, design and brand operation of golf apparel. Over the years, it has been deeply involved in the apparel market. The company has gradually refined golf culture into casual apparel, proposed the concept of "life golf", and based on the golf series, it has created lifestyle leisure series, fashion leisure series and a new Venice Carnival vacation travel brand line.
's dual-brand and multi-series product matrix has helped the company complete the transition from the professional golf apparel market to the high-end sports and leisure market. By adding the three major advantages of brand effect , product quality, and marketing model, the company has now grown into a leader in high-end casual apparel.
has gone through a start-up growth stage and a single-brand accelerated expansion stage. The company's business is currently in a stage of diversified expansion of brands and channels. The performance is as follows: on the brand side, it implements a multi-brand development strategy and timely launches the vacation travel brand Venice Carnival; on the channel side, it implements an omni-channel development strategy and actively deploys online channels to embrace new retail.
Initial growth period (2003-2012): Golf apparel started, and sports culture attracted attention.
In 2003, Biyinlefen Company was officially established in Guangzhou with only 35 people in the early stage of the business. In 2004, it opened its first store in Nanjing. As the first domestic brand focused on golf apparel, Biyinlefen quickly attracted market attention with its sophisticated design and high-quality fabrics.
Single-brand accelerated expansion period (2012-2018): Entering the high-end leisure market and accelerating the expansion of channel scale.
As the "life golf" concept advocated by the company is recognized and accepted by more people, the company has gradually accelerated its march into the high-end casual wear market.
In 2015, the company cooperated with British designer Paul to carry out brand creative design work. In the same year, a research and development team composed of designers from China, Britain and South Korea was formally established, giving the Biyinlefen brand a halo of international standards.
In 2016, the company successfully landed on the A-share market on the Shenzhen Stock Exchange and was recognized by more consumers.
In 2017, the company launched a series of fashion products, bringing together international trend elements, aiming to expand the brand's target customer group of young consumers who prefer fashion and individuality. Subsequently, the film and television star Yang Shuo was signed as the brand spokesperson, and advertisements were inserted into popular TV series such as " Mr. Love " and " The Great Pediatrician ", Biyinlefen opened the brand's "Star Era".
From 2012 to 2018, the company’s offline stores expanded from 474 to 764, an increase of 61.18%. At this stage, the company aimed at the high-end casual wear market, started explosive expansion with the advantage of sports genes, and quickly occupied the domestic market.
brand and channel diversified expansion period (2018-present): diversified brand strategy expansion and improved online channel layout.
In August 2018, the company officially launched the new brand Venice Carnival to enter the holiday travel apparel market. The launch of the new brand marks the company's launch of a dual-brand operation model and the diversified expansion of its brand strategy.
Biyinlefen Tmall flagship store opened in the first half of 2019, and in August 2020, Biyinlefen settled in JD.com .
As of the end of 2020, the company has opened Tmall flagship store, JD flagship store and Vipshop flagship store, and has fully leveraged the brand's advantages of high sticky customer base and high repurchase rate through live broadcast, Xiaohongshu planting, Douyin, WeChat mini programs and other methods. The development of
online channels has provided customers with a more convenient and efficient way to consume. It has also become a platform to develop new consumption traffic and improve customer stickiness. Online and offline integration has formed an omni-channel layout model.
.2 Brand positioning: from golf to diverse scenes covering
The company takes the Biyinlefen brand as its main line, and its layout covers diverse series such as sports, leisure, and fashion. The main brand of
, Biyinlefen, is positioned in the market segment that combines golf sports with fashion and leisure life. The brand has developed and established three product series: golf, life, and fashion. The target customer base widely covers golf culture enthusiasts, high-income people who prefer low-key luxury, and young consumers who are passionate about individuality and fashionable dressing styles.
products are compatible with sports, life, and fashion, and can meet the dressing needs of the elite in multiple scenes and the exquisite and fashionable consumer tastes. The sub-brand Venice Carnival is positioned in the tourism and vacation market and is a bold attempt by the company to implement the strategic layout of "high-end + segmentation" on the basis of the steady growth of the main brand. The
brand launches a series of products such as parent-child clothing, couples clothing and family clothing around the holiday travel scene, aiming to meet the four core needs of "functionality, design and photo effects, family clothing warm experience and fashion" in high-quality travel life, and then create a segmented brand of vacation travel clothing.
.3 Equity structure: The equity structure is concentrated and stable, and employee stock ownership helps the company work together
The company has a high equity concentration , with the shareholding ratio of persons acting in concert reaching 41.32%. Since its listing, the actual controllers of the company have always been Xie Bingzheng and Feng Lingling. As of September 2022, Xie Bingzheng holds 37.88% of the shares and Feng Lingling holds 3.44% of the shares. The two hold a total of 41.32% of the shares of and . In addition, Shen Jindong is the general manager of the company and holds 3.44% of the company's shares. The company's ownership structure is concentrated and stable.
The third phase of the employee stock ownership plan deeply binds the interests of employees and the company, fully mobilizing the enthusiasm of the entire company.
Since the implementation of the first phase of the employee stock ownership plan in 2017, the company has successively launched the second and third phases of the plan, continuing to implement and iterate this type of equity incentive plan.
In June 2019, all the company's stocks held by the first phase of the employee stock ownership plan were sold, accounting for a total of 1.59% of the company's total share capital, and no more than 600 employees were encouraged. In October 2020, the company completed the implementation of the second phase of the employee stock ownership plan, with a total of no more than 900 employees, accounting for 1.31% of the total share capital.
launched the third phase of the employee stock ownership plan in January 2021 and completed the stock purchase at the end of February. The cumulative number of shares purchased accounted for 1.24% of the company's total share capital.
The coverage of this employee stock ownership plan is wider than the previous two, covering no more than 6 executives and 1,314 employees. Extensive employee coverage is conducive to more deeply binding the interests of employees and the company, thereby fully mobilizing the enthusiasm of the entire enterprise.
