Summary of Jiangnan Buyi Conference Call Company Overview - Jiangnan Buyi is a leading designer women's clothing company with a market share exceeding 10% in the designer women's apparel sector, demonstrating strong performance resilience despite a weak demand backdrop [2][3][6]. Key Points and Arguments Industry Position and Growth Potential - Jiangnan Buyi reported a revenue of 5.6 billion RMB and a profit of nearly 900 million RMB in the latest fiscal year, maintaining low double-digit growth in a challenging market [3]. - The company has a layered brand structure, including core women's wear, men's wear, casual wear, and children's wear, contributing to revenue growth over the past decade [2][3]. - Emerging brands, particularly in children's wear and sustainable concepts, are also making significant contributions to revenue [2][3]. Management Team and Ownership Structure - The management team is stable, with the founder overseeing strategy and his wife managing design and retail operations. The introduction of a senior Alibaba director as CEO has strengthened digital retail efforts [4]. - The controlling family holds over 80% of the shares, ensuring alignment between ownership and management, which supports long-term strategic direction [4]. Valuation Trends - Jiangnan Buyi has experienced valuation fluctuations, peaking at around 20 times earnings in 2017-2018, then declining to approximately 7 times due to market challenges [5]. - As of 2024, the valuation has gradually increased to around 10 times, indicating potential undervaluation compared to other Hong Kong-listed apparel companies [5][17]. Future Performance and ROE Sustainability - The company is expected to maintain strong performance resilience due to the growth potential in the designer brand segment, which has been growing at a compound annual growth rate of about 10% [6]. - Jiangnan Buyi's ROE is supported by high net profit margins, rapid turnover, and financial leverage, outperforming other apparel companies [6][10][16]. Investment Value - Jiangnan Buyi is positioned as a valuable investment opportunity, with a leading position in a niche but rapidly growing designer women's apparel market and a stable management team [7]. - The current valuation of around 10 times earnings suggests room for growth compared to other Hong Kong apparel firms, making it a potential high-return investment [7][17]. Revenue Growth Drivers - Continuous revenue growth is attributed to unique design styles and a strong design team, with a focus on developing proprietary fabrics [8]. - The company employs a diverse design team that balances exploratory and commercial SKUs, ensuring stable style and dynamic commercial value [8]. Membership Operations and Sales Conversion - Jiangnan Buyi enhances sales conversion through customized membership operations, utilizing data from various channels to tailor product offerings [9]. - The introduction of the "布置盒子" app has significantly increased purchase conversion rates, with GMV rising from 100 million RMB in 2019 to 1 billion RMB in 2023 [9]. High Turnover and Efficient Accounts Receivable Management - The company benefits from a nationwide inventory sharing system, enabling quick stock transfers and efficient logistics [12]. - Jiangnan Buyi's accounts receivable turnover is notably low, averaging under 10 days compared to the industry average of 50-60 days, due to a prepayment model with distributors [13][14]. Maintaining High Net Profit Margins - High net profit margins are maintained through a combination of brand strength, pricing strategies, and low sales expense ratios [15]. - The company’s direct store sales average over 4 million RMB, placing it among the leaders in the industry [15]. Future Development and Valuation Outlook - The current valuation is between 9-10 times earnings, with expectations for gradual improvement as market recognition of its operational model increases [17]. - The potential for steady growth and improved valuation makes Jiangnan Buyi a recommended investment from a dividend perspective [17].

