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].

Core Viewpoint - The company is expected to achieve steady revenue growth in FY25 and maintain a high net profit margin, with a target of reaching 10 billion in sales by focusing on "fan economy" [1][3] Group 1: Financial Performance - In FY25, the company achieved revenue of 5.55 billion, a year-on-year increase of 5%, and a net profit of 890 million, also up 5% year-on-year [1] - For FY25, the revenue growth in H1 and H2 was 5% and 4% respectively, while net profit growth was 5% in H1 and 7% in H2, indicating a faster profit growth in the second half [2] - The company maintained a gross margin of -0.3 percentage points and an increase in sales expense ratio by 0.6 percentage points, primarily due to the rise in online revenue [2] Group 2: Brand and Channel Performance - Revenue growth by brand in FY25 showed mature brands up 2%, growing brands down 0.5%, and emerging brands up 107%, with corresponding gross margins varying [2] - Online revenue increased by 18%, while self-operated and distribution revenue decreased by 6% and increased by 10% respectively, with a net decrease in self-operated stores [2] Group 3: Membership and Retail Contribution - Membership contributed over 80% to retail sales, with active members reaching 560,000, and members with annual purchases exceeding 5,000 yuan increasing to over 330,000 [2] Group 4: Future Guidance and Dividends - The company maintains its FY26 retail sales target of 10 billion, with stable profitability expected [3] - The total dividend per share for FY25 is 1.38 HKD, corresponding to a dividend yield of over 6%, indicating a commitment to high dividends for shareholders [3]