.4 Financial analysis: Performance maintains steady growth, asset structure is healthy and reasonable
1.4.1 Operating income grows rapidly, profitability remains strong
Revenue maintains long-term stable growth, and performance shows high growth. Benefiting from the rapid expansion of offline channels and the continuous optimization of store efficiency, the company's operating income has achieved rapid growth.
From 2017 to 2021, the company's operating income increased from 1.054 billion yuan to 2.720 billion yuan, with a compound growth rate of 26.43%, of which the single-year growth rate in 2018 was as high as 39.96%, showing a rapid development momentum. From 2019 to 2021, affected by the new crown epidemic and macroeconomic , the growth rate has slowed down, but it still maintained steady growth.
At the same time, compared to other apparel companies, the company has been less affected by the epidemic. In the past two years, the company has actively improved the layout of online channels such as e-commerce and new retail, and cooperated with the optimization of offline channel benefits. The overall operating capabilities and efficiency have been effectively guaranteed, and it has achieved high growth despite the impact of the epidemic. We expect that with the support of the continued implementation of the store optimization strategy of "adjustment of location and expansion of area", the company's subsequent performance is expected to continue to maintain rapid growth.
The high-end positioning of the brand provides support, and the company's gross profit margin remains at a high level.
The company's high-end casual wear positioning and light-asset operation model have established the brand's high premium. From 2017 to 2021, the company's gross profit margin was 65.40%/63.28%/67.78%/73.88%/76.69% respectively, all remaining above 60%, higher than the industry average. Looking at
channels, the gross profit margin of direct sales in 2021 is 81.11%, a year-on-year increase of 2.85pct; the gross profit margin of franchise sales is 68.90%, a year-on-year increase of 1.21pct; the online sales gross profit margin is 50.93%, a year-on-year increase of 13.34pct, and profitability continues to improve. The company still uses offline channels as its main sales model, and the gross profit margins of both directly-operated stores and franchise stores remain at a high level.
The overall expense rate remains stable, and the management expense rate has improved significantly.
has achieved good cost control results since its listing, with the total expense ratio remaining stable at around 45%, of which sales expenses account for the main part and remain basically stable. Among the remaining parts, the R&D expense rate and financial expense rate remained stable and fluctuated, and the management expense rate showed an overall optimization trend. This was mainly because the company's scale effect continued to reflect and management expenses were effectively controlled.
net profit has achieved rapid growth, and the net profit rate level is better than that of comparable companies in the same industry. The company's net profit has maintained rapid growth since its listing. From 2017 to 2021, the company's net profit increased from 180 million yuan to 625 million yuan, with a compound growth rate of 36.51%. Even after experiencing a mild winter in 2019 and affected by the epidemic in 2020, the company still showed contrarian growth that was higher than the industry average. In addition, benefiting from the increase in gross profit margin and the optimization of income tax rates, the company's net profit margin continues to grow, showing strong competitiveness compared with the gradually declining net profit margin levels of comparable companies in the same industry.
1.4.2 Inventory management has achieved remarkable results, and the aging of accounts receivable is healthy
The company pays attention to inventory management, and inventory turnover has been significantly improved. The company continues to strengthen inventory management. In 2020/2021, the company's inventory turnover days were 360/384 days, a decrease of 13/24 days year-on-year. After strengthening inventory management, the company's inventory turnover has been significantly improved.
From the perspective of inventory structure, most of the company's inventory is less than 2 years old, and the company has also deployed some outlets stores at the channel level, so generally inventory with an inventory age of less than 2 years can be better digested. In addition, the company invested in the construction of an intelligent warehousing center in 2018. It is expected that upon completion, it will realize automated inbound and outbound operations, which can effectively improve warehousing and distribution efficiency and improve inventory turnover.
The company's accounts receivable structure is healthy, and the turnover days have increased but remain at a low level.
In recent years, the company's accounts receivable turnover days have shown a certain upward trend, but they still remain below 40 days, which is at a low level. The increase in accounts receivable turnover days is mainly due to the company's increased proportion of sales revenue from directly operated stores in recent years. In addition, from the perspective of aging , 99.61% of the company's accounts receivable are within 1 year, and accounts receivable of 3 years and above account for only 0.11%. The account structure is healthy and the risk of bad debts is small.
. Industry background: The trend of sports is sweeping the market, and men's clothing brands are riding the wave. From the perspective of the positioning attributes of the company's products, first of all, the company's clothing has golf genes, and the company focuses on golf sports and leisure clothing based on this gene. In addition, the company also has mid-to-high-end business, fashion, and leisure series for men. Therefore, the company's positioning market mainly includes the men's clothing industry and the sportswear industry.
.1 Demand side: The men's clothing market is large and the growth potential of sportswear is high
my country's men's clothing industry is developing steadily, and the market size is gradually growing.According to statistics from Euromonitor Consulting, the scale of men's clothing experienced double-digit rapid growth from 2003 to 2011. The growth rate slowed down after 2012. Except for the low base affected by the epidemic in 2020, it has now stabilized at around 4% and is in a stable growth stage.
The sportswear industry has begun a period of steady growth, and the market size has returned to a high-growth trend.
my country’s sports industry is growing strongly and has huge development potential. The market size was US$24 billion in 2015 and US$45.29 billion in 2020, with a five-year compound growth rate of 13.54%. Compared with mature overseas countries, the five-year compound growth rates of Japan and the United States were 0.86%/0.73% respectively. my country's sportswear industry is currently in a period of rapid development.
Behind the strong growth of the sportswear industry is the two-wheel drive of industrial policy + consumption upgrading.
1) At the policy level, the government strongly supports the construction of a sports power to promote the rapid development of the sports industry: In September 2019, the "Opinions on Promoting National Fitness and Sports Consumption to Promote the High-Quality Development of the Sports Industry" proposed 10 policy measures to promote the sports industry to become a pillar industry of the national economy. In the future, with the continuous optimization of policy support methods, a two-wheel drive effect of government and market will be formed, which will help to ensure the rapid growth of the sports industry while improving the quality of development, and the domestic sportswear industry will benefit significantly.
