Anzheng Fashion (603839): Minutes of the Textile and Apparel 20

20 Strategic Meeting Series

Anzheng Fashion (603839): Minutes of the Textile and Apparel 2020 Strategic Meeting Series

I. Company Introduction 1) The company has five independent brands: Li Zi, Yin Mo, An Zheng, Mosak and Fina Chen.

  From the perspective of target population positioning: Zanzi, Yin Mo, Anzheng, Mosak, and Fina Chen take the core groups of 35-45, 28-35, 30-45, 25-35, and 25-35 respectively.
  From the perspective of brand positioning: Yan Zi, Yin Mo, Mosak and Fina Chen specialize in women’s clothing. Among them, Zi Zi, Yin Mo’s ready-to-wear style is suitable for mature women.”Simplification” targets young women; Anzheng Menswear is aimed at urban elite men who pursue career success, high-quality life and fashion taste.

  2) Acting for luxury brands.

The company established a joint venture with Runxiang (Macau) Co., Ltd. in February 18 to run Jinrun Fashion Co., Ltd., which operates luxury brands Stella McCartney and Stella McCartney Kids in China. It currently has stores in Guangzhou, Shenyang, Qingdao and other places.

In January-September 19

, it opened a direct store and realized a net income of 9.24 million.

  3) Shares in children’s clothing brands.

In 18 years, the company’s shares in China’s top 10 children’s clothing brand Frog Prince, in August 19 acquired the Korean children’s clothing group zero to seven, layout children’s clothing industry, and promote the company’s performance in the future.

  4) Acquisition of e-commerce agency.

The company acquired a 7

0% stake in Lishang Information in October 18 to expand opportunities for e-commerce operations.

Lishang Information is a brand e-commerce service provider that integrates e-commerce and integrated marketing services. It has a deep understanding of e-commerce brands and operations. Its cooperation targets include A2, Bellamy, Hasbro and other mother-in-law.There are more than 20 well-known brands at home and abroad for baby accessories and children’s products.

Through the acquisition of Lishang Information, the company broadened its business space and helped capture more online market share.

  Second, the full text of the question and answer (a), on the company’s sales situation 1.

What is the company’s revenue outlook for the next 2-3 years?

  1) Through the acquisition of new brands such as Frog Prince, Zero to Seven, etc. to achieve consolidation, the company hopes to achieve revenue growth of 10-15

% in the next 2-3 years.

  2.

What plans does the company have for opening stores in the next two years?

  1) As far as next year is concerned, the company will be more cautious in opening stores under the harsh external environment: FY2020’s net opening target is 5-60.

  3.

What are the company’s goals for next year, and in which areas do you start?

  2) The company’s goal next year is to improve store efficiency, starting from the following four aspects.

  3) Cultivate and optimize staff efficiency and strengthen sales staff training.

  4) Optimize the supply chain and increase the proportion of flexible supply chains.

  5) Refined and detailed marketing strategies.

  6) Optimize performance, encourage models, promote amoeba models, and increase sales staff’s sales ratio.

  4.

At present, the developing countries generally think that the clothing industry will be affected by weather factors in 19Q4 and 20Q1, which will cause fluctuations in performance. Is the company prepared for this?

  1) The company is less affected by weather.

Because the company is a multi-category brand, the choice of clothing is relatively wide, so it is less affected by this.

The good sales in October and November 19 also confirmed this view.

  5,

What is the growth rate of the company ‘s main brand retail end in the fourth quarter of this year?

  1) Direct-operated stores: approximately double-digit growth; franchise stores: slightly shifted; online sales: approximately double-digit growth.

  2) Total: growth from high numbers to double digits.

  6.

What are the reasons for the acceleration of the company’s franchise stores?

  1) There are two reasons for the decrease in franchise store revenue: First, due to changes in the external environment and weak sales in the apparel industry, the company actively controlled the speed of delivery to reduce inventory risks, resulting in reduced revenue.

Second, due to changes in the external environment, the initiative to eliminate franchisees with poor colonial management capabilities led to a decrease in revenue.
  2) By controlling the speed of delivery and eliminating joint franchisees, the company intends to increase the proportion of self-operated store revenue in the future and improve the overall retail operation level.
  7
How many franchisees does the company currently have?

What is the average number of stores a franchisee holds?

  1) The company has dropped from a maximum of more than 100 franchisees to 66 currently.

