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].
江南布衣：高ROE穿越周期，时装龙头乘风而起