2) National income at the consumption level has increased steadily, and sports consumption demand is strong: In 2020, the per capita disposable income of urban residents in my country reached 32,189 yuan, a year-on-year increase of 4.74%. With the rise of economic level, the domestic middle class continues to expand and the consumption model gradually transforms. Currently, consumers pay more attention to the improvement of healthy life quality and comfortable sports consumption experience, and gradually develop sports consumption habits.
.2 Structural end: Sports attribute brands have strong customer stickiness, and the market share of leading menswear companies has room to increase
Functional sportswear is easier to form consumer brand stickiness, and industry concentration continues to increase.
In 2020, my country's sports apparel industry CR0 is 84%. Compared with Japan (CR10 is 62.7%), the United States (CR10 is 42.8%) shows a significant head agglomeration effect. Local leading companies have taken advantage of scale effects and brand influence, and their market share has increased year by year. It is expected that the market share will continue to expand in the future. The increase in national income and per capita sports consumption, as well as the stable high growth rate and high concentration of the industry, have created long-term growth in the sportswear industry.
The low consumption frequency of men's clothing brands determines high customer loyalty, and the market share of major players in the market is increasing year by year.
The competitive landscape of my country's men's clothing industry is relatively fragmented, but driven by the high loyalty of men's clothing brand customers, the market share of major players has increased year by year.
According to Euromonitor data, the market share of CR3 and CR5, the main players in the men's clothing industry, continues to increase. CR3 increased from 7.6% in 2011 to 13.6% in 2020, and CR5 increased from 13.3% in 2011 to 20.4% in 2020. In the future, leading brands are expected to leverage their scale and brand advantages to continue to exert efforts in all channels, and the concentration of men's clothing is expected to further increase.
. Three major advantages: coordinated efforts of brand, product and marketing .1 Differentiated brand positioning: unique sports cultural genes in the high-end casual wear market
3.1.1 Deeply bound to golf to lay the brand cultural heritage
company is positioned in the mid-to-high-end casual wear market. Compared with other casual wear brands in the same market, Biyinlefen has a unique sports gene, which also lays the cultural foundation for its brand differentiation strategy.
started from golf apparel and is deeply involved in golf culture.
As early as 2003, when it was founded, Bienlefen was bound to the sport of golf. Since then, it has successively launched a series of professional golf apparel around golf, creating a professional sports brand gene in the professional sports field. In the nearly 20 years since its establishment, Biyinlefen has successively become a partner of the Chinese National Golf Team, helping the national team compete in the Olympics. Now it has become a leading brand of golf apparel.
is based on golf culture and enters the high-end casual wear market. After
accumulated certain brand advantages in the field of golf apparel, the company further relied on the golf sports brand genes to create a series of high-end casual apparel for men, and successively launched fashion, lifestyle, and vacation travel series (now independently opened stores). Following its concept of "life-oriented" golf culture, the company broadened its market positioning boundaries, attracted middle- and high-income consumer groups, and established the brand's high-end leisure image.
So far, the company has gradually developed into a leading brand of high-end casual clothing in China, and golf culture has been deeply embedded in its brand genes, becoming the foundation for its foothold among high-end casual clothing brands.
Therefore, whether in the field of professional golf apparel or high-end casual apparel, Bienlefen has the cultural heritage to support its high-end professional brand image.
In addition, golf genes are not only the guarantee of the brand connotation of Biyinlefen, but also a strong support point for brand marketing and image building.
In recent years, the company has continued to carry out marketing promotions based on golf culture, including sponsoring influential professional golf events, placing promotional advertisements in professional golf magazines, and opening stores in golf clubs, etc., to widely spread the brand image of its professional golf apparel and continue to strengthen the outside world's understanding of the golf genes in its brand.
3.1.2 Comparing the market structure of competitive brands, Biyinlefen has multi-dimensional competitive advantages
Biyinlefen has deeply explored the market segment that combines golf sports with fashion and leisure life. In order to intuitively display the competitive advantages of the company's brand and its specific position in the industry, we used the Baidu map shopping mall navigation function to examine the distribution of brands around the company's stores, and then analyze the company's brand influence from terminal channels and competitive product structure.
is located in the first-tier department stores and ranks among the high-end brands.
Since the company mainly distributes department store channels in first- and second-tier cities, we have conducted a detailed review of the brands in the men's clothing area of department stores in key cities.
In the department store format, the men's clothing area can be roughly divided into four categories: domestic high-end casual clothing brands, domestic high-end business formal wear brands, international high-end casual wear brands and mass casual wear brands.
Among them, Biyinlefen belongs to the domestic high-end casual wear brand category, and it also belongs to the same category as Bose Shenwei, Haggis, etc.
In addition, domestic high-end business formal wear brands include Youngor, Goldlion , etc.; international high-end casual wear brands include Shachi , St. Paul , etc.; mass casual wear brands include Jack Jones , Jiumu Wang, etc. Among these brands, the two brands with the highest overlap rate with Biyinlefen Department Store are Goldlion and Youngor. Both brands are well-known domestic high-end business formal wear brands. Biyinlefen's similar shopping mall layout reflects the high-end style of its brand market positioning.
In addition, among the domestic high-end casual wear brands, the brand with the highest overlap rate with Biyinlefen Department Store is Ordos. As a well-known domestic affordable luxury brand, Ordos is positioned in high-end cashmere fashion. The price of a single product is between 990-5290 yuan, which is at a high level in the same industry.
High-end brand stores such as Yinlefen and Ordos appear frequently in the same area in the department store channel, which can strengthen consumers' awareness and recognition of their high-end image.
multi-dimensional comparison of market segment brands, Biyinlefen has a significant competitive advantage.
In order to accurately draw a portrait of the brands that directly compete with the company, we screened out the popular casual wear brands and high-end business formal wear brands among the above 20 brands, and made appropriate supplements based on their market positioning and product series, and finally obtained the competitive landscape of the company's market segment.