  2) The company has a minimum of 3-5 stores and a maximum of 100 square meters.

There are more than 600 stores in total, so an average franchisee holds nearly 10 stores.

  8.

Does the franchisee of the company only represent the company’s brand?

  1) At present, franchisees with ownership only represent company brands, and two-thirds of franchisees represent multiple brands at the same time.

  2) The company has no restrictions on whether franchisees only represent our own brands. They can also sell clothing of other brands at the same time.

  9.

Under the macroeconomic environment, is the company’s brand sales better among the multiple brands represented by franchisees?

  1) The company’s brand, especially the main brand, Zanzi, is a relatively good internal sales performance in the industry. This is mainly reflected in the replacement of the inventory of franchisees. Zanzi’s revenue growth from January to September of 19 was relatively stable.

  (2) About other aspects of the company10.

What are the respective proportions of the company’s futures pricing and quick fill orders?

How many days does it take to fill a quick order?

  1) The company’s scheduled futures account for about 70%, and quick fill orders account for about 30%.

  2) In the case of sufficient stock of fabrics and auxiliary materials, quick replenishment takes about 7 days.

  11.

Is the production base in Jiangsu and Zhejiang?

  1) The company’s production base is in Haining and its operating headquarters is in Shanghai.

  12

How does the increase in staff costs and raw material costs affect the company?

  1) Due to the company’s product ratio and high bargaining power, the impact of raw material cost fluctuations is not significant.

  2) Due to the high proportion of expense ratios (including R & D expenses), the impact of personnel costs on the company’s revenue is transmitted.

  13

The industry has promoted a series of cost-effective products to cope with the macroeconomic situation. Does the company have the same strategy?

  1) Since 2017, the company has consciously launched cost-effective products, which are characterized by “quality does not rise.”

Specific to the product, the company’s women’s clothing and men’s clothing both contain higher-cost imported fabrics, the content of which is 30% + and 70% +, respectively, but the company still remains relatively stable in pricing, reflecting a cost-effective strategy.

  14.

Does the company have started to move closer to price-performance for the brand matrix?

  1) Since 2017, the company has consciously launched cost-effective products. In terms of brands, Mosak products have low unit prices and good quality, attracting cost-effective consumers.

  15
What is the ratio of each brand of the company?

  1) Stance: 7-7.

5 times; Yin Mo: 8-8.

5 times; Fina Chen: 6 times; Mossack: 5 times; Anzheng Men’s: 6

5 times.

  16.
Does the company consider transforming other industries?

  1) Although the clothing industry is highly attractive, the trend is changing, the consumer demand-side uncertainty and other attributes have caused the industry’s stock market to intensify competition, the drill becomes more and more difficult, but we stillThere are four reasons to choose to stay in this industry.

  2) The stock market share is concentrated in the head, and the incremental market space is considerable.

Stock market: Enterprises entering the internal field of the industry have a certain increase in the entry threshold for the apparel industry due to the advantages of channels, supply chains, and upstream and downstream collaboration, which will accelerate the steady concentration of market share to decline companies.

Incremental market: The absolute growth rate of the apparel retail industry per capita GDP growth rate. If China’s economy grows steadily, there is still considerable room for future incremental markets.
  3) Good cash flow to meet the company’s expansion needs.

By having a good cash flow, the company’s ability to find investment targets can be enhanced to meet the company’s expansion needs.

  4) Stable gross profit margin helps boost shareholder returns.

The company’s main brands from January to September 19 had gross profit margins of 64,94%, and the small brands Yin Mo, Anzheng, Mosak and Fina Chen had gross profit margins of 77.

47%, 76.

64%, 53.

7%, 77.

63%, and at a high level in Dublin, both inside and outside the industry, laying a foundation for the company to improve shareholder returns.

  5) The debt ratio is reduced, and the company’s operating burden is small.

From January to September of 19, the company’s assets and liabilities decreased by 25%, and at the same time, it was at a low level inside and outside the industry.

  17.

What kind of performance does the generation operating company (Li Shang Information) have in terms of performance contribution?

  1) Breakthroughs in the contribution of the generation operation business performance, and rapid revenue growth.

On January 9, 19, e-commerce operations achieved revenue6.

14 billion, accounting for 34 of sales revenue.

4%, the growth rate is as high as 367.

twenty two%.

  18 years old

What are the selection criteria for the company’s investment targets?

