Kai Run Shares: The First Three Quarters Of The Performance Maintained High Growth, B2B Outstanding Performance

In October 27th, Anhui Kai Run Limited by Share Ltd (hereinafter referred to as "Kai Run shares") issued the 2019 three quarterly report. 2019Q1-Q3 achieved revenue, net profit from mother, 1 billion 954 million yuan (+35.48%), 175 million yuan (+36.91%) and 163 million yuan (+43.42%). 2019Q3 achieves revenue, net profit from mother, net profit of 733 million yuan (+27.57%), 61 million 550 thousand yuan (+38.58%) and 5183 yuan (+31.86%).


According to Fangyi textile team Feng Yi group analysis, the first three quarters of open run shares maintained a relatively high growth and profitability.


(1) performance has maintained a relatively high growth rate.


Revenue maintained high growth: the company's B2B side bought Indonesia's factories to expand the quality customers such as NIKE, and the B2C side maintained high growth and continuously optimized multiple channels and improved product structure. The company's 2019Q1-Q3 and 2019Q3 revenues amounted to 1 billion 954 million yuan (+35.48%) and 733 million yuan (+27.57%), maintaining a relatively high growth rate. Resolution, the first three quarters of 2019, B2B, B2C revenue growth 40%+, 35%+, 2019Q3 B2C growth slowed slightly in the single quarter, is expected to reach about 20-30%, B2B growth of about 40%.


Profits grew rapidly: the net profit of 2019Q1-Q3 company rose to 36.91%, while Q1, Q2 and Q3 grew by 31.63%, 39.11% and 38.58% respectively.


(2) gross margin increased significantly.


Gross margin increased: 2019 in the first three quarters, the gross profit margin of Q3 reached 27.69% (+2.16pct), 26.95% (+1.11cpt), and gross margin increased. The rate of increase in the period: the increase in sales scale resulted in an increase in the cost of logistics delivery, staff salaries, market development and so on. The 2019Q3 sales rate increased by 1.07pct to 9.42%. As the scale of the revenue grew, the related management fees rose, the cost of the research and development increased, the overall management fee increased by 0.46pct to 7.74%, and the management fees and R & D rates increased by 0.08pct and 0.38pct respectively. The exchange rate decreased by the exchange rate fluctuations, and the financial rate decreased from 0.76pct to -0.64%. The overall rate increased by 0.77pct to 16.52%.


(3) inventory turnover slows down and cash flows fluctuate in short term. 2019Q3 business cycle and inventory turnover increased by 55/6 days to 129/80 days. The net cash flow of operation was reduced by 91.91% to -920.59 million compared with that of Indonesia.


(4) increase in accounts receivable and prepaid accounts. Due to the growth of production and sales scale, accounts receivable and prepaid accounts amounted to 461 million yuan (+84.26%) and 31 million 299 thousand yuan (+152.12%) respectively.


B2C still has room and profitability is on the rise. B2B is heading for the year of turning point.


(1) B2C still has room and profitability is expected to increase. Space remains. Domestic travel box market space of about 50 billion, of which about 10 billion online, Ali is expected to account for about 6 billion, 2018 companies B2C business revenue of 880 million yuan, of which millet channel accounted for more than half, if the group buying and other businesses, Ali channel revenue scale is limited, there is still room for space. 2. High growth is durable. There are still gaps in the scale and sales volume of B2C business, such as rice science and technology, nine intelligence and so on. We believe that the main reason is that the leading market leader in the industry is stronger than the brand in the industry (such as the Limited reputation of the leading Fitbit in the market, and the leading consumer in the water purification industry is limited), but because the functional demand of the suitcase products is far greater than that of the design, the other brands of the same type of suitcase often exceed the price of the company's products more than 4 times, and have the future quality reserve products such as light suitcases. (see "Kai Run shares: BC are excellent, excellent speed"), we think that the B2C has a relatively high growth expectation in the future. The company's B2C business grew faster, but with little difference in the establishment time, compared with the cloud rice technology, China 3. Short term growth will mainly come from group buying and business super. It is expected that the company's offline expansion mainly comes from group buying and business super. 2019H1 group buying maintains high growth, and business super channel expansion results are expected to emerge in the second half of the year. Offline store expansion has not yet officially started, with limited cost implications. Fourth, revenue growth is expected to increase and profits will continue to improve. It is estimated that the B2C business revenue of the 2019 companies will grow by about 40%. Due to the scale effect of online channel, the gross profit margin of the offline channel is higher than that of millet channel, and the net interest rate of 2019B2C business is expected to increase to 6-7%. (2018B2C net interest rate 5%)


(2) 2019B2B meets the inflection point. Indonesia factory. In February 2019, Indonesia's factories and factories, about 90% of its revenue from NIKE OEM, the rapid growth of NIKE orders will push the business to become one of the core growth points of B2B. Sports and leisure bags. With the improvement of popularity, Sports Pack customers have gradually expanded from Decathlon to new retail customers, and new customers are still increasing. Customers increase the promotion of sports leisure bags to become another core growth point of B2B. 3. 2019 revenue is expected to maintain high growth. The company's B2B business, with the advantages of the computer package itself and the growth of its growth point, expects 2019 revenue growth to be around 40%, and the B2B revenue CAGR in the next three years is expected to be around 20%.


[investment advice]


We expect the net profit of 2019/2020/2021 to be 2.28/3.03/4.01 billion yuan in the year of 2019/2020/2021. The growth rate is 31.05%/32.97%/32.52% in the same period. The corresponding EPS is 1.05/1.39/1.84 yuan / share, corresponding to P/E is 31.06/23.36/17.63, giving the "recommended" rating.


[risk hint]

The expansion of B2C business line is not as good as expected; the growth of B2C business online competition is fast, and the B2B customer order fluctuation has an impact.

Author: Founder Fang Yi Feng Yi team