Investment Rating - The report assigns a "Buy" rating to Jiangnan Buyi (3306) with a target price of HKD 20.9 (RMB 19.0) based on a combination of PE and DCF valuation methods [5][10] Core Views - Jiangnan Buyi is a leading domestic designer brand with a 30-year history, strong brand equity, and a diversified portfolio covering women's, men's, children's, and homewear segments [5][11] - The company has achieved rapid revenue growth from RMB 1.38 billion in FY2014 to RMB 5.24 billion in FY2024, with a CAGR of 14.3%, and net profit CAGR of 19.0% [5][11] - The designer brand industry is growing faster than the overall apparel market, with a 7.6% CAGR from 2018-2023, outpacing women's wear (6%) and luxury/fast fashion sub-segments [5][11] - The company's strategy focuses on "design + brand-driven" growth, "omni-channel retail," and "multi-brand operations," aiming to achieve RMB 10 billion in retail sales by FY2026 [5][11] Financial Performance and Valuation - FY2025-2027 net profit is forecasted to be RMB 869/904/987 million, with a PE ratio of 9/8/8x [5][10] - The company's FY2024 revenue reached RMB 5.24 billion, with a gross margin of 66.3%, and net profit margin of 16.2% [27] - FY2024 dividend payout ratio was 97%, and future dividends are expected to remain above 75% [5][60] Brand Portfolio and Growth - The company operates a diversified brand matrix including mature brands (JNBY), growth brands (CROQUIS, jnby by JNBY, LESS), and emerging brands (POMME DE TERRE, JNBYHOME) [23][24] - Mature brands contributed 56% of FY2024 revenue, while growth brands accounted for 42%, with emerging brands making up 2% [24][44] - FY2019-2024 revenue CAGR for mature/growth/emerging brands exceeded 9% [5][45] Design and R&D - FY2024 design and R&D expenses increased by 16% to RMB 196 million, accounting for 4% of revenue [5][42] - The company emphasizes innovation in fabric and design, with a focus on art-inspired branding [5][42] Omni-Channel Retail Strategy - FY2024 online revenue grew 18.4%, accounting for 19.3% of total revenue, with a gross margin of 63.8% [49] - Offline revenue remains the primary contributor, with self-operated and distributor channels growing 16.4% and 17.7% respectively in FY2024 [49] - The company has 2,024 stores as of FY2024, with comparable store sales growth of 10.7% [50][52] Industry Outlook - The designer brand industry is expected to grow faster than fast fashion and luxury segments, with a 7.6% CAGR from 2018-2023 [40] - The mid-to-high-end women's wear market in China grew from RMB 297.7 billion in 2018 to RMB 391.6 billion in 2023, with a CAGR of 6% [36] - Female consumers prioritize product aesthetics (34%), material quality (25%), and brand reputation (22%) when making purchasing decisions [37][38]

Investment Rating - The investment rating for the company is "Outperform" [1] Core Views - The company is expected to achieve high-quality growth in FY24, with revenue increasing by 17.3% to 5.238 billion [3][5] - The net profit attributable to shareholders is projected to rise by 36.7% to 849 million [3][5] - The company maintains a high dividend yield of 12.1% for FY24, with a proposed final dividend of 0.86 HKD per share [4][5] Summary by Sections Financial Performance - FY24 revenue is expected to grow by 17.3% to 5.238 billion, with online and offline revenue increasing by 17.1% and 18.4% respectively [3][5] - Comparable same-store sales are projected to improve by 10.7% [3] - The net profit for FY24 is forecasted to increase by 36.7% to 849 million, with a net profit margin rising by 2.3 percentage points to 16.2% [3][5] Brand Performance - Revenue growth for mature, growing, and emerging brands is expected to be 17.1%, 17%, and 28.7% respectively [4] - The gross profit margin for FY24 is anticipated to be 66.25% [5] - The operating profit margin is projected to improve significantly across different brand categories [4] Store Expansion and Membership - The company plans to open a net of 34 stores in FY24, with a focus on maintaining core membership [4] - Active membership accounts are expected to reach 556,000, a year-on-year increase of 9.4% [4] Dividend and Valuation - The company plans to maintain a high dividend payout ratio of 97%, with a forecasted dividend yield of 9.8% for FY25 [4] - The estimated net profit for FY25 is projected at 888 million, with corresponding EPS of 1.71 HKD [5][7] - The company is valued at a P/E ratio of 9-10X for FY25, with a target price range of 16.75-18.62 HKD per share [4][5]

