Revenue and net profit hit a new historical high, BOSIDENG presses the "acceleration key"

Choosing investment targets, there is a simple method, which is to see if the alternative targets are the best companies in the industry. The judgment criteria are not complicated, that is, if this company continues to develop, it will become bigger and stronger, then it can be considered an excellent investment choice.

In the field of clothing, the globally leading down apparel expert - BOSIDENG (03998) belongs to the model of "bigger and stronger". In 2018, BOSIDENG clearly defined the strategic direction of "focus on the main channel, focus on the main brand", embarked on a new journey of transformation and upgrading, and entered a "strong cycle" of performance growth.

On June 26, 2024, BOSIDENG released an unexpectedly strong performance announcement for the 2023/24 fiscal year. The financial report shows that the company achieved revenue of 23.214 billion yuan during the period, a year-on-year increase of 38.4%; achieved a net profit of 3.12 billion yuan, a year-on-year increase of 44.7%. The Securities Times APP noted that from the 2018/19 to 2023/24 fiscal year, BOSIDENG's annual compound growth rate of revenue reached 17.5%; the net profit index reflecting the company's "big and strong" performance showed even more outstanding growth, with an annual compound growth rate of 25.4%. As of the 2023/24 fiscal year, BOSIDENG has achieved a net profit growth rate exceeding revenue growth rate for 9 consecutive years.

Based on good performance growth, BOSIDENG has created lucrative investment returns for investors. In 2024, BOSIDENG's stock price once rose to 4.89 Hong Kong dollars, with a maximum increase of 39.3% during the year. Data from the Securities Times APP shows that as of nearly 60 trading days by June 26, BOSIDENG has received a net inflow of 363 million Hong Kong dollars. On June 27, influenced by the positive performance, BOSIDENG's stock price rose to 4.7 Hong Kong dollars intraday, up 8.54% from the previous trading day's high. In addition to the rise in stock price, BOSIDENG also continues to maintain a stable dividend payout, with the board of directors recommending a final dividend of 20 Hong Kong cents per ordinary share, corresponding to an annual dividend payout ratio of approximately 81%.

Innovation-driven brand upgrade, consolidating high-quality growth foundation

In the view of the Securities Times APP, the continuous strengthening of BOSIDENG's profitability stems from the company's strong strategic determination. Since 2018, the company has firmly adhered to the strategic direction of "focus on the main channel, focus on the main brand", clearly positioning BOSIDENG as the "global leading down apparel expert", activating consumers' perception of the "down apparel expert" and winning the recognition of mainstream consumers of the times In terms of business strategy, Bosideng continues to solidify its four core competitive strengths: "brand leadership, product upgrades, channel upgrades, and high-quality rapid response," to strengthen the resilience of corporate development.

In terms of brand building, Bosideng integrates brand strategy, creative visuals, public relations experiences, and digital content to implement brand leadership, brand battle empowerment, and strategy for both brand and sales prosperity. By promoting best-selling items and empowering hot-selling stores to help with brand strategy, Bosideng continuously deepens consumer awareness and reputation of the brand, achieving the goals of brand leadership perception and maximizing brand and sales.

According to one of the world's top five brand value evaluation authorities, Brand Finance, the "Brand Finance Apparel50 2023" list of the 50 most valuable apparel brands in the world, Bosideng brand was once again selected, ranking 47th in the apparel brand list. At the same time, the Bosideng brand also made it onto the Brand Finance "Top 500 Chinese Brand Value" list, jumping 30 places compared to last year, ranking 145th. In the 2023 World Brand Lab's "Top 500 World Brands" list, Bosideng ranked 462nd, being the only brand selected in the Chinese clothing and apparel field.

With the continuous improvement of brand strength, Bosideng's consumer base continues to expand steadily. In the 2023/24 fiscal year, Bosideng brand gained over 11 million new fans and over 4 million new members on Tmall and JD platforms. As of March 31, 2024, Bosideng brand has a total of approximately 45 million fans and 18 million members on Tmall and JD platforms. Additionally, Bosideng brand has over 9 million fans on Douyin, with over 1 million new fans.