Core Viewpoint - The report highlights Jiangnan Buyi as a leading designer brand in China, showcasing strong performance metrics such as high dividend yield and return on equity (ROE), while emphasizing the company's resilience in a mature market phase [1][3]. Group 1: Company Overview - Jiangnan Buyi is positioned as a domestic designer brand leader with a mid-to-high-end product range, featuring a multi-brand strategy that caters to diverse customer needs [1]. - The company has a highly educated management team and a concentrated family ownership structure, maintaining a stable dividend payout ratio of over 70% in recent years [1][2]. - The company's PE valuation has undergone two rounds of downward adjustments, recently stabilizing around 10X, indicating a potential undervaluation due to market misconceptions about its performance resilience and high ROE sustainability [1]. Group 2: Performance Resilience - Jiangnan Buyi's resilience is attributed to three key competitive advantages: design capability, fan economy, and multi-brand strategy [1]. - The design strength combines artistic creativity with commercial viability, enhancing product appeal and aligning with market trends [1]. - The fan economy leverages a comprehensive retail model to engage customers, utilizing refined membership services and digital upgrades to drive retail conversion [1]. - The multi-brand approach allows for balanced brand development and risk mitigation, with a diverse product range that enhances growth potential [1]. Group 3: High ROE Sustainability - The company's high ROE reflects strong operational capabilities and competitive advantages, supported by a DuPont analysis [2]. - High inventory turnover is achieved through a national inventory sharing system and a unique payment model with distributors, leading to faster cash recovery [2]. - The company maintains a relatively high gross margin due to brand premium and ongoing supply chain improvements, while effective cost management enhances profitability [2]. - A high equity multiplier is noted, with significant operating liabilities and a strong dividend policy reinforcing leverage effects [2]. Group 4: Future Projections - Forecasts for Jiangnan Buyi's net profit for FY2026-FY2028 are projected at 920 million, 960 million, and 990 million yuan, respectively, with corresponding PE ratios of 9X [3]. - Assuming a 75% dividend payout ratio, the expected dividend yield for FY2026 is estimated to reach 8%, highlighting the company's combination of high dividends and growth potential [3].

Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [3][10][12]. Core Insights - Jiangnan Buyi, as a leading designer brand in China, showcases strong design capabilities, fan economy, and a multi-brand matrix that forms its competitive moat. The company demonstrates resilience in adverse conditions and flexibility in favorable ones, supported by its advanced omnichannel operations and a large, loyal membership system that continuously contributes to retail sales, laying a solid foundation for steady growth in performance [3][10]. Summary by Sections Company Overview - Jiangnan Buyi is recognized as a top designer brand in China, with a product positioning in the mid-to-high-end market. The company has a comprehensive multi-brand layout that meets diverse customer needs, with established brands, growth brands, and emerging brands contributing to its revenue [7][30]. Financial Performance - The company is projected to achieve a net profit attributable to shareholders of 9.2 billion, 9.6 billion, and 9.9 billion CNY for FY2026, FY2027, and FY2028, respectively, with a corresponding PE ratio of 9 for each year. Assuming a 75% dividend payout ratio, the dividend yield for FY2026 is expected to reach 8% [3][10]. Competitive Advantages - Jiangnan Buyi's competitive advantages stem from three main pillars: design strength, fan engagement, and a multi-brand strategy. The design aspect combines artistic creativity with commercial viability, while the fan economy leverages a comprehensive retail model to enhance customer engagement and retention [8][9][10]. ROE and Dividend Policy - The company maintains a high return on equity (ROE) of over 35% in recent years, supported by efficient inventory turnover and strong profit margins. The dividend payout ratio has consistently been above 70%, reinforcing its attractiveness as a high-dividend stock [7][9][50]. Market Position - Jiangnan Buyi holds a significant market share in the domestic designer brand segment, with a 9.6% share in 2016, and has shown steady revenue growth with a CAGR of 13% from FY2014 to FY2025 [26][30][31]. Future Outlook - The report highlights the company's potential for growth in the designer brand segment, which is expected to continue expanding at a CAGR of 17% over the next five years, significantly outpacing the overall apparel market [56][58].

Core Viewpoint - The company is experiencing steady growth in its fiscal year 2025, with a focus on maintaining a high dividend payout ratio, supported by revenue growth from online channels and expansion of offline stores [1][2] Financial Performance - For the fiscal year ending June 30, 2025, the company's revenue increased by 4.6% year-on-year to 5.548 billion yuan, and net profit attributable to shareholders rose by 5.3% to 893 million yuan [1] - In the second half of the fiscal year, revenue grew by 4.2% year-on-year to 2.392 billion yuan, with net profit increasing by 6.6% to 293 million yuan [2] - The gross profit margin decreased by 0.3 percentage points to 65.6% due to a shift from a higher-margin self-operated model to a lower-margin distribution model [1] - Operating cash flow decreased by 29.2% to 1.133 billion yuan, primarily due to increased inventory [1] Channel and Brand Performance - Online revenue saw a significant increase of 18.3% year-on-year to 1.202 billion yuan, while offline self-operated and distribution revenues experienced a decline of 6.2% and an increase of 9.6%, respectively [2] - The main brand's revenue grew by 2.3%, accounting for 54.3% of total revenue, while emerging brands saw a remarkable growth of 107.4%, making up 6.5% of total revenue [2] Dividend Policy - The company maintains a high dividend payout ratio, with total dividends for the year amounting to 716 million Hong Kong dollars, representing over 75% of net profit [1]

