Bosideng (3998 HK) Product integration improves profitability, Domestic down brands continue to upgrade August 10, 2021 361

PSR Recommendation: ACCUMULATE Status: Maintained
Target Price: HKDHKD6.22

Investment summary
The company announced its annual report for the FY20/21 on July 21. Revenue increased by
10.9% Yoy to CNY 13.52 billion, which was lower than our expectation. The net profit
attributable to the parent for the year was CNY 1.71 billion, an increase of approximately
42.1%, beat our expectations. It mainly due to the decrease in the company’s expense ratio
during the period and the increase in profitability. The company declared a final dividend of
HKD 10.0 cents per share. The total dividend for the year was HKD 13.5 cents, with a dividend
payout ratio of 70.8%.
The company’s brand down revenue increased, main brand down improve company GPM
The company’s performance was generally in line with expectations. In terms of revenue, it
was lower than our expectation. The company’s annual revenue recorded approximately CNY
13.52 billion, which was 5% lower than our expectation. The main reason was that the
company’s branded down jacket wholesale business revenue was lower than our expectation.
The company’s net profit recorded approximately CNY 1.71 billion, which beat our
expectations and was 12% higher than our expectations. This was mainly due to the
improvement in product efficiency and the decrease in the proportion of company expenses
during the period under the operating leverage. The company’s net profit growth faster than
revenue growth was also due to the improvement in GPM. The company’s overall GPM for
the 2020/21 fiscal year was approximately 58.6%, an increase of 3.6 ppts compared to the
same period last year. The GPM of the branded down apparel business increased by 3.9 ppts
compared to the same period last year. As the self-operated proportion of Bosideng down
jackets has increased, it will greatly help increase the GPM.

About the author

Profile photo of Timothy Chong

Timothy Chong

Timothy Chong received Bachelor’s Degree with first class honor in Banking and Finance from University of Leicester. He is currently studying Master of investment management in Hong Kong Polytechnic University. Before joining Phillip Securities, Timothy worked at BOCOM international and he is equipped with years of experience in the capital market. Timothy is now a licensed research analyst at Phillip Securities and covers Consumer / Property Management sectors.

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