Pou Sheng International (Holdings) Co., Ltd. (hereinafter referred to as “Pou Sheng International”) is a local sportswear retailer and distributor that is the main distributor of international first-line sports brands Nike, Adidas and Puma in China. The announcement stated that in August 2021, the company’s comprehensive net operating income reached 1.401 billion yuan, a decrease of 32.3% compared with the same month last year.
In the first eight months of this year as of August 31, 2021, Baosheng International’s comprehensive cumulative net operating income was 16.22 billion yuan, an increase of 2.5% compared with the same period last year.
Baosheng International’s 2021 interim report previously released showed that in the first half of this year, the company achieved operating income of 13.074 billion yuan, a year-on-year increase of 11.4%, and the net profit attributable to the company’s owners was 636 million yuan , a year-on-year increase of 50.64%. As of the end of the reporting period, Baosheng International’s retail network covering Greater China reached 8,828, including 4,968 directly operated stores and 3,860 franchised stores.
As for the reasons for the performance changes, Pou Sheng International admitted frankly that although the market fluctuations since the end of March 2021 have affected the performance in the second quarter, the market’s consumption of sports products has led to the performance in the first quarter. Strong recovery.
Ding Shijie, an analyst at Guosen Securities, said that with the gradual improvement in post-epidemic performance, Pousheng International’s overall performance is at a good level in the industry. Judging from recent sales performance, Pousheng International’s sales are still declining from April to August, but the impact of the Xinjiang cotton incident has been slowly recovering. Although affected by the epidemic in early August, there is still a decline compared with 2019.
However, industry insiders believe that as far as sports brands are concerned, brands such as Anta have performed well after the Tokyo Olympics. Supported by the Olympic Games, sports brands will benefit from cooperation with the Olympic Games in the short term. With the further implementation of the national fitness plan and related policies, it will also stimulate consumer demand for mass sports in the long term. Based on the judgment of the high prosperity of domestic sports consumption, leading sports brands There will still be sustained and stable growth.
Lin Wenjia, a researcher at Shanghai Pudong International Securities, said that despite the impact of market fluctuations, Pousheng International did not choose to increase retail discounts in the second quarter in exchange for revenue growth. On the contrary, Pousheng International still strictly controls retail discounts, focuses on inventory control, increases the sell-out rate of products in the season, and ultimately ensures operating profit margins. Pousheng International’s management also revealed that the company’s overall retail discounts in the second quarter were in low single digits, lower than the same period in 2019. Therefore, the company’s gross profit margin and operating profit margin reached 38.4% and 7.2% respectively in the second quarter, both record highs. It is expected that Pousheng International will continue to prioritize meeting profit margins in the future through channel structure optimization (increasing pan-WeChat Channel proportion), offline store optimization (increasing the proportion of large stores above 300 square meters) and strengthening relationships with international brand partners to strive for high-quality and sustainable revenue growth. Lin Wenjia believes that this strategic change will significantly increase the certainty of the company’s future performance and reduce the company’s operational risks.
In the long term, Pou Sheng International also judges that the impact of market fluctuations will gradually weaken, and its international brand partners will gradually restart the pace of market promotion in the second half of the year. Based on the sharp decline in revenue in the past four consecutive months, management lowered its full-year revenue forecast from the previous high double-digit growth year-on-year to low single-digit growth relative to 2019. However, Baosheng International is still confident in the development of its omni-channel, and expects it to contribute high double digits to 20% of revenue in 2021. Through strict retail discount management and expense control, Baosheng In the first half of the year, Sheng International’s operating profit margin reached more than 7% for two consecutive quarters, which also enhanced the market’s confidence in its profit margin improvement.
It is understood that since 2021, Baosheng International has continued to optimize offline sales channels and closed offline direct sales channels. There are 272 operating stores and 25 newly opened franchise stores. The proportion of large stores with an area of more than 300 square meters has increased to 14%. This will help improve the company’s sales efficiency and achieve higher sales with fewer stores. Same-store growth in the first half of 2021 was 8.4%. In the second half of 2021, Baosheng International plans to continue to open larger concept stores and close inefficient stores to attract consumers with a better product mix and consumption experience, thereby increasing revenue and profit levels.
In addition, Pousheng International vigorously develops the pan-Weidian ecosystem and establishes comprehensive relationships with members through designated key opinion personnel (KOS) and interesting content (ExP) to enhance consumer awareness. service level. In the first half of 2021, Pousheng International used the pan-Weidian ecosystem to cover and connect more than 70% of the inventory with 7% of the number of stores. Secondly, the company vigorously develops ASPs that are better than third-party platforms, such as Tmall, JD.com, Vipshop, etc. Private domain traffic, including Weidian, Douyin, and live broadcast, accounted for 6.6% in the second quarter. With both online and offline efforts, in the first half of this year, both revenue and profits have grown very well compared to 2020. This year, Baosheng International is expected to reach the operating profit margin target of 7%.
Ding Shijie expects that with the healthy inventory of Pou Sheng International, the impact of the incident will gradually narrow, discount improvement and channel quality optimization will significantly boost profit margins, and its future performance flexibility and medium-term continued improvement will be The potential is worth looking forward to.
As of the last trading day of publication, Pousheng International closed at HK$1.49 per share, a decrease of 0.67%, with a market value of HK$7.982 billion. </p
