Significant brand building effect Seven wolves 07 years is the year of the future

The company's 2006 annual report showed a substantial increase in performance, with main business revenue and net profit reaching 484 million yuan and 51.55 million yuan, respectively, an increase of 54.7% and 45% year-on-year, respectively. The dividend plan was a cash dividend of 10 yuan per 10 shares and was increased. 5 shares; the first quarter of 2007 continued to maintain rapid growth, and the main business income and net profit reached 167 million yuan and 20.03 million yuan respectively, an increase of 59.1% and 24.6% year-on-year respectively.

Domestic consumption upgrades and higher consumption levels are external factors in the improvement of company performance;

In 2006, the company will expand its market share as its core business objective. Under the condition of ensuring relatively stable gross profit margin, it will make appropriate profits to dealers, adopt various measures to promote distributors to expand the sales system, and add 455 stores (halls, cabinets). This is the basis for the increase in income;

The company extended its product range in 2006, and the “Colorful” series, the three-defense clothing and the Min Dong clothing series were approved by the market;

The advertising marketing efforts have been continuously increased, and the advertisements take into account both functionality and visuality, which has facilitated the growth of sales revenue.

The year of 2007 is the year of the past. The effect of brand building in 2006 is obvious. The company will continue to deepen various measures on the basis of 2006. We are confident that the company's future performance will continue to grow rapidly.

Continue to expand market share as a core business objective. We believe that at least until 2010, the domestic consumer market is still the golden age of brand operators. In the early stage of the “Spring and Autumn and Warring States Period” of brand competition, brand enterprises need to “enclosure” as soon as possible to occupy market opportunities and expand the market share of the company. The development strategy of the rate is undoubtedly in line with the market development prospects in recent years;

Construction of self-operated stores will accelerate. In 2006, the company opened about 30 new stores for its own stores, and the number in 2007 will exceed 06 years. In order to increase the number of self-operated stores as soon as possible, reduce the cost of opening stores, make full use of the advantages of dealers in the local area, and reduce the competition with distributor shops, the company’s self-operated store operations will change. The cooperation with dealers will be transformed from "doing self-operated stores" to managing self-operated stores, that is, through output management, and dealers will mainly participate in capital investment and coordinating parties' relations. We believe that self-operated stores (including flagship stores) play a significant role in improving company performance (the company will obtain profit from retail terminals), enhance brand image, display company strength, and accelerate market information feedback.

Maintain steady growth in the number of stores. On the one hand, the company promotes dealers to increase the number of newly opened stores through various promotional measures, and on the other hand continues to carry out the entire store's entire, reform, and expansion activities. Increase the number of sales stores can directly promote the growth of performance;

In the future, the company will continue to deepen the development of basic products such as jackets and trousers, as well as new clothing lines such as “colorful” and “three colors”. We believe that the excessive rotation of products is not conducive to brand building or performance improvement. To further expand advertising marketing efforts to ensure simultaneous growth in advertising costs while increasing revenue. At present, in the domestic market, the role of advertising can not be ignored, functional and visual advertising will effectively promote product sales;

The company's apparel production capacity has not changed recently, and it does not come from having more production capacity for high-end production. Whether or not a brand enterprise needs to own a garment production line depends on the company's own history and status quo and has both advantages and disadvantages. Having a certain amount of production capacity is conducive to gaining profits in the production process, ensuring that high-end product design is not compromised, and is conducive to replenishment at any time. However, there is a large gap between business management and brand management in the production process, which may lead to increased costs;

The company continues to strengthen its supply chain management. With the rapid increase in company income, the company’s product quality has always had some problems. We believe that companies need to pay more attention to supply chain issues and strengthen the institutional management of the supply chain.

In recent years, international famous brands have entered China one after another, but we believe that foreign brands will not pose a major threat to the company in the next three years:

Differentiated competitive strategies. International brands mainly occupy first-tier cities, while companies have strong positions in second-tier and third-tier cities, especially prefecture-level cities; international brands have higher prices, and the company’s product terminal sales price maintains a price difference of more than 20%; channel advantages. International brands have entered China for a short period of time. The company’s brand has been operating for more than a decade. The history of company growth is the history of dealer growth.

We expect the company's revenue growth to maintain around 40% in the next 3 years, and the growth rate of net profit will be around 35%. It still maintains the buying recommendation:

According to the company's 2007 Spring Fair, we expect the revenue to increase by about 60% in 2007. The large increase in the number of newly opened stores in 2006 guaranteed a high growth in revenue in 2007. We assume that the revenue growth rate will be around 40% after 2008. The growth rate was lower than that in 2007. On the one hand, it was due to an increase in the base number. The actual increase was higher than in 2007. On the other hand, it was cautious. After all, continuous high growth brought higher demands and pressure on company management. Assume that the future domestic gross profit margin is stable. In the future, the company may also appropriately distribute profits to distributors to achieve its strategic goal of increasing market share. However, taking into account the increase in the number of self-operated stores and the increase in operating levels, the two companies will offset each other and maintain stable gross profit margins; the cost will continue to rise. This is mainly due to the accelerated construction of self-operated stores and advertising costs. In addition, due to the inclusion of management expenses for share-based incentive expenses, the administrative expenses for 2007-09 were increased by approximately 12 million yuan, 6 million yuan, and 2 million yuan respectively (no taxation is allowed before taxes).