This competitive landscape can be roughly described as three categories: domestic high-end casual wear brands, international high-end casual wear brands and international professional golf wear brands, including a total of 17 brands such as Biemlfdlkk, Golden Fox, and Sachi, including:
1) Domestic high-end casual wear brands: including Biemlfdlkk, Frognie Zila), Bossunwei (BOSSsunwen) Folense (FOLUNSI) and Haggis (HAZZYS) 5 brands. Compared with domestic high-end casual clothing brands, Biyinlefen has many advantages such as channel layout and cultural heritage. In terms of channel layout,
is far ahead of its domestic peers in terms of the number of offline stores in Biyinlefen.
As of June 30, 2022, Biyinlefen has a total of 1,125 offline stores across the country, while the number of stores of Frannicilla, Bosshenwei, and Haggis are 1/8, 1/3, and 1/3 of Biyinlefen respectively, and the number of channels is far smaller than Biyinlefen.
In addition, Bienlefen adopts a multi-channel layout model. In addition to department stores and shopping malls as the main sales channels, it also extensively deploys in brand-related areas such as airport high-speed rail stations and golf courses. Therefore, the channel structure is healthier than other domestic high-end casual clothing brands.
In terms of cultural heritage, compared with the " imported culture " of its domestic counterparts, Biyinlefen has the support of golf sports culture, thereby conveying the brand's style positioning of "comfort, sunshine, and fashion".
Most other domestic high-end casual wear brands directly borrow the design styles and styles of foreign brands, such as the "European style" brand style positioned by Franzilla and the "British style" brand style positioned by Haggis, which lack local characteristics and cultural foundation.
In addition, Biyinlefen has joined hands with the palace culture of the Forbidden City since 2020 and launched many co-branded series of products, keeping up with the momentum of national trend culture and exploring fashion from classics.
2) International high-end casual wear brands: including Beverly Hills Polo Club, SANTA BARBARA POLO, Tommy Hilfiger (TOMMY HILFIGER), French Crocodile (Lacoste), and Ralph Lauren (Polo Ralph Lauren), Satchi and GANT 7 brands. Compared with international high-end casual wear brands, Biyinlefen has channel layout advantages.
Biyinlefen has a wide-ranging omni-channel layout, focusing on high-end department stores and shopping malls, and has established a strong marketing network.
In terms of total volume, the three international high-end casual wear brands with the largest number of stores in China are Billy Paul, St. Paul and Tommy Hilfiger. The number of offline stores of Bienlefen (1125) is 1.41, 2.51 and 2.78 times respectively, which is much higher than the domestic channel scale of these international high-end casual wear brands.
In terms of structure, most of the offline stores of foreign high-end casual clothing brands are concentrated in core business districts such as high-end department stores and shopping malls in first- and second-tier cities, and their channel penetration capabilities are limited. By authorizing franchisees to open franchise stores, Biyinlefen has penetrated its channel layout into some third- and fourth-tier cities with strong spending power, effectively increasing the brand's popularity.
3) International professional golf apparel brands: includes 5 brands: Wolsey, Munsingwear, Callaway, TaylorMade and Mizuno.
Compared with international professional golf apparel brands, Biyinlefen has a consumer scale advantage. Although international professional golf apparel brands have high brand awareness and customer loyalty in the golf market, most of these brands focus on golf supplies, clubs and other golf supplies, and their efforts in golf apparel are relatively insufficient.
Biyinlefen focuses on apparel and apparel and has strong competitive advantages in the field of golf apparel. According to the statistical results of the national large-scale retail enterprise product sales survey released by China Chamber of Commerce and China National Commercial Information Center , Biyinlefen golf clothing ranks first in the comprehensive share of similar products in 2021. At the same time, this is the fifth consecutive year (2017-2021) that Biyinlefen golf clothing ranks first in comprehensive share.
In addition, compared with the positioning of these brands that are limited to professional golf supplies, Biyinlefen starts from the golf apparel market and enters the high-end casual apparel market, which has a broader market space.
.2 The product concept of "three highs and one new": "cutting-edge design" + "top supply" ensures high quality and functionality
3.2.1 The company has sufficient R&D expenditures to help create functional fabric technology
. As the only designated supplier of the national golf team, the company has become "the first brand of golf apparel in China". The professionalism of golf apparel requires that the company's products be designed and tailored to suit sports characteristics. At the same time, the functionality of the product fabrics is also extremely sophisticated to meet golfers' needs for perspiration, breathability, windproofing, and warmth in different outdoor climate conditions.
Therefore, in order to improve product competitiveness, maintain its leading position, and build market barriers , the company has always adhered to the "three highs and one new" product design and development concept of high quality, high taste, high technology and innovation, focusing on R&D investment and showing high-level R&D results.
insists on a high proportion of R&D expenditures, which is much higher than that of comparable peers.
html For many years, the company has always adhered to a high proportion of R&D investment, and R&D investment has increased year by year since 2016. According to the company's 2021 annual report, the company had 205 R&D personnel as of the end of 2021, and its investment in R&D expenses during the year reached 83.39 million yuan, accounting for 3.07% of operating income, significantly higher than its peers.
has achieved remarkable results in R&D investment, creating industry-leading fabric technology.
According to the company's 2021 annual report, as of the end of 2021, the company has 107 invention patents and utility model patents, and 69 utility model patents are in application.
In addition, the company's design department designs more than a thousand products every year, and its R&D and design capabilities are self-evident. At present, the company continues to innovate in the research and development of product , and has achieved remarkable results in terms of product functionality, texture, and high-end development. It has continuously launched high-quality fabrics such as Outlast (air-conditioning fiber) series, antibacterial series, and Xinjiang long-staple cotton series.
3.2.2 The design team is top-notch, and the fabric quality is on par with international big-name brands
company is positioned as a leading enterprise in domestic high-end casual clothing. In order to ensure product quality and establish a high-end brand image, the company adopts a two-pronged approach from design, R&D and fabric supply to provide consumers with high-quality products with "high-quality fabrics, bright colors, novel styles, and fine workmanship". This has further distinguished it from other domestic casual clothing and gained strong brand recognition and influence.
has invested heavily in building a top-notch design team to ensure high-level R&D and design.
company currently has a high-level international R&D and design team, including well-known designers from China, Britain, Italy and South Korea.