Core Viewpoint - The Korean designer brand Wooyoungmi is expanding its presence in China with new stores in Beijing and Chengdu, despite having an existing store in China, highlighting the complexities of brand operations and market entry strategies in the region [1][2]. Group 1: Brand Operations and Market Entry - Wooyoungmi's new stores in Beijing and Chengdu are operated by Kolon Group, while the existing store in Beijing's Galeries Lafayette is managed by the mall as an agent [1]. - Kolon Group has diverse business interests, including textiles and outdoor sports, and operates various designer brands in Asia, although Wooyoungmi is not listed among them [2]. - The collaboration with local agents allows Korean brands to leverage established distribution channels and better understand market trends in China [5]. Group 2: Market Trends and Competitive Landscape - Korean brands are generally more aggressive in expanding into China compared to Japanese brands, often partnering with local agents to enhance market penetration [5]. - Wooyoungmi, established in 2002, has 47 global retail points, with only three independent stores, indicating a reliance on multi-brand retail environments [5]. - The pricing strategy for Wooyoungmi's products aligns with other Korean brands, targeting a mid to high-end market segment, with prices for shirts and outerwear ranging from 2,000 to 7,500 yuan [5]. Group 3: Challenges and Consumer Perception - Despite the growth of Korean brands in China, the overall presence of designer brands remains limited, with many relying on multi-brand sales channels [12]. - The lack of a strong brand identity for Korean designer brands compared to their Japanese counterparts poses challenges in market recognition and consumer loyalty [13]. - Consumer feedback indicates that the late arrival of independent stores and significant price discrepancies across different channels affect purchasing decisions [13].

Core Insights - Jiangnan Buyi, established in 1994, is a leading designer brand fashion company with a strong market presence and high dividend payout since its listing in 2016 [1][2] - The company has maintained a high return on equity (ROE), averaging 35.7% over the past three years and 33.4% over the past five years, positioning it among the top in the consumer goods sector [1] Group 1: Growth Strategies - The company employs three main strategies for growth: multi-brand matrix, design-driven approach, and fan-driven engagement [1] - Multi-brand matrix: Revenue contributions from mature brands, growth brands, and emerging brands are 56.2%, 41.7%, and 2.1% respectively, with compound annual growth rates (CAGR) of 9.4% and 9.2% for mature and growth brands from FY2019 to FY2024 [1] - Design-driven: The founder is directly involved in design, with strong incentives and high investment in core designers, including initiatives like the Sesame Laboratory to explore sustainable fashion [1] - Fan-driven: The company has a strong membership base with 319,000 active members contributing over 60% of offline retail sales, supported by digital retail initiatives [1] Group 2: Market Potential and Financial Outlook - The designer brand market shows significant potential, with a CAGR of 5.5% from 2017 to 2022, and an expected CAGR of 14.5% from 2023 to 2027, ranking among the top two in its segment [2] - The company has a high-quality channel presence, with 45.3% of stores located in first and second-tier cities, and a comparable store growth rate of 10.7% for FY24 [2] - Financial projections indicate revenue growth to reach 5.59 billion yuan, 5.98 billion yuan, and 6.39 billion yuan for FY2025, FY2026, and FY2027 respectively, with year-on-year growth rates of 6.7%, 7.0%, and 6.9% [2] - Net profit forecasts for the same period are 890 million yuan, 950 million yuan, and 1.02 billion yuan, with year-on-year growth rates of 4.4%, 7.6%, and 7.1% [2]