It is worth noting that "product depth supports brand height" is the underlying logic for Bosideng to achieve brand leadership and rapid growth of fan base. In the 2023/24 fiscal year, Bosideng applied for a total of 545 patents, providing patented technologies and endorsement support for down jacket experts. As of March 31, 2024, the company has accumulated a total of 971 patents (including invention, utility model, and design patents). The high emphasis on product research and development allows Bosideng to continuously optimize product research, design, and provide innovative products with a "high value sense" based on consumer trends, while solidifying the functionality of down jackets.

In 2023, Bosideng launched functional product categories such as sun protection clothing in the spring and summer seasons, successfully expanding incremental business. In the lightweight down jacket race, Bosideng, in collaboration with Chinese and Italian design teams, overcame the challenges of splicing different materials and combining retro and modern elements. Bosideng used down to cross-border splice 6 major fashion items, all series of down jackets using internationally certified 700+ fill power goose down, producing more diverse, lighter, warmer, and more fashionable professional products than traditional down jackets, opening up a new pattern of cross-season and multi-scene fashion wear freedom for down jackets With the rise of the outdoor sports trend, the wearing scenarios for functional down jackets continue to expand. Bosideng has launched a "breathable" down jacket based on market demand changes. It is reported that the down jacket uses technology protective fabrics, and the three-in-one detachable design allows Bosideng down jackets to connect with the down jacket, further expanding the usage scenarios.

With the support of innovative products, the traction of the down jacket business on performance growth continues to strengthen. In the 2023/24 fiscal year, Bosideng's brand down jacket business achieved revenue of approximately 19.52 billion yuan, accounting for 84.1% of total revenue, a year-on-year increase of 43.8%. Among them, the main Bosideng brand achieved revenue of 16.78 billion yuan, a year-on-year growth of 42.7%, both reaching historical highs. The mid-range brand Xuezhongfei achieved revenue of approximately 2.02 billion yuan, a high-speed growth of 65.3% year-on-year. OEM processing business revenue increased by 16.4% year-on-year, reaching 2.67 billion yuan, setting a new historical high.

Channel and Supply Chain Upgrades, Operational Efficiency Reaches New Heights

Intelligent Finance and Economics APP noted that in addition to the continuous peak sales of products, "quality improvement and efficiency enhancement" are also key words reflected in Bosideng's financial report.

The financial report shows that in the 2023/24 fiscal year, Bosideng's accounts receivable turnover days were 19 days, a decrease of 4 days year-on-year. During the same period, the company's inventory turnover days were 115 days, a decrease of 29 days from the same period last year. The decrease in inventory turnover days is mainly due to Bosideng's continuous maintenance of a low proportion of initial orders, while on the one hand, continuously using pull-based replenishment and small-order fast return adjustment mechanisms, and on the other hand, effectively promoting integrated operation and management of goods across all channels.

In the 2023/24 fiscal year, Bosideng continued to break through from the flexible fast response model to the Top-style agile rapid supply model, continuously achieving a high replenishment rate of Top styles of up to 99%, truly meeting the urgent needs of the market, ensuring that popular styles are not out of stock, and unpopular styles are not produced; while maximizing support for sales targets, driving the synergy of the commodity value chain, achieving flexible and agile response process restructuring and capability development, and becoming one of Bosideng's core competencies.

During the 2023 "Double 11" event, Bosideng brand achieved first place in women's clothing and second place in men's clothing on Tmall platform, first place in Tmall official store (men's + women's clothing), first place in clothing rankings on JD.com and Vipshop, and first place in women's clothing single store on Douyin official store. Behind this success, there must be the credit of the "high-quality fast response" capability.

Furthermore, Bosideng's channel upgrades also reflect the company's proactive approach to improving quality and efficiency. In terms of offline channels, Bosideng continues to steadily improve the existing channel structure, layout, quality, and terminal image. On one hand, by focusing on "single store operation for quality improvement and efficiency enhancement," centering on store operations, and business process transformation centered on customer value, driving the improvement of store operation capabilities and operational efficiency; On the other hand, by further solidifying the channel structure, layout, quality, and terminal image, more refined management and operation of channel construction have been achieved. At the same time, through the implementation of projects such as "Top Stores" and "Top Store Managers," effective matching of channel-side resources has been realized.

