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]
江南布衣：设计师品牌翘楚，三大战略力促可持续增长