BOSIDENG financial report "secret": Long track, focus and dedication

BOSIDENG has once again refreshed its record.

Yesterday, BOSIDENG (3998.HK) officially released its 2023/24 annual report, with impressive data:

According to the financial report, in the 2023/2024 fiscal year, BOSIDENG Group's revenue steadily increased by 38.4% to approximately RMB 23.21 billion; the group's net profit steadily increased by 44.7% to approximately RMB 3.12 billion, and operating profit once again achieved high-quality growth.

The reason for saying "once again" is because BOSIDENG's leading speed has always been visible to the naked eye.

As early as 2021, according to data from Euromonitor International, in terms of retail channel sales and sales volume of down jacket products, BOSIDENG's down jacket scale ranked first globally in terms of sales revenue and sales volume.

By 2023, in the market for sun protection clothing priced above 400 yuan on major e-commerce platforms, the market size and product sales volume of the sun protection clothing category launched by BOSIDENG both ranked first.

This annual financial report is not only remarkable in terms of revenue, but also surprises with product innovation, breakthroughs in top stores, globalization, ESG layout, and more.

Now that BOSIDENG, which has already reached the top of the industry, continues to climb higher, what other possibilities are there?

1

Double Increase in Revenue and Net Profit

BOSIDENG = Explosive Product Manufacturing Machine

In the past, the focus of the outside world was more on BOSIDENG's marketing and tactics, but it overlooked its strategic efforts.

From the financial report, it is clear that in the 2023/2024 fiscal year, BOSIDENG's focus is no longer on its competitors, but on how to maintain its own advantages.

In terms of data, BOSIDENG achieved high-quality growth in all business units in the 2023/2024 fiscal year, with all major product categories also achieving steady growth.

In the 2023/2024 fiscal year, in terms of the BOSIDENG brand, revenue steadily increased by 42.7% to approximately RMB 16.78 billion, reaching a historical high for the same period; the Snow Flying brand strengthened its online business, upgraded the Universal brand, continued to create explosive products, and achieved revenue of approximately RMB 2.02 billion, a year-on-year increase of 65.3%; in terms of OEM processing management, its revenue increased by 16.4% compared to the same period last year, reaching RMB 2.67 billion, also setting a historical high.

One noteworthy point is that in the off-season of down jacket sales, sun protection clothing and outdoor clothing have supported sales.

Entering the outdoor and sun protection tracks is mainly to compensate for the seasonal income shortage of the main down jacket category. However, BOSIDENG once again accurately grasped the pain points of consumers, opened up a new "more fashionable professional sun protection clothing," and ushered in the era of sun protection clothing 3.0.

More professional, BOSIDENG has made a major breakthrough in sun protection technology, such as the "Original Yarn Sun Protection Technology" with a sun protection factor of up to 100+, truly achieving hardcore sun protection; and more fashionable, BOSIDENG launched the world's first sun protection clothing fashion show at the Beijing International Film Festival "Film and Fashion Unit," allowing the outside world to feel BOSIDENG's value and cultural identity to the new generation of young people Data is the best proof. In the first half of the 2023/24 fiscal year, thanks to the rapid increase in sales of sun-protective clothing, BOSIDENG brand achieved a revenue of RMB 4.42 billion, a year-on-year increase of 25.5%.

At the same time, the "hard work" that BOSIDENG quietly put into supply chain management is also reflected in the financial report. As of March 31, 2024, BOSIDENG Group's inventory turnover days were 115 days, a decrease of 29 days compared to the same period last year; accounts receivable turnover days were 19 days, a decrease of 4 days compared to the same period last year, indicating that BOSIDENG's liquidity is continuously strengthening.

BOSIDENG's outstanding vertical and horizontal performance has also been well received by the outside world.

Just yesterday, Morgan Stanley released a new review of BOSIDENG's annual report, further raising the target price from HKD 6.4 to HKD 6.6, maintaining an overweight rating and keeping it on the catalyst watchlist.

Morgan Stanley specifically mentioned that we have more confidence in BOSIDENG's investment theme of "not just winter trading". In an uncertain macro environment, BOSIDENG's verified category expansion capabilities, strengthened brand value, flexible supply chain, and robust execution capabilities can create alpha.

It can be said that behind this report card is BOSIDENG's continuous optimization and persistence in product strength, brand strength, channel strength, and supply chain system for decades.

2

Under the financial report,

Decoding BOSIDENG's path to growth

In addition to revenue in this financial report, there is another highlight that strongly confirms the success of BOSIDENG's "focus on the main channel, focus on the main brand".

Compared with other products, the BOSIDENG down jacket brand equipped with cutting-edge technology not only has seen a continuous increase in sales, but also has shown a very rapid growth momentum - the financial report shows that the total revenue of the BOSIDENG brand down jacket is RMB 19.52 billion, a year-on-year increase of 43.8%.

Everyone is talking about "technology", where does BOSIDENG's confidence come from?

First, through product upgrades to drive brand upgrades.

A down jacket may seem simple - filling down between two layers of fabric, the air in the down gaps can provide thermal insulation, which is the basic principle of a down jacket.

But to what extent a down jacket can resist cold while balancing comfort, style, and aesthetics still has unlimited potential.

Under the BOSIDENG brand matrix, the classic series of Peak, Extreme Cold, Puff, High-end Outdoor, and Skiing each bear their own mission of "tackling tough challenges".

For example, the Extreme Cold series has now reached its fourth generation. After continuous selection and research on fabrics and craftsmanship, as well as multiple tests in severe cold environments, the fourth generation of Extreme Cold can resist temperatures as low as -40°C for the first time, while reducing weight by 500 grams without compromising quality.