  1) The target team needs to be ideal and consistent with the company’s assessment.

  2) Have self-driven ability. After the acquisition, they will not be “hands-out shopkeepers” and continue to strengthen the development of the main business.

  3) Estimate is reasonable.

Find the right investment target by using the market supervision anchor.

  19
Does the company’s current investment mainly focus on certain aspects?

  1) Improve research and development, which is reflected in the introduction of high-tech talents and increase of research and development costs.

As of now, the company has introduced a total of 13 middle-level management personnel with relevant overseas experience and 7 outstanding senior management personnel in the industry. They have optimized and upgraded important positions and departments of each brand division.

  2) On January 9, 2019, the company invested a total of RMB 53.twenty two
million in research and development expenses, which will increase by 8 in the future.

18%, accounting for 2 of clothing sales revenue.

97%.

  In April this year, the company set up a design research and development center in Milan, Italy, and hired Italian designer Diego Lazzaroni to become a high-end line designer.

  20
Has the new chief designer hired by the company already launched the product?

  1) The designer has launched the high-end 2019 F / W high-end series and sold it in the Century Century Store in Chongqing. It has been highly replaced in terms of layout, design and style.

  twenty one
What are the main differences between domestic clothing brands and foreign countries?

  1) Insufficient R & D talent reserves.

Because domestic clothing research started late and has a history of over 100 years abroad, it lags behind foreign countries in the training of talents and the development of technology, leading to foreign fashion trends and design capabilities that have penetrating power to speakforce.

  2) Insufficient design ability of clothing structure.

Clothing structure design or manual patterning is one of the important components of clothing design. It is irreplaceable, and industrial manufacturing cannot completely replace manual patterning.

Although domestically recognized clothing industry capabilities, the lack of technical reserves in manual boarding has caused a gap with foreign countries.

  twenty two

How does the company ensure good cash flow?

  1) Monitor retail terminals to control risks.

Proactively adjust franchisees to improve the efficiency of repayment and help create good operating cash flow.
  2) The first payment and then the goods.

By reaching an agreement with franchisees to pay first and then ship, it will increase the efficiency of repayment and help create a good operating cash flow.

  twenty three.

How does Prince Frog rank in the children’s clothing industry?

  1) The frog prince ranks among the top 10 in the children’s clothing industry. Company introduction 1) The company has five independent brands: Zanzi, Yin Mo, Anzheng, Mosak and Fina Chen.

  From the perspective of target population positioning: Zanzi, Yin Mo, Anzheng, Mosak, and Fina Chen take the core groups of 35-45, 28-35, 30-45, 25-35, and 25-35 respectively.
  From the perspective of brand positioning: Yan Zi, Yin Mo, Mosak and Fina Chen specialize in women’s clothing. Among them, Zi Zi, Yin Mo’s ready-to-wear style is suitable for mature women.”Simplification” targets young women; Anzheng Menswear is aimed at urban elite men who pursue career success, high-quality life and fashion taste.

  2) Acting for luxury brands.

The company established a joint venture with Runxiang (Macau) Co., Ltd. in February 18 to run Jinrun Fashion Co., Ltd., which operates luxury brands Stella McCartney and Stella McCartney Kids in China. It currently has stores in Guangzhou, Shenyang, Qingdao and other places.

In January-September 19, it opened a direct store and realized a net income of 9.24 million.

  3) Shares in children’s clothing brands.

In 18 years, the company’s shares in China’s top 10 children’s clothing brand Frog Prince, in August 19 acquired the Korean children’s clothing group zero to seven, layout children’s clothing industry, and promote the company’s performance in the future.

  4) Acquisition of e-commerce agency.

The company acquired a 70% stake in Lishang Information in October 18 to expand opportunities for e-commerce operations.

Lishang Information is a brand e-commerce service provider that integrates e-commerce and integrated marketing services. It has a deep understanding of e-commerce brands and operations. Its cooperation targets include A2, Bellamy, Hasbro and other mother-in-law.There are more than 20 well-known brands at home and abroad for baby accessories and children’s products.

Through the acquisition of Lishang Information, the company broadened its business space and helped capture more online market share.
  Second, the full text of the question and answer (a), on the company’s sales situation 1.

What is the company’s revenue outlook for the next 2-3 years?
  1) Through the acquisition of new brands such as Frog Prince, Zero to Seven, etc. to achieve consolidation, the company hopes to achieve revenue growth of 10-15% in the next 2-3 years.

