BOSIDENG(3998.HK)：AGILITY AND BRAND ELEVATION ARE KEY STRATEGIES-格隆汇

机构：招银国际
研究员：Walter Woo

　　Despite an inline result and lack of specific growth guidance, we stay confidenton FY22E and forecast sales/ net profit to grow by 15%/ 23% YoY. The stock isstill attractive with its 19x FY23E P/E (vs GOOS’s 30x, MONC’s 33x). ReiterateBUY and raised TP to HK$6.13 (23x FY23E P/E, rolled over from FY22E).
　　An inline result with slight miss in sales and GP margin beat. Bosideng’ssales/ net profit rose by 11%/ 42% YoY, 6% below/ 2% above CMBI est.,which was attributable to: 1) miss in wholesale sales, 2) surge in GP marginand 3) strong SSSG in the larger sized stores, hence the efficiency gainsand operating leverage. We believe the subdued wholesale performance inFY21 was a result of both intentional de-stocking (asked by Bosideng) andpreparation for the new replenishment system to be rolled out in FY22E.
　　Inventory days seems to be high at 175 in FY21 (vs 155 in FY20), but if weexclude increased reserve for raw materials and as at Mar 2021, adjustednumber will become just ~120, vs healthy level of 100-110.
　　A more flexible ordering system and inventory sharing in the channel.
　　Bosideng will further upgrade its order replenishment system and unlockmore inventory sharing between self-owned and distributors in FY22E. Suchsystem will allow distributors to return up to 10% of their initial trade fairorders (usually take up ~30% of annual sales targets). This allows thedistributors to respond faster to the market and capture more salesopportunities, and avoid inventory pile up at the same time. This wassupported by Bosideng’s quick response ordering and production, whichcould help its distributors to gain more market shares.
　　We expect 15% YoY sales growth in FY22E, thanks to 1) positivesentiments during the current trade fair (commented by management), 2)expansions of category, as more outdoor and high-end SKUs will be launched,together with marketing events in Oct-Nov 2021(may account for 15-20% oftotal sales) and 3) excellent e-commerce sales growth momentum, etc.
　　..and expect NP margin to be 13.6% in FY22E. Driven by: 1)premiumization through brand elevation (ASP may drive more growth thanvolume), 2) better control over retail discounts (esp. for e-commerce), 3)more self-owned sales and 4) efficiency gains from more larger-sized stores.
　　It also believed a more reasonable long term NP margin is at around15-20%.
　　Maintain BUY and raised TP to HK$ 6.13. We revised up our diluted EPSin FY22E/ 23E by 17%/ 24% to factor in GP margin surge and operatingleverage. Hence reiterate BUY with TP of HK$ 6.13, based on 23x FY23EP/E (rolled over from FY22E). Current valuation of 19x FY23E P/E with a 19%NP CAGR in FY21-24E is still attractive, vs GOOS’s 30x and MONC’s 33x.