The Peak series has made breakthroughs in top materials and craftsmanship for professional applications: the 2023 Peak LITE series is developed for severe cold environment workers and mountain enthusiasts other than professional climbers, achieving a dual breakthrough in warmth and lightweight, with the ability to withstand temperatures as low as -50°C and a 5% reduction in weight of the garment As a sport that has been popular among young people in recent years, skiing also tests a brand's fashion sensitivity and technological strength in upgrading ski wear.

In 2023, BOSIDENG upgraded its third generation of ski wear with a patented down air circulation system, which can not only lock in the heat radiated by the human body but also expel excess moisture, making it more suitable for high-intensity sports scenes.

You will find that BOSIDENG has not only significantly enhanced the value of down jackets and magnified its own advantages, but also made wearing down jackets in winter cooler and more imaginative.

Secondly, it is about precise marketing, getting closer to the users.

In addition to being a competition of top-notch technology, product development also requires comprehensive strength.

As times progress and users continue to grow, brands are required to constantly have new stories. This year, it is also evident that in activities loved by young people, you can always see the presence of BOSIDENG.

For example, in April this year, at the summer sun protection clothing new product launch event held in Shanghai, BOSIDENG chose to collaborate with the authoritative fashion media "Fashion Bazaar", presenting BOSIDENG's innovative exploration in the fashion field through a strong partnership.

From fashionistas, celebrities to scholars in related fields, they delved into the trends and future of the sun protection clothing industry together. At the forum, BOSIDENG and Fashion Bazaar also jointly released the "Sun Protection New Fashion Manual", becoming the world's first sun protection new fashion manual.

In May, BOSIDENG also made an appearance at the Strawberry Music Festival.

BOSIDENG set up a sun protection workshop on-site, allowing young people to experience the collision of BOSIDENG's sun protection clothing with music in close interaction, turning the music festival into a sun protection fashion show.

In addition to collaborating with other IPs, BOSIDENG also did not forget to give offline stores a major upgrade. The themed concept store "in88 Dengfeng" in Wangfujing Yintai, Beijing, and the sixth-generation flagship store in Chengdu Vientiane City are powerful and stable brand traffic entry points for BOSIDENG.

It can be said that through iteration and upgrading, BOSIDENG has broken free from the impression that domestic products are only low-priced, and has become a brand that understands needs, innovates, and delivers high quality.

3

The core advantage of business,

lies in value and experience

In fact, facing a younger user base, for the existing clothing industry, it is undoubtedly a disruptive change and reshuffle, forcing many domestic brands to rethink their positioning.

Behind the financial numbers growth, there is a more important question worth exploring: what is the core logic behind all growth?

The answer is: value and experience.

Economist Joseph Pine pointed out in his book "The Experience Economy" that companies provide an experience that customers are immersed in and find unforgettable, and this experience process also creates commercial value for the company.

This requires companies to consider issues from the perspective of users, and to pay more attention to what consumers need more than ever before, in order to provide them with products they truly need. BOSIDENG has become a benchmark due to two key factors:

First, holding onto the long track 48 years ago, BOSIDENG started with only 8 sewing machines, an absolute veteran Chinese brand.

Many brands born around the same time as BOSIDENG could not resist the temptation of diversification. Some turned to real estate, some became obsessed with investing in finance, and some lost themselves in continuous transformation.

As early as the end of 2017, BOSIDENG proposed a plan of "Focusing on the Main Channel and Shrinking Diversification", and officially made "Focusing on the Main Channel, Focusing on the Main Brand" the group's strategy the following year, which has been continuing to this day: the main channel and main brand refer to the down jacket category and the BOSIDENG brand.

Every down jacket from BOSIDENG is made through 62 craftsmen and 150 processes - every seemingly insignificant detail is considered an important production process by BOSIDENG - because it affects the user's real experience.

During the Double 11 period in 2023, BOSIDENG ranked first in brand apparel sales on Tmall platform, first in Tmall official store (men's + women's clothing), first in apparel rankings on JD.com and Vipshop, and first in the full-cycle brand women's clothing single store on Douyin.

As of 2024, BOSIDENG has been the champion of down jacket sales in the Chinese market for 29 years and has achieved global best-selling status.

Even more commendable is that while holding onto the track, a company is willing to continuously invest in research and development.

Currently, BOSIDENG has established a national-level industrial design center, a national-level post-doctoral research workstation, and a research and technology center of over 10,000 square meters.

In BOSIDENG's laboratory, many "firsts" have been witnessed - the first clothing company laboratory in China to obtain accreditation from the International Down and Feather Bureau (IDFB), the first enterprise laboratory in the down jacket industry to obtain accreditation from the China National Accreditation Service for Conformity Assessment (CNAS), and the first clothing industry laboratory in China to have a polar environment simulation verification laboratory.

Every down jacket from BOSIDENG must undergo extreme testing in the laboratory, including 24-hour -30°C material extreme cold testing, 15,000 to 20,000 fabric friction tests, and 10,000 zipper pull tests.

In the field of functional apparel that values genuine materials and practicality, even industry leaders cannot afford to be distracted.

Yet, in BOSIDENG, such a high level of focus can always be seen.

Whether it is as grand as moving from "Leading Chinese Brand" to "Global Leader", the rise and growth of a company, or solving specific issues such as cold resistance and sun protection, one must focus on the right direction and valuable things to have a chance of success.

In the past, foreign competitors standing in front of BOSIDENG were once very strong, but through long-term adherence to professionalism, BOSIDENG has created advantages that are no less than any competitor, achieving global leadership.

When the spotlight shines down, BOSIDENG can shine on its own, all because this company breaks through the ceiling of Chinese brands with professional determination