Semir Clothing: Leisure Gradually Revival, Children'S Clothing Is Still Sustainable Growth.

Leisure business: multi angle adjustment to achieve the turning point of performance, and channel sinking brings growth momentum.

In 2017, casual wear ushered in the turning point of performance.

From the external environment, the company follows the shopping center channel to continue to lay down the low level city, actively adjust the channel structure, enjoy the growth bonus of the shopping center's channel sinking; at the same time, under the background of the low line city consumption upgrading, it is more difficult to sink than the international brand in the low line city channel. Semir's shopping center in the low line city has the advantage of attracting investment, which will continue to benefit from the upgrading of the low line city's consumption. Internally, the company actively carries out the supply chain rectification, and adjusts the product, design and other aspects, which is initially effective.

In 2017, under the background of fierce competition in brand clothing, the company achieved 5 billion 634 million yuan (+0.59%) in leisure business, and nearly 20% in the 18 year Q1 leisure business.

We expect that the company's casual wear will further improve quality and volume in the next 18 years, and the expansion will help to amortize R & D expenditure and achieve double growth in revenue and net profit.

Children's clothing business: there will be huge room for growth in the future. It is expected to maintain sustained high growth and grow into an international leader.

In recent years, China's children's wear industry has achieved rapid growth. The market scale of 17 years is 175 billion 600 million yuan, but the market concentration of children's clothing is relatively low, CR10 is 11%, which is lower than that of developed countries. We believe that the growth of industry will be huge in the future under the trend of second child policy and consumption upgrading.

The company's children's clothing brand Balabala city occupies the first place in all year round, and the leading position is stable. In.17, children's wear business achieved a revenue of 6 billion 322 million yuan (+26.4%) and grew rapidly.

At the end of the product, the company constantly perfected the brand matrix, nurturing the brand of mcarat, dream and so on. Through the agent Sarababda, TheChildren 'sPlace, localization of overseas brands; acquisition of Kidliz and promotion of brand internationalization; at present, the company's children's clothing business has realized the full coverage of the whole category, the whole year's age and the various consumption levels; the channel side company continues to expand and sink, and has 17 stores in 4795 years, the channel has the scale advantage, at the same time enters the shopping center, now the shopping center store reaches more than 1000, and the future will enjoy the growth bonus brought by the low line urban consumption upgrading.

Online business: Matthew effect appears, supply chain system is gradually improving, and the future can be expected.

We think the current electricity supplier.

Has begun to shift from the traffic market to the stock market.

Under the Matthew effect, the competitive advantage of the head brand is more and more obvious.

As a key brand supported by Ali, the company's online business is developing rapidly and its revenue keeps growing at a high speed.

In the 17 year, Semir achieved a revenue of 3 billion 124 million yuan (+40.53%). The company made full use of the fans and the net red effect to launch joint products. The effect was remarkable. At the same time, the company continued to promote the e-commerce Industrial Park project, forming a warehouse base of 633 thousand and 200 square meters in the four industrial parks, which helps to connect online and offline, form a retail channel pattern and realize the further development and linkage of the supply chain system.

Corporate Governance: amoeba management and partner system continue to advance, fully mobilizing the enthusiasm of employees.

In terms of corporate governance, we should vigorously promote multi-level equity incentive work, deepen amoeba operation and management, further promote multi-level equity incentive work, innovate and improve the incentive plan, and create flat and interconnected organizations, optimize partner system, and build a full entrepreneurial platform, so that employees, agents and suppliers can share the achievements of the company's development, stimulate the enthusiasm of all parties, and continuously enhance the overall management level and operational efficiency of the company.

Maintain "buy" rating, increase profit forecasts, 3-6 months target price of 17.75 yuan.

We continue to look forward to the future of the company.

Market share continues to rise, and maintain a relatively high growth rate, accelerate the internationalization process, and the future growth can be expected; at the same time, the adjustment of the leisure wear on line is expected to regain growth, and the future will gradually resume. We will give the company a compound growth rate of CAGR=26% net profit of 18-20 years. Taking into account the gradual resumption of the company's casual wear in 18 years, the continuous high growth trend of children's clothing business in 19 years is expected to continue, and the profit forecast is adjusted. The 18-20 year EPS is 0.59/0.71/0.86 (the original value of 0.58/0.73 is 0.58/0.73 yuan), corresponding to PE is 23/19/16.

Give 19 times 25 times PE, corresponding target price 17.75 yuan.