Investment Rating - The investment rating for Jiangnan Buyi (03306.HK) is "Outperform the Market" [1][4][16]. Core Views - The company is experiencing rapid growth in fiscal year 2024, with a revenue increase of 17.3% to 5.24 billion yuan and a net profit increase of 36.7% to 850 million yuan, driven by multiple brand stages and strong online and offline sales [1][16]. - The company maintains a high dividend payout ratio of 96.8%, with total dividends per share amounting to 1.71 HKD, supported by robust cash flow [1][16]. - Despite a challenging macroeconomic environment, the company achieved a steady revenue growth of 7.5% in the second half of the fiscal year, with improvements in gross margin and sales expense ratio [1][16]. Summary by Relevant Sections Financial Performance - For the fiscal year ending June 30, 2024, the company reported a revenue of 5.24 billion yuan, a year-on-year increase of 17.3%, and a net profit of 850 million yuan, up 36.7% [1][17]. - The gross margin improved by 2.4 percentage points to 66.2%, reflecting stable retail discounts and healthy inventory management [1][16]. - The operating cash flow was robust at 1.6 billion yuan, with a net cash ratio of 1.9 [1][16]. Revenue Breakdown - Online revenue grew by 18.4% to 1.01 billion yuan, while offline self-operated and distribution revenue increased by 16.4% and 17.7% to 2.16 billion yuan and 2.07 billion yuan, respectively [1][16]. - The main brand's revenue increased by 17.1%, while the emerging brand saw a significant growth of 28.7% [1][16]. Future Outlook - The company plans to maintain a dividend payout ratio of no less than 75% over the next three years, indicating strong confidence in future earnings [1][16]. - The net profit forecasts for FY2025-2027 are adjusted to 870 million, 940 million, and 990 million yuan, reflecting a growth of 2.4%, 8.0%, and 6.2% respectively [1][16]. Valuation - The target price is maintained at 17.5-19.2 HKD, corresponding to a PE ratio of 9.5-10.5x for FY2025 [1][16].

Investment Rating - Buy (Maintained) [1] Core Viewpoints - FY2024 performance was strong, with total revenue reaching RMB 5,238 million, up 17.3% YoY, and net profit reaching RMB 848 million, up 36.5% YoY [3] - The company's gross margin increased by 1.0pct YoY to 66.3%, and net margin increased by 2.3pct YoY to 16.2% [3] - The company proposed a final dividend of HKD 0.86 per share, with a full-year dividend payout ratio of 97% [3] - The company's brand matrix was further improved, with the acquisition of onmygame brand, which holds 51% of its shares, to strengthen the children's wear sector [4] - The company's global independent physical retail stores totaled 2,024, an increase of 34 stores YoY [4] Performance Analysis - By brand, JNBY revenue was RMB 2,940 million, up 17.1% YoY, accounting for 56.2% of total revenue [4] - By channel, direct sales revenue was RMB 2,160 million, up 16.4% YoY, dealer channel revenue was RMB 2,070 million, up 17.7% YoY, and online channel revenue was RMB 1,010 million, up 18.4% YoY [4] - The company's gross margin by brand: JNBY 68.2%, up 1.0pct YoY, CROQUIS 66.3%, up 1.6pct YoY, jnby by JNBY 59.2%, up 0.6pct YoY, LESS 69.9%, up 1.2pct YoY, emerging brands 45.0%, down 1.4pct YoY [2] - The company's gross margin by channel: direct sales 74.1%, up 0.9pct YoY, dealer channel 59.3%, up 0.4pct YoY, online channel 63.8%, up 2.4pct YoY [2] Future Outlook - The company is expected to achieve revenue of RMB 5,560 million, RMB 5,956 million, and RMB 6,384 million in FY2025, FY2026, and FY2027, respectively [6] - The company's net profit is expected to reach RMB 875 million, RMB 938 million, and RMB 1,011 million in FY2025, FY2026, and FY2027, respectively [6] - The company's PE ratio is expected to be 7.6X, 7.1X, and 6.6X in FY2025, FY2026, and FY2027, respectively [6] - The company's ROE is expected to be 39.1%, 36.8%, and 35.1% in FY2025, FY2026, and FY2027, respectively [6]

Investment Rating - The report maintains a "Buy" rating for Jiangnan Buyi (03306) with a 6-month target price of 13.64 HKD [1] Core Views - Jiangnan Buyi's FY24 revenue reached 5.24 billion RMB, a 17.3% YoY increase, driven by comparable store sales growth, online channel expansion, and offline store network growth [1] - Net profit for FY24 was 850 million RMB, a 36.5% YoY increase [1] - The company's dividend payout ratio reached 75%, with a total annual dividend of 890 million HKD (approximately 830 million RMB) [1] - The report highlights the company's low valuation and high dividend attributes as key investment attractions [1] Financial Performance - FY24 gross margin improved to 66.3%, up 1.0 percentage point YoY [1] - Net profit margin reached 16.2%, a 2.3 percentage point increase YoY [1] - Total assets amounted to 7.08 billion HKD, with a debt-to-asset ratio of 49.42% [1] Brand