According to the company's 2021 annual report, as of the end of 2021, the company's design team includes 85 in-house fashion designers and a total of 7 contracted fashion designers, all of whom have high professionalism in design concepts, color applications, process design and performance, fabric processing and control, etc. Among them are many world-class designers with many years of experience in designing well-known golf apparel brands and high-end casual apparel brands. Feng Lingling, head of the R&D and Design Center of
company, graduated from Hong Kong Fashion Institute of Technology and has rich experience in the clothing industry. Now she joins hands with current creative director Paul Reese and Venetian brand design director Li Xiaozhen to create high-quality products with "high quality, high taste, and high technology".
fabric supply is strictly controlled, and the quality is in line with international brands.
In terms of fabric selection, the company strictly selects high-quality, high-grade, and high-performance fabrics to ensure excellent product quality.The company maintains stable cooperative relationships with well-known fabric suppliers in the United States, Italy, South Korea and Japan, such as U.S. military fabric supplier Malden Mills, Italian high-quality yarn supplier CANCLINI, and Japanese luxury fabric supplier TORAY.
These fabric suppliers are also partners of international first-line clothing brands such as Hermes and GUCCI. During the cooperation process, not only the quality of the products has been effectively guaranteed, but the influence and recognition of the Biyinlefen brand have also been greatly improved.
.3 Marketing diversification model: layout channels based on customer portraits, brand influence and performance go hand in hand
3.3.1 The positioning of the target customer group determines the stable passenger flow, and the repeated fluctuations of the epidemic will have less impact
The company's core consumer groups are mainly people with incomes of middle class and above. With the rapid growth of the number of high-net-worth individuals in my country, the brand demand side is expected to be effectively protected. According to data from the "2021 China Private Wealth Report" released by China Merchants Bank and Bain & Company, the number of domestic high-net-worth individuals with investable assets of more than 10 million yuan reached 2.62 million in 2020, an increase of 650,000 compared to 2018. The average annual compound growth rate of from 2018 to 2020 was , which reached 15%.
The per capita investable assets of these high-net-worth individuals are about RMB 32.09 million. The increase in the number of high-net-worth individuals has promoted consumption upgrades, and consumers have gradually increased their requirements for clothing quality, performance, and grade. It is expected that the domestic high-end casual clothing market will have a large space for development in the future, and the Biyinlefen brand, which is positioned in the mid-to-high-end and affordable luxury markets, will also take advantage of this opportunity to obtain development opportunities.
's target customer group also determines its brand's two characteristics: high customer stickiness and low consumption frequency.
High-net-worth consumers have unique value orientations, living habits and cultural tastes. Especially for clothing consumer goods, they usually have strong brand dependence, so they have high brand loyalty.
Based on this, the company established a VIP customer service center and used offline stores as terminals to provide services to maintain the brand's core consumer groups and protect the brand's customer stickiness. At the same time, the low consumption frequency determines that the company's sales revenue source is based on the high single consumption amount of a single customer.
Therefore, unlike mass consumer brands, the Biyinlefen brand shows characteristics such as smaller store traffic, high transaction rate, and high product gross profit margin.
Therefore, the two unique advantages of high customer stickiness and low consumption frequency can bring stable customer flow and sales revenue to the company. In conjunction with the company's omni-channel marketing layout, the brand's overall performance has grown steadily and is less affected by repeated fluctuations in the epidemic.
3.3.2 The joint operation model of department stores has controllable costs. Adjusting the location and expanding the area ensures stable performance.
The joint operation model of department stores with low opening costs effectively assists the company's cost-controllable expansion. The company's offline channel layout is comprehensive and covers a wide range of areas. As of June 30, 2022, the company has 1,125 terminal stores. Among them, traditional department stores are the company’s key distribution channel, accounting for the highest proportion among all types of stores. In the traditional department store channel, most company-operated stores adopt the joint operation model. Under the
joint venture model, the company signs a joint venture agreement with the shopping mall. The mall provides the venue, and the company provides products and sales management. The sales revenue adopts a deduction system, that is, both parties share the sales revenue according to the agreed ratio. Compared with the non-joint operation model, under the joint operation model, the company does not need to pay store rental fees, the cost of opening a store is greatly reduced, and business risks are also partially dispersed to the joint venture parties.
Therefore, under the department store joint venture model, the company's number of offline stores can be rapidly expanded at a low cost and low risk. As of June 30, 2022, the company had 544 offline directly operated stores, nearly double the number of 274 stores in 2016. The optimization of offline channels has achieved remarkable results, and the efficiency of single stores has continued to improve. While
company continues to open new stores, it has also begun upgrading and optimizing existing stores. In 2017, the company launched the store renovation strategy of "adjustment of location and expansion of area". On the one hand, it selected 200 directly-operated stores located in first-, second- and third-tier cities to be renovated to complete the upgrade of store image and intelligence level. On the other hand, it focused on building a number of large-scale flagship brand stores and boutiques, aiming to provide consumers with a better shopping experience while enhancing the brand image.
So far, the optimization of offline channel layout has achieved remarkable results, and the company's single store revenue and store efficiency have continued to grow.
In addition, in order to improve operational efficiency, the company has deepened the implementation of the digital operation and management model and established a VIP service center to provide comprehensive and meticulous personalized services to VIP customers, including establishing a VIP customer database to provide exclusive matching solutions, regularly delivering fashion information to VIP customers, and inviting VIP customers to participate in consumer experience activities, etc.
Through the precise service of terminal stores, the company has effectively strengthened the relationship with customers, enhanced customer loyalty, and thus ensured the sustainable growth of single store revenue. While rapidly expanding stores at low cost, it also launched the strategy of "adjustment of locations and expansion of area", and the company's offline marketing network has been effectively optimized. The expansion of high-quality stores will increase the revenue of single stores, and we expect the company's sales performance to be stable and guaranteed by combining both volume and price.