  2.

What plans does the company have for opening stores in the next two years?
  1) As far as next year is concerned, the company will be more cautious in opening stores under the harsh external environment: FY2020’s net opening target is 5-60.

  3.

What are the company’s goals for next year, and in which areas do you start?
  2) The company’s goal next year is to improve store efficiency, starting from the following four aspects.

  3) Cultivate and optimize staff efficiency and strengthen sales staff training.

  4) Optimize the supply chain and increase the proportion of flexible supply chains.

  5) Refined and detailed marketing strategies.

  6) Optimize performance, encourage models, promote amoeba models, and increase sales staff’s sales ratio.

  4.
At present, the developing countries generally think that the clothing industry will be affected by weather factors in 19Q4 and 20Q1, which will cause fluctuations in performance. Is the company prepared for this?

  1) The company is less affected by weather.

Because the company is a multi-category brand, the choice of clothing is relatively wide, so it is less affected by this.
The good sales in October and November 19 also confirmed this view.

  5,

What is the growth rate of the company ‘s main brand retail end in the fourth quarter of this year?
  1) Direct-operated stores: approximately double-digit growth; franchise stores: slightly shifted; online sales: approximately double-digit growth.

  2) Total: growth from high numbers to double digits.

  6.

What are the reasons for the acceleration of the company’s franchise stores?

  1) There are two reasons for the decrease in franchise store revenue: First, due to changes in the external environment and weak sales in the apparel industry, the company actively controlled the speed of delivery to reduce inventory risks, resulting in reduced revenue.
Second, due to changes in the external environment, the initiative to eliminate franchisees with poor colonial management capabilities led to a decrease in revenue.

  2) By controlling the speed of delivery and eliminating joint franchisees, the company intends to increase the proportion of self-operated store revenue in the future and improve the overall retail operation level.

  7
How many franchisees does the company currently have?
What is the average number of stores a franchisee holds?
  1) The company has dropped from a maximum of more than 100 franchisees to 66 currently.

  2) The company has a minimum of 3-5 stores and a maximum of 100 square meters.

There are more than 600 stores in total, so an average franchisee holds nearly 10 stores.

  8.

Does the franchisee of the company only represent the company’s brand?
  1) At present, franchisees with ownership only represent company brands, and two-thirds of franchisees represent multiple brands at the same time.

  2) The company has no restrictions on whether franchisees only represent our own brands. They can also sell clothing of other brands at the same time.

  9.

Under the macroeconomic environment, is the company’s brand sales better among the multiple brands represented by franchisees?
  1) The company’s brand, especially the main brand, Zanzi, is a relatively good internal sales performance in the industry. This is mainly reflected in the replacement of the inventory of franchisees. Zanzi’s revenue growth from January to September of 19 was relatively stable.

  (2) About other aspects of the company10.

What are the respective proportions of the company’s futures pricing and quick fill orders?

How many days does it take to fill a quick order?
  1) The company’s scheduled futures account for about 70%, and quick fill orders account for about 30%.

  2) In the case of sufficient stock of fabrics and auxiliary materials, quick replenishment takes about 7 days.

  11.

Is the production base in Jiangsu and Zhejiang?
  1) The company’s production base is in Haining and its operating headquarters is in Shanghai.

  12
How does the increase in staff costs and raw material costs affect the company?

  1) Due to the company’s product ratio and high bargaining power, the impact of raw material cost fluctuations is not significant.

  2) Due to the high proportion of expense ratios (including R & D expenses), the impact of personnel costs on the company’s revenue is transmitted.

  13
The industry has promoted a series of cost-effective products to cope with the macroeconomic situation. Does the company have the same strategy?
  1) Since 2017, the company has consciously launched cost-effective products, which are characterized by “quality does not rise.”

Specific to the product, the company’s women’s clothing and men’s clothing both contain higher-cost imported fabrics, the content of which is 30% + and 70% +, respectively, but the company still remains relatively stable in pricing, reflecting a cost-effective strategy.

  14.

Does the company have started to move closer to price-performance for the brand matrix?
  1) Since 2017, the company has consciously launched cost-effective products. In terms of brands, Mosak products have low unit prices and good quality, attracting cost-effective consumers.

  15
What is the ratio of each brand of the company?
  1) Stance: 7-7.

5 times; Yin Mo: 8-8.