Performance - JNBY brand contributed 2.94 billion RMB in revenue, accounting for 56.2% of total revenue, with a 17.1% YoY growth [1] - CROQUIS (速写) generated 750 million RMB, a 11.7% YoY increase, representing 14.4% of total revenue [1] - jnby by JNBY achieved 810 million RMB in revenue, a 21.4% YoY growth, contributing 15.4% to total revenue [1] - LESS brand recorded 620 million RMB in revenue, an 18.3% YoY increase, accounting for 11.9% of total revenue [1] Channel Performance - Offline channels contributed 81.5% of total revenue, with self-operated stores generating 2.16 billion RMB (41% of total) and franchised stores contributing 2.07 billion RMB (39.5% of total) [1] - Online channel revenue reached 1.01 billion RMB, an 18.4% YoY increase, representing 19.3% of total revenue [1] Store Network - As of June 30, 2024, the company operated 2,024 physical stores globally, including 515 self-operated stores and 1,509 franchised stores [1] - The retail network covers all provinces, autonomous regions, and municipalities in mainland China, as well as 9 other countries and regions [1] - Comparable store sales growth reached 11% in FY24, driven by store image upgrades, inventory sharing system improvements, and digital retail initiatives [1] Membership System - Member contribution accounted for over 80% of total retail sales, with active member accounts exceeding 550,000 (compared to 510,000 in FY23) [1] - Members with annual purchases exceeding 5,000 RMB reached 310,000 accounts (compared to 260,000 in FY23), contributing 4.49 billion RMB in retail sales, a 27% YoY increase [1] Future Projections - The report forecasts FY25-27 revenues of 5.5 billion RMB, 6.0 billion RMB, and 6.6 billion RMB respectively [2] - Net profit projections for FY25-27 are 880 million RMB, 900 million RMB, and 990 million RMB respectively [2] - EPS estimates for FY25-27 are 1.69 RMB, 1.74 RMB, and 1.91 RMB per share, with a consistent PE ratio of 7x [2]

9 Sep 2024 CMB International Global Markets | Equity Research | Company Update JNBY Design (3306 HK) Prudent guidance and generous dividends FY24 results were roughly inline with CMBI/BBG est.. Some investors could be concerned about the softened performance in 2H24, but this should be partially expected. The conservative tone for FY25E is not surprising and guidance should likely be achieved, thanks to further upgrades in member management and customer services, resilient GP margin and a better channel mix ...

Brand Portfolio and Strategy - The company has categorized its brand portfolio into three stages: mature brands (JMBY), growth brands (men's wear Su Xie, women's wear Less), and emerging brands (Penma, Relab, OMYGAME) [1] - Each brand has a unique brand language and market positioning, collectively building a diverse and rich brand matrix for the company [1] Business Lines and Market Positioning - The growth brands include Su Xie for men's wear and Less for women's wear, indicating a focus on expanding in the apparel sector [1] - Emerging brands such as Penma, Relab, and OMYGAME suggest the company is exploring new market segments and diversifying its offerings [1] Market and Industry Competition - The company's strategy of maintaining a diverse brand portfolio with distinct market positioning reflects a competitive approach to capture different consumer segments [1] Management Commentary and Future Outlook - No specific management commentary or future outlook was provided in the document [1] Other Important Information - No other significant information was mentioned in the document [1] Q&A Session - No Q&A session was recorded in the document [1]

Financial Performance - For the fiscal year ending June 30, 2024, the total revenue of JNBY Design Limited was RMB 5,238.1 million, an increase of 17.3% or RMB 773.0 million compared to RMB 4,465.1 million for the fiscal year ending June 30, 2023[2]. - The gross profit for the fiscal year 2024 was RMB 3,470.5 million, up 19.0% or RMB 553.5 million from RMB 2,917.0 million in the previous fiscal year, with a gross margin increase from 65.3% to 66.3%[2]. - The net profit for the fiscal year 2024 reached RMB 848.1 million, representing a 36.5% increase or RMB 226.9 million compared to RMB 621.3 million in fiscal year 2023[2]. - The operating profit for the fiscal year ending June 30, 2024, was RMB 1,194,266,000, compared to RMB 857,898,000 for the previous year, indicating a significant increase of about 39.4%[20]. - The company reported a profit attributable to shareholders of RMB 849,087,000 for the year ended June 30, 2024, up from RMB 621,292,000 in 2023, representing a growth of 36.6%[28]. - The net cash inflow from operating activities for fiscal year 2024 was RMB 1,603.0 million, a significant increase of 70.7% or RMB 663.9 million from RMB 939.1 million in fiscal year 2023[2]. - The total comprehensive income for the fiscal year 2024 was RMB 869.2 million, compared to RMB 642.4 million in the previous year, indicating a growth of 35.3%[5]. Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.86 per share, totaling approximately RMB 824.8 million, which accounts for 97% of the company's net profit for fiscal year 2024[2]. - The total dividends declared and paid for the year ended June 30, 2024, amounted to RMB 726,533,000, significantly higher than RMB 391,864,000 in 2023, showing an increase of 85.5%[31]. - The company has adopted a general annual dividend policy to distribute 75% of the net profit available for distribution each fiscal year[26]. Assets and Liabilities - The total assets of the company as of June 30, 2024, were RMB 4,372.3 million, an increase from RMB 4,065.8 million in the previous year[8]. - The total liabilities decreased slightly to RMB 2,160.8 million from RMB 2,084.3 million in the previous year, reflecting improved financial stability[9]. - The company's equity attributable to shareholders increased to RMB 2,169.2 million from RMB 1,981.5 million, showing a growth of 9.5%[9]. - The company's total liabilities increased to RMB 780,935,000 in 2024 from RMB 640,322,000 in 2023, marking a rise of 22%[47]. Revenue Breakdown - Revenue from mature brands in mainland China was RMB 2,919,867,000, while growth brands generated RMB 2,176,553,000, and emerging brands contributed RMB 109,619,000 for the fiscal year ending June 30, 2024[19]. - Revenue from the geographical segment of mainland China accounted for 99.4% of total revenue, increasing by 17.7% to RMB 5,206.0 million[67]. - Revenue from the mature brand JNBY increased by 17.1% to RMB 2,944.2 million, while the growth brand segment saw a 17.0% increase to RMB 2,184.1 million[63]. - Online sales channel revenue grew by 18.4% to RMB 1,008.4 million, while offline sales channels increased by 17.1%[66]. Operational Highlights - The number of independent retail stores globally increased from 1,990 to 2,024, with a presence in all provinces and regions of mainland China and nine other countries[56]. - Comparable store sales growth for physical retail stores was recorded at 10.7% in fiscal year 2024, driven by strategic investments in store image upgrades and the successful launch of "Jiangnan Buyi+" multi-brand stores[60]. - Active member accounts exceeded 550,000, a significant increase from nearly 510,000 in fiscal year 2023, contributing over 80% of total retail sales[61]. - The company operates 514 self-operated stores and 1,488 distributor stores in mainland China as of June 30, 2024[58]. Expenses and Costs - Employee benefits expenses increased to RMB 486,503,000 for the fiscal year ending June 30, 2024, compared to RMB 434,792,000 in the previous year, marking an increase of about 11.9%[21]. - Selling and marketing expenses for fiscal year 2024 were RMB 1,827.1 million, accounting for 34.9% of total revenue, down from 38.0% in the previous year[70]. - The cost of goods sold for the fiscal year ending June 30, 2024, was RMB 1,620,362,000, up from RMB 1,374,982,000 in the previous year, indicating an increase of approximately 17.8%[21]. Investments and Acquisitions - The company acquired a 51% stake in Huiju for approximately RMB 96,441,000, gaining effective control with three out of five board seats[49]. - The fair value of identifiable net assets acquired from Huiju was RMB 88,410,000, with goodwill recognized at RMB 51,352,000 due to expected high growth and synergies[50]. - The company's cash outflow for the acquisition of Huiju, net of cash acquired, was RMB 39,121,000[51]. Governance and Compliance - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange's listing rules and has complied with all applicable provisions during the fiscal year 2024[85]. - The audit committee reviewed the accounting principles and practices adopted by the group for the fiscal year 2024[88]. - The auditors confirmed that the figures in the performance announcement align with the audited consolidated financial statements for the fiscal year 2024[89].