The Net Profit Of The First Three Quarters Of Meibang Clothing Fell By 30% - 50% Year On Year

In the first half of 2013, the company realized an operating income of 3.738 billion yuan, down 18.74% year on year; Operating profit was 282 million yuan, down 46.52% year on year; Net profit attributable to owners of the parent company was 222 million yuan, down 48.52% year on year; Basic earnings per share is 0.22 yuan. At the same time, the company expects that the net profit in the first three quarters of 2013 will decline by 30% - 50% year on year.

The weak market and the company's active adjustment led to a significant decline in revenue. During the reporting period, the company's revenue decreased by 18.74%, of which the direct sales revenue reached 1.996 billion yuan, down 13.88% year on year, and the franchise revenue reached 1.711 billion yuan, down 23.74% year on year. We judged that the decline in revenue was due to the weakness of the terminal and the reasonable reduction of promotion incentives due to the return of the company's inventory. On the other hand, the company took the initiative to adjust, control risks, and reduce new products and futures orders of franchisees. In addition, the company's inventory has returned to the normal level, and the semi annual report shows that the amount of the company's inventory has dropped to 1.52 billion yuan.

Management efficiency was improved and cost control was better. During the reporting period, the gross profit margin of the company's main business increased by 0.7 percentage points to 46.9%, of which the direct gross profit margin increased by 4.2 percentage points to 52.41%; As the company reduced the delivery discount of franchisees, the gross profit rate of franchisees decreased by 3.65 percentage points to 40.47% compared with the same period last year. In the first half of the year, the company focused on improving management efficiency and promoting the lean adjustment of organizational structure and personnel post matching, resulting in a year-on-year decrease of 5.6%, 17.85% and 46.62% in sales expenses, administrative expenses and financial expenses, respectively, with good cost control. However, due to the decline in revenue, the expense ratio increased by 3.9 percentage points to 37.6% year on year, while the net profit margin decreased by 3.4 percentage points to 6%, a new low over the years.

Profit forecast. With the new management team of the company in place (Mr. Lin Haizhou in charge of supply chain, Ms. Gui Meiping in charge of human resources, and Mr. Min Jie, the recently returned former e-commerce leader), the company has changed from the original business division system to a horizontal functional management model, while the focus of the company's growth has also shifted to endogenous growth, and launched a new store image of "experiential shopping" and "technology velvet" For the representative new products, we believe that these are long-term strategic transformation, but the effect is relatively slow, and need to withstand the test of time and market. Therefore, we lowered our profit forecast. It is estimated that the EPS in 13-15 will be 0.65/0.94/1.06 yuan, and the PE will be 15/10/9 times, giving us the rating of "prudent recommendation".