3.3.3 Online channels are rapidly deployed, and multiple platforms help revenue growth
Online channels are developed on multiple platforms, and the new affordable luxury sales model has achieved remarkable results. 's current main online sales channels include Tmall, Vipshop, JD.com, WeChat mini program member malls, etc. The company insists on providing shopping convenience for high-end online people, focusing on experience and service, and unifying online and offline price systems to open a new online luxury sales model.
company has comprehensively promoted refined VIP management and attracted offline members to online. According to the company's 2021 annual report, as of the end of 2021, the company's VIP members totaled more than 700,000.
In 2021, the company's online sales revenue was 123 million yuan, a year-on-year increase of 24.76%. The proportion of online revenue increased from 0.89% in 2019 to 4.51% in 2021. In 2022H1, the company's online sales revenue was 84 million yuan, a year-on-year increase of 47.80%.
. Channel analysis: The channel layout is reasonable and healthy, and there is broad room for growth. In terms of channel layout, the company generally adopts an "offline + online" diversified omni-channel layout model, and uses offline stores as the main marketing channel. We use Amap to collect the company's offline store distribution data for classification processing and analysis, and on this basis, we estimate the future growth space of store scale. To sum up, we use company announcements and Amap data to analyze the company's channel layout.
.1 The channel layout model is reasonable, and the type structure is healthy.
4.1.1 The "direct operation + franchise" layout model is reasonable, and the scale has significant growth. The proportion fluctuates steadily
The company's offline channels adopt a "direct operation + franchise" composite model. On the one hand, it can ensure the company's control over the marketing network and maintain the brand image. On the other hand, it can use the regional resources of franchisees to expand market coverage. Directly-operated stores are mainly distributed in core business districts such as department stores and shopping malls in first- and second-tier cities in China, as well as in areas such as airports and well-known golf clubs with large passenger flow. They are the company's main source of operating income. Looking at operating income by channel in 2021, direct-operated stores accounted for 70.37% of the operating income, which is the key to the company's business development.
franchise stores are mainly located in more economically developed areas outside first- and second-tier cities. Under the franchise model, the company sells products directly to franchisees, who are responsible for external sales and responsible for the operation and management of terminal stores, and bear corresponding channel expenses. Franchisees are responsible for the profits and risks of operations.
franchise stores are an important channel for the company to reach third- and fourth-tier cities, accounting for 25.12% of operating income, which can effectively help the company expand market coverage and increase terminal density.
The company's offline store scale has grown significantly, and the ratio of directly operated stores to franchised stores has fluctuated steadily.
As of June 30, 2022, the company's offline marketing network covers core business districts, high-end department stores, airports, well-known golf clubs, etc. in 31 provinces, autonomous regions and municipalities across the country. The total number of stores reaches 1,125, including 544 directly-operated stores and 581 franchised stores. The direct-operated franchise ratio is close to 1:1. In terms of the number of channels,
has continued to expand its business scale since its listing, with the number of offline stores increasing year by year. The total number of stores expanded from 602 in 2016 to 1,100 in 2021, a net increase of 498 stores.
In terms of channel growth rate, the company's directly-operated stores expanded faster than franchised stores in 2018 and 2019, and they will be similar in 2020.
In terms of channel type structure, the ratio of company-operated stores to franchised stores has increased to a certain extent from 2016 to 2018, and has basically maintained a steady fluctuation within the range of 0.9-1 in the past three years.
4.1.2 The regional distribution of channels is "widely covered and deeply rooted", and the type structure is healthy and diversified
We use Amap to search the company's store layout in various provinces and cities across the country, and then analyze the company's offline channel layout status and future development space. (Note: A problem with the Amap search engine algorithm has resulted in the absence of some stores, resulting in inconsistencies between the Amap caliber and the company's announcement caliber. However, the coverage rate of the Amap caliber has reached more than 70%, and the channel portrait is relatively accurate). The regional distribution of
channels has "wide coverage and deep roots", focusing on economically developed areas.
In terms of regional layout of marketing channels, the company's stores are widely distributed in 31 provinces, autonomous regions and municipalities across the country, and are mainly concentrated in economically developed areas. The coverage density in first- and second-tier cities is relatively high. Among them, the five regions with the largest number of stores are Guangdong, Sichuan, Jiangsu, Shandong, and Liaoning provinces. The corresponding number of stores are 114, 63, 59, 52, and 42 respectively. The number of stores in the top five sales regions accounts for 50% of the total number of stores in the country. About 43.71%.
company originated in Guangdong and is deeply involved in the Guangdong market. Data shows that the company has established 114 stores in Guangdong Province, which is much higher than the 63 stores in Sichuan Province, the second largest layout area. On this basis, based on the company's high-end brand positioning and high-income target consumer groups,
expanded to the southeastern coastal areas and business tourism centers, forming a unique regional channel layout model.
The channel type structure is healthy and diversified, and different types of channels focus on unique marketing positioning.
The company adopts an omni-channel hierarchical layout model in terms of channel layout, which is conducive to balancing marketing communication and market penetration. On the one hand,
is based on the positioning of a high-end casual clothing brand. The company has deployed a large number of terminal stores in core business districts, including traditional department stores and emerging shopping malls, and airport high-speed rail stations with large passenger flow, to achieve the dual purposes of channel supply and brand promotion. At the same time, based on the brand's golf genes, the company has also set up terminal stores in some well-known domestic golf clubs to spread the brand image with the help of golf culture and specific consumer groups.
On the other hand, the company implements a "direct sales + franchise" channel sales model, so many franchise stores have moved to commercial streets, residential areas and other areas in third- and fourth-tier cities in the form of independent stores, which is conducive to the widespread dissemination of the brand image and enhance brand awareness. In addition, the company has also actively deployed outlet stores, which are an important channel for inventory digestion, effectively ensuring the health of the channel layout.
According to different store types and core functions, the company's offline channel stores can be classified into 6 types: department store stores, shopping mall stores, outlet stores, golf club stores, airport high-speed rail stores and independent stores, among which:
1) Department store stores and shopping center stores
Department stores and shopping center stores are the main channels for the company's product sales. As of March 2022, they totaled 460 home, accounting for 60.93%.In terms of regional distribution, the number of shopping mall stores (number of department store stores + number of shopping mall stores) in the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen is 13, 4, 24, and 33 respectively. The total number of stores in the four first-tier cities is 74, of which Guangzhou and Shenzhen are the most common, reflecting the company’s focus on high-end shopping malls in first-tier regions.
