Urban Beauty Shops Slow Down, Adjust Brand Channels

The total shop speed slowed down and brand channel adjustment: by the end of 2015, the company had 8609 stores (7126 franchised stores and 1483 self operated stores).

The company slowed down its sales and adjusted its 2016 target to 900 stores.

There are 800 brands, 100 free time (1000 net original target, 600 urban beauty, 300 free time, 100 Ordifen).

Due to the impact of economic downturn, the company adjusted the pace of expansion.

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The city beauty has opened 200 stores than the original plan.

Consumption is still confident.

The number of free time target stores has decreased to 100, mainly because the free time brand has just been launched for 1 years, and is still in the incubation period. It is expected to expand rapidly after the brand recognition starts.

As a Brand Company, the main channel for Brand Company to enter the high-end market is department stores. Under the background of a sharp decline in department stores consumption, the company suspended the expansion of department stores and plans to expand its channels to residential areas and high-end commercial streets.

It is considered that the capacity of stores is not saturated, and the company expects to expand steadily at 800-900 speed each year in the next 3 years.

Cultivate multi echelon brand and occupy the market in a comprehensive way and buy products to expand the product line: the company purchases Taiwan Ordifen brand and enters the high-end market (priced 200-500 yuan RMB).

Launch the new brand free time and locate the low-end market (priced 39-99 yuan).

The company plans to launch Arose Ordifen brand under Ordifen brand, target high end market with high cost performance products (priced at 100-300 yuan), and independent shopping center of target channel. It is expected to launch the first store in June.

The company's future acquisition is expected to be strong, with the introduction of tights, bathing suits, plastic clothing and other perfect product lines.

At present, the market share of the company is 3%. Under the double-digit growth trend of the close fitting clothing industry, the multi brand and whole category strategy that the company adheres to will continue to promote the integration of the industry and enhance the market share.

The contribution of the electricity supplier has increased further, and the brand image has been upgraded. In 2015, the company's electricity supplier income was 170 million yuan, accounting for 3.5% of the total revenue, reaching a break even.

It is expected that the growth rate will be multiplied in 2016. The annual income scale is expected to double. The proportion will increase to 6-7%, and 16 years will make profits.

Valuations and ratings: Despite the poor market and weak terminal sales, urban beauty forecasts an annual growth of around 15% in 2016, still higher than the average retail sales of apparel by 10%.

It is believed that the company is in a period of adjustment and will release its performance after the adjustment of brand matrix, product line and channel layout.

It is estimated that the earnings per share of 16/17/18 are 0.32, 0.37 and 0.43 yuan respectively (0.37 yuan, 0.48 yuan, 0.62 yuan respectively). The current price is equivalent to 11 times of the forecast price earnings ratio of 16. The target price is 17 times of the 16 year, and the target price is reduced to 6.51 yuan, giving a "buy" rating.

Company profile: the company was established in 1998, mainly engaged in the design, research, development and sales of high cost performance clothing.

The company designs and sells five main categories of personal clothing products: bra, underwear, pajamas and home wear, thermal clothing and others, core brand urban couple, city silk, city colourful faction and urban front.

The company went public in Hongkong in 2014.