In the 2023/24 fiscal year, BOSIDENG comprehensively upgraded to create Top Stores, systematically and systematically operating and managing benchmark stores that were selected, and through the establishment of over 250 projects covering approximately 500 sales outlets, focusing on precise resource allocation to achieve rapid and effective growth of Top Stores, shaping the benchmark for future channel iteration and upgrade.

According to the financial report, in the 2023/24 fiscal year, the number of BOSIDENG brand stores decreased by 186 compared to the previous year, yet brand revenue increased significantly by 42.7% year-on-year, confirming the results of refined operations. Placing resources in reasonable and effective areas has indeed driven continuous performance growth.

Strong growth momentum, institutions optimistic about long-term development

Zhongtong Finance and Economics APP noted that BOSIDENG's performance has pressed the "acceleration button," attracting widespread market attention to the company, with multiple institutions issuing research reports optimistic about BOSIDENG's long-term development prospects.

CICC stated in its research report that BOSIDENG's performance in the 2023/24 fiscal year exceeded the bank's expectations, mainly due to outstanding revenue performance. The company plans to strengthen its core business of down jackets while innovatively extending the core category of "Fashion Functional Technology" apparel, further solidifying single-store operations to improve quality and efficiency. CICC maintains a "outperform industry" rating for BOSIDENG, considering the company's strong sales performance, raising FY25/26 EPS forecasts by 9%/9% to HKD 0.34/0.38, and raising the target price by 11% to HKD 5.63.

Zheshang Securities pointed out that in March, BOSIDENG launched a new generation of professional sun protection clothing, highlighting differentiation with outstanding professional performance (UPF100+, 66% higher than the national standard for cooling sensation, 35%+ improvement in breathability), and introduced collaborative products with Christelle Kocher (Artistic Director of Chanel's high-end workshop), cooperation with fashion magazine Bazaar to create SHOWROOM, and cooperation with the Beijing Film Festival to enhance topicality. In the product series, in addition to the existing Sunshine series, a new urban light outdoor series will be added in 2024 to expand coverage in daily life scenarios, laying a solid foundation for the high growth continuation of the sun protection clothing business in the new fiscal year.

Considering the active growth plans for sun protection clothing in the 2024/25 fiscal year, lightweight down jackets, and stable growth in winter down jackets, Zheshang Securities raised its profit forecast for BOSIDENG. It is expected that the company's revenue for the 2024/25, 2025/26, and 2026/27 fiscal years will be RMB 26.3 billion, 29.7 billion, and 33.4 billion, respectively, with year-on-year growth rates of +13%/13%/13%, and net profit attributable to shareholders will be RMB 3.51 billion, 3.98 billion, and 4.50 billion, respectively, with year-on-year growth rates of +14%/+13%/+13%. The corresponding PE ratios are 12.8, 11.3, and 10.0 times, and the current valuation still has obvious cost-effectiveness. With a dividend payout ratio of over 80% for the past three fiscal years, the attributes of undervaluation, stable growth, and high dividends are highlighted, maintaining a "buy" rating Guosheng Securities maintains a "buy" rating on BOSIDENG. Guosheng Securities believes that BOSIDENG has always adhered to product and channel innovation. The brand upgrade in the past has been effective, and in recent years, the active expansion of product categories and the pursuit of medium to long-term growth are expected to result in a net profit of 3.57/4.1/4.72 billion yuan for FY2025-2027. The bank estimates that the brand down jacket business in FY2025 is expected to grow steadily by 10%-20% driven by category expansion and new product launches, while the OEM business is expected to grow by 10%-20%. Overall, the bank estimates that the company's revenue in FY2025 is expected to grow by around 15% and the net profit growth rate is expected to be faster than revenue, maintaining a trend of high-quality growth.

As the saying goes, "numbers are the best touchstone." As a leading company in the down jacket market, BOSIDENG's continuous growth in core financial indicators clearly demonstrates a stable and growth-oriented foundation to the outside world. From the company's clear and effective strategic layout, it can also be seen that BOSIDENG has a high level of certainty in maintaining business growth in the future, which is worth long-term investor attention