Among department stores and shopping malls, department store channels are the focus of sales, with the number of stores accounting for 35.36%. By analyzing target customer portraits, the company selects high-end department stores to open stores according to the shopping habits of the target customer groups and expands rapidly. It establishes a high-end brand image and widely covers high-income elite groups in cities at all levels, striving to become a domestic first-tier high-end casual wear brand.
In addition, based on the long-term cooperative relationship with department stores and the brand's own good store performance, Biyinlefen has also received support from department stores in terms of store location, area and discount points. Combined with its "position adjustment and area expansion" measures, it effectively ensures the competitive advantage and store efficiency of the company's department stores, thereby forming a virtuous cycle in which brand performance and channel bargaining power promote each other.
Compared with the department store channel’s layout of emerging shopping malls, the company started late.
On the one hand, generally speaking, the consumer groups attracted by shopping malls are of a younger age and are more inclined to mass consumption, which deviates to a certain extent from the target customer group of Bienlefen brand positioning; on the other hand, emerging shopping malls are mostly large-scale comprehensive activity venues that integrate shopping, catering, leisure and entertainment, and shopping is only part of their functions. Therefore, some shopping mall consumers do not have shopping expectations, which in turn leads to low store efficiency in some shopping malls.
However, in recent years, with the rapid construction of high-end shopping malls, the iteration of consumer age and changes in shopping habits, the company has gradually increased the layout of shopping mall channels and constantly updated it to approximate the channel structure that best adapts to the market.
2) Airport high-speed rail stores
Airport high-speed rail stores are the company’s unique sales channel. Amap data shows that as of March 2022, the company has opened a total of 36 stores nationwide, including 31 airport stores and 5 high-speed rail stores. In terms of regional distribution, the 36 airport high-speed rail stores cover 19 provinces, autonomous regions and municipalities, accounting for 61.29% of the coverage in 31 provinces, autonomous regions and municipalities. The establishment of the airport high-speed rail store has brought the Biyinlefen brand into more direct contact with its target customer groups. The airport high-speed rail station has a large passenger flow, and high-end business travelers among them are the company's important marketing and service targets.
On the one hand, as a targeted marketing scenario, opening a store at the airport high-speed rail station can improve publicity efficiency and effectively enhance brand awareness; on the other hand, as a specific consumption scenario, opening a store at the airport high-speed rail station can help customers make full use of their waiting time, provide customers with convenient shopping channels, and strengthen customer stickiness.
3) Outlet stores
Outlet stores are an important sales channel for the company to digest inventory products. Amap data shows that as of March 2022, the company has opened a total of 73 stores nationwide, accounting for 9.67% of the company's total stores. Bienlefen is positioned in high-end casual clothing, and its brand image is its foundation. Therefore, in order to maintain the brand's high-end image, the company's ordinary stores generally have no or very few discounts, but special discount stores are set up to digest out-of-season clothing inventory.
outlet stores mainly sell products that have been on the market for more than one year. Since the product itself has a high gross profit margin and the discounts are concentrated at 40-60% off, there is still a certain profit margin for sales after discounts. Therefore, the outlet stores also bring considerable profits to the company while destocking.
4) Golf club stores
Golf club stores are another sales channel for the company in specific scenarios. As of March 2022, we have searched for 6 golf club stores on the Amap map, all of which are located near well-known domestic golf clubs. The establishment of the golf club store highlights the brand's inherent golf cultural genes, and cooperates with its golf series to carry out targeted marketing to golf enthusiasts and high-income people who prefer golf clothing styles.
company strives to create "China's No. 1 Golf Apparel Brand", starting from the root and efficiently and accurately covering golf culture-related people, consolidating the brand's popularity and influence in the industry, and establishing competitive advantages. In addition, golf enthusiasts are usually elites with high income and high taste. Using the golf series to bring the brand closer to this group of people can lay a solid foundation for further developing them into consumers of the brand's leisure and fashion series.
5) Independent stores
Independent stores are the basic way for brands to sink into the market and expand coverage. As of March 2022, the number of stores totaled 180, accounting for 23.84%. Most of
's independent stores are franchise stores opened by the company's authorized franchisees, mainly distributed in more economically developed areas outside first- and second-tier cities. These stores are scattered in various living areas such as commercial streets, residential areas, and hotels, providing the company's marketing network with rich and diverse channel scenarios. They are an important part of the brand's expansion of popularity and closeness to daily life.
.2 Channel space calculation: Channels still have development potential
4.2.1 Exploring part of the channel space by type
The penetration rate of department stores nationwide is low, and there is room for layout. According to the National Bureau of Statistics, there were 6,071 retail department stores in the country as of the end of 2020, and the company has deployed 267 stores in the department store channel, with a low penetration rate of only 4.40%. Therefore, the company still has a large layout space in the department store channel.
The penetration rate of airport stores nationwide is low, and there is room for layout.
According to data from the Civil Aviation Administration of China, as of the end of 2020, there were 241 civil transport airports in my country (excluding Hong Kong, Macau and Taiwan). Amap shows that the company's 32 airport stores are distributed in 26 international airports, with a penetration rate of only 10.79%. The company also has a large layout space in airport channels.
In addition, the data also shows that there are 29 airports nationwide with a passenger throughput of more than 10 million in 2021, accounting for 70.78% of the country's passenger throughput. The company has deployed a total of 24 stores in 18 of these 29 airports, with a penetration rate of 62.07%, which is relatively high, but there is still some room for expansion.
4.2.2 Calculating channel laying space by region
The company announced that the total store space of the Biyinlefen brand is about 1500-2000. Based on the existing channel layout portrait, we used the volume penetration of shopping malls and department stores and the per capita disposable income of residents in each region to measure the channel space. The calculation process and results are as follows:
1) Describe the regional distribution of stores by region
Due to the differences in economic development levels and company marketing network coverage in various regions, we first divided the 31 provinces, autonomous regions and municipalities covered by Biyinlefen brand stores across the country.