5 times; Fina Chen: 6 times; Mossack: 5 times; Anzheng Men’s: 6

5 times.

  16.

Does the company consider transforming other industries?
  1) Although the clothing industry is highly attractive, the trend is changing, the consumer demand-side uncertainty and other attributes have caused the industry’s stock market to intensify competition, the drill becomes more and more difficult, but we stillThere are four reasons to choose to stay in this industry.
  2) The stock market share is concentrated in the head, and the incremental market space is considerable.
Stock market: Enterprises entering the internal field of the industry have a certain increase in the entry threshold for the apparel industry due to the advantages of channels, supply chains, and upstream and downstream collaboration, which will accelerate the steady concentration of market share to decline companies.

Incremental market: The absolute growth rate of the apparel retail industry per capita GDP growth rate. If China’s economy grows steadily, there is still considerable room for future incremental markets.

  3) Good cash flow to meet the company’s expansion 淡水桑拿网 needs.

By having a good cash flow, the company’s ability to find investment targets can be enhanced to meet the company’s expansion needs.

  4) Stable gross profit margin helps boost shareholder returns.

The company’s main brands from January to September 19 had gross profit margins of 64,94%, and the small brands Yin Mo, Anzheng, Mosak and Fina Chen had gross profit margins of 77.

47%, 76.

64%, 53.

7%, 77.

63%, and at a high level in Dublin, both inside and outside the industry, laying a foundation for the company to improve shareholder returns.

  5) The debt ratio is reduced, and the company’s operating burden is small.

From January to September of 19, the company’s assets and liabilities decreased by 25%, and at the same time, it was at a low level inside and outside the industry.

  17.

What kind of performance does the generation operating company (Li Shang Information) have in terms of performance contribution?

  1) Breakthroughs in the contribution of the generation operation business performance, and rapid revenue growth.

On January 9, 19, e-commerce operations achieved revenue6.

14 billion, accounting for 34 of sales revenue.

4%, the growth rate is as high as 367.

twenty two%.

  18 years old

What are the selection criteria for the company’s investment targets?
  1) The target team needs to be ideal and consistent with the company’s assessment.

  2) Have self-driven ability. After the acquisition, they will not be “hands-out shopkeepers” and continue to strengthen the development of the main business.

  3) Estimate is reasonable.

Find the right investment target by using the market supervision anchor.
  19
Does the company’s current investment mainly focus on certain aspects?

  1) Improve research and development, which is reflected in the introduction of high-tech talents and increase of research and development costs.

As of now, the company has introduced a total of 13 middle-level management personnel with relevant overseas experience and 7 outstanding senior management personnel in the industry. They have optimized and upgraded important positions and departments of each brand division.

  2) On January 9, 2019, the company invested a total of RMB 53.22 million in research and development expenses, which will increase by 8 in the future.

18%, accounting for 2 of clothing sales revenue.

97%.

  In April this year, the company set up a design research and development center in Milan, Italy, and hired Italian designer Diego Lazzaroni to become a high-end line designer.

  20
Has the new chief designer hired by the company already launched the product?
  1) The designer has launched the high-end 2019 F / W high-end series and sold it in the Century Century Store in Chongqing. It has been highly replaced in terms of layout, design and style.

  21
What are the main differences between domestic clothing brands and foreign countries?

  1) Insufficient R & D talent reserves.

Because domestic clothing research started late and has a history of over 100 years abroad, it lags behind foreign countries in the training of talents and the development of technology, leading to foreign fashion trends and design capabilities that have penetrating power to speakforce.

  2) Insufficient design ability of clothing structure.

Clothing structure design or manual patterning is one of the important components of clothing design. It is irreplaceable, and industrial manufacturing cannot completely replace manual patterning.
Although domestically recognized clothing industry capabilities, the lack of technical reserves in manual boarding has caused a gap with foreign countries.

  22
How does the company ensure good cash flow?  1) Monitor retail terminals to control risks.

Proactively adjust franchisees to improve the efficiency of repayment and help create good operating cash flow.

  2) The first payment and then the goods.

By reaching an agreement with franchisees to pay first and then ship, it will increase the efficiency of repayment and help create a good operating cash flow.

  twenty three.

How does Prince Frog rank in the children’s clothing industry?
  1) The frog prince is in the top 10 in the children’s clothing industry