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 18.13, representing a potential upside of 33% from the current price of HKD 13.68 [3]. Core Insights - The company demonstrates high Return on Equity (ROE) and profitability, driven by a combination of high dividend payout, strong net profit margins, and efficient inventory turnover [2][24]. - The market for urban white-collar apparel in China is projected to reach approximately RMB 365.4 billion by 2026, with the company expected to capture a market share of 1.66% [2]. - The company has maintained a stable dividend payout ratio of around 75% since its listing in 2016, with cumulative dividends exceeding RMB 3.2 billion [13][22]. Summary by Sections Company Highlights - The company has a high dividend yield of 11% for FY23, positioning it among the top in its industry [2]. - It has achieved a sales net profit margin of 13.91% in FY23 and 19.29% in FY1H24, indicating strong profitability [2]. - Inventory turnover days are 188 and 135 for FY23 and FY1H24 respectively, showcasing industry-leading efficiency [2]. Investment Logic - The company's differentiation strategy in the designer brand segment fills a market gap, appealing to a targeted consumer base [2]. - The integration of traditional culture with modern design enhances brand appeal and attracts a younger demographic [2]. - The company has effectively reduced customer acquisition costs through multi-brand fan engagement strategies [2]. Future Outlook - The company is expected to achieve revenue of RMB 6.08 billion by 2026, with a compound annual growth rate (CAGR) of 8.05% [2]. - The urban white-collar apparel market is anticipated to grow at a CAGR of 4.33% over the next five years, indicating significant growth potential for the company [2]. Profit Forecast, Valuation, and Rating - Projected net profits for FY24-26 are RMB 825 million, RMB 859 million, and RMB 920 million, reflecting growth rates of 32.8%, 4.1%, and 7.0% respectively [2]. - The company’s price-to-earnings (P/E) ratio for FY24 is estimated at 8.4 times, suggesting substantial room for valuation improvement compared to the industry average of 13 times [2].

Investment Rating - The report initiates coverage on Jiangnan Buyi (03306) with a "Buy" rating and a target price of HKD 19.3 [4] Core Views - Jiangnan Buyi is a leading designer brand fashion group in China, with a diversified brand portfolio and strong growth potential driven by its three core strategies: design-driven, multi-brand, and fan economy [1][3] - The company has demonstrated steady revenue and profit growth, with FY19-23 revenue increasing from RMB 3.36 billion to RMB 4.47 billion (CAGR 7.38%) and net profit growing from RMB 485 million to RMB 621 million (CAGR 6.37%) [1][13] - The designer brand market in China is expanding, with the industry size reaching RMB 177.6 billion in 2022, and Jiangnan Buyi is well-positioned to capitalize on this growth due to its first-mover advantage and strong brand recognition [1][28] Brand Portfolio and Market Position - Jiangnan Buyi operates a diversified brand matrix, including one mature brand (JNBY), three growing brands (CROQUIS, jnby by JNBY, LESS), and several emerging brands, targeting different customer segments [1][3][10] - JNBY remains the core revenue driver, contributing 56% of total revenue in FY23, while the growing brands are showing faster growth rates, with a combined revenue increase of 29.7% in FY24H1 [39] - The company has a strong market position in the designer brand industry, with a 9.6% market share in 2015, and is recognized as the most unique and easily identifiable women's designer brand in China [31][32] Growth Drivers - **Design-driven strategy**: The company emphasizes original design, with a strong R&D team and significant investment in design innovation. Its brands have won multiple awards, enhancing brand recognition and customer loyalty [1][35][36] - **Multi-brand strategy**: The company leverages its diverse brand portfolio to cater to a wide range of customer needs, with mature brands providing stable revenue and growing brands driving faster growth [3][38][39] - **Fan economy**: Jiangnan Buyi has built a robust membership system, with over 6.9 million members contributing 80% of retail sales in FY23. The company also focuses on enhancing customer engagement through digital channels and social media, with over 8.5 million followers across platforms [41][42][43] Financial Performance and Outlook - The company has maintained a high dividend payout ratio, distributing approximately 75% of its net profit to shareholders in recent years [1][19] - For FY24-26, the report forecasts revenue of RMB 5.19 billion, RMB 5.92 billion, and RMB 6.50 billion, with net profit of RMB 840 million, RMB 960 million, and RMB 1.07 billion, respectively. The EPS is expected to be RMB 1.63, RMB 1.86, and RMB 2.06 per share, with a PE ratio of 9.6X, 8.4X, and 7.6X for FY24-26 [1][45] - The target valuation is based on an 11X PE multiple for FY24, implying a target market cap of RMB 10 billion and a target price of HKD 19.3 [1][47]