Based on multiple factors such as administrative division, geographical location, economic development level and company development history, we divided the following 3 regions:
Region 1: 4 municipalities of Beijing, Shanghai, Tianjin and Chongqing. The four municipalities have the characteristics of small area, large resident population, and developed economy, so we classified them into a comparable area.
Region 2: Northeast, southeast coastal and central developed areas. Relatively speaking, these areas have similar levels of economic development and are all at a relatively high level, so we classify them into a comparable area.
Region 3: Southwest, northwest and other inland areas with low economic development levels. These regions include the six provinces and autonomous regions of Xinjiang, Tibet, Gansu, Qinghai, Ningxia and Inner Mongolia. They all have the characteristics of low economic development level, remote areas, and low brand penetration, so we classify them into a comparable area.
2) Calculate the store opening space in each region
predicts the channel space in Region 1, using the method of volume penetration of shopping malls and department stores. We assume that all regions in Region 1 will have store opening space to achieve the maximum penetration rate in the region in the future, so we use the current penetration rate of Chongqing City as the target penetration rate of other regions in the region to calculate the store opening space.
For Chongqing, we consider synchronous growth, using the average of the penetration rate growth of the other 3 cities plus the current penetration rate of Chongqing as its target penetration rate, and then calculate the store opening space.
For the prediction of channel space in Regions 2 and 3, the per capita disposable income of residents in each region is benchmarked. Taking into account the decisive role of residents' income level in the number of sales terminals, we assume that the saturation value of the company's store number in each region in Regions 2 and 3 is directly proportional to the per capita disposable income of residents in the region, calculate the ratio of the number of stores in each region to the per capita disposable income, and use the corresponding statistical values as the target benchmark for prediction.
Specifically, for Region 2, first take the average 9.39, the 70% quantile 11.96, the maximum 80% 20.59 and the maximum 25.34 of the ratio of the number of stores in each region to per capita disposable income as the target benchmark.
determines the target ratio based on the current ratio of the province and city and the per capita disposable income; for Guangdong Province, where the ratio is 25.34, considering simultaneous growth, the average of the ratio growth in other 20 regions plus the current ratio of Guangdong Province is used as the target ratio, and then the store space is calculated.
For Region 3, first take the average value of 1.72 and the maximum value of 2.72 as the ratio of the number of stores in each region to per capita disposable income as the target benchmark.
For areas where the ratio is less than 1.72, the target ratio is 1.72 in the forecast; for areas where the ratio is greater than 1.72 but less than 2.72, the target ratio is 2.72. Finally, for Gansu Province where the ratio is 2.72, simultaneous growth is considered, and the average of the ratio growth in the other five regions plus the current ratio of Gansu Province is used as the target ratio to calculate the store opening space.
According to calculations, the store opening space in areas 1, 2, and 3 can reach 106, 1090, and 37 stores respectively, totaling 1233 stores.
takes into account that the data used in the calculation is 755 stores based on the Amap caliber. Compared with the 1,007 stores announced in the company's 2021 interim report, the coverage rate is approximately 75%. Therefore, the predicted value of store opening space is converted into the company’s announcement of 1,644 stores, and the calculation results are in line with the company’s announcement of 1,500-2,000 store opening space.
Comparing the current store size of 1,125, we believe that there is still at least 50% room for development in the number of brand channels than Yinlefen.
. Profit forecast and valuation Direct sales channel: As the company continues to open new stores, optimize store quality, and launch new product series, the revenue in 2022-2024 is expected to be 23.8/28.2/3.29 billion yuan respectively, a year-on-year increase of 24.1%/18.5%/16.7%.
franchise channel: As it continues to open new stores and optimize store quality, it is expected that the revenue in 2022-2024 will be 8.6/1.01/1.17 billion yuan respectively, a year-on-year increase of 25.2%/18.3%/16.0%.
online channels: company has vigorously developed online channels in recent years, consolidating traditional channels such as Tmall while expanding new channels such as Douyin. We estimate that the revenue in 2022-2024 will be 1.5/1.9/230 million yuan respectively, a year-on-year growth of 23.0%/25.0%/20.0%.
Gross profit margin: expects the company's overall gross profit margin to maintain a steady upward trend, and the company's gross profit margin is expected to be 77.7%/78.4%/78.7% in 2022-2024 respectively.
expense ratio: As the company continues to optimize sales and administrative expense rates, we estimate that the company's sales expense rate will be 38.1/37.9%/37.9%, administrative expense rate will be 5.7%/5.3%/5.3%, and R&D expense rate will be 3.1%/3.1%/3.1% from 2022 to 2024.
Taken together, expects the company's revenue from 2022 to 2024 to be 3.38/4.02/4.69 billion yuan, a year-on-year increase of 24.3%/18.8%/16.7%; the net profit attributable to the parent company is 8.0/10.0/1.22 billion yuan, a year-on-year increase of 28.7%/24.9%/21.4%.
We select other domestic mid-to-high-end apparel companies as comparable companies. The current market value corresponds to PE of 15.7/12.6/10.4 times from 2022 to 2024 respectively, compared with the industry average of 15.5/8.8/7.5 times. We believe that the company has diversified advantages and strong performance certainty under the epidemic. At the same time, the successive opening of independent golf stores is expected to build a second growth curve.
Risk warning
Industry competition intensifies: The epidemic has repeatedly affected traffic, and competition in the mid-to-high-end apparel industry has gradually become fiercer. If competition intensifies in the future, it may further affect the company's performance.
's new product expansion is not up to expectations: company is expanding its golf series products based on high-end clothing. It is currently in the process of opening independent stores. If the opening of independent golf stores in the future does not meet expectations, it may have a certain impact on the company's revenue growth. Price fluctuations of
raw materials: raw materials are a major component of the company's costs. If there are fluctuations in the future, it may have a certain impact on the company's gross profit margin.
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