Rebecca plans to open another 100 stores this year

Henan Rebecca Hair Products Co., Ltd. (Rebecca, 600439) was officially listed on the Shanghai Stock Exchange on July 10, 2003, becoming the first share in the domestic hair products industry. The company is a hair products professional company integrating research, development, production and sales.

In 2011, Rebecca achieved sales revenue of 2.264 billion yuan, a year-on-year increase of 12.94%, net profit of 246 million yuan, an increase of 38.39%, and earnings per share of 0.31 yuan. The net profit margin reached 10.89%, an increase of nearly 2 percentage points from 2010. The main reason for the increase in net profit margin is the upgrading of export product structure and the increase in the proportion of domestic retail business.

From the perspective of business structure, the US business still accounts for half of the revenue, accounting for 57.48% of the total sales revenue. In 2011, the proportion of domestic brand retail business increased year by year, and the proportion increased from 4.30% in 2010 to 6.64% in 2011. In particular, in 2011, the company's domestic brand retail business has achieved profitability (loss in 2010), accounting for about 8% of the company's total profit.

We expect the company's 2012-2014 earnings per share to be 0.44 yuan, 0.59 yuan, 0.74 yuan. According to our forecast, the proportion of the company's profitable composition in the 2012-2014 corporate retail business is 21%, 28% and 34% respectively. The attributes of the retail business are increasingly prominent, and the compound growth rate of the company's profit in the next three years is 33. %, we give it a valuation of 25 times PE in 2012, corresponding to the target price of 11 yuan, maintaining the company's "overweight" rating.

Yesterday, Rebecca closed at 7.83 yuan / share, up 1.82%.

North American market positioning in the high-end

The US market is Rebecca's largest market. In 2011, it achieved sales revenue of 1.302 billion yuan, a year-on-year increase of 4.78%. On the one hand, through product structure adjustment and product upgrades, the proportion of upgraded products, especially Gaoshunfa products, has increased substantially, and on the other hand, ordinary products have gradually increased prices. In the first half of 2011, sales fell by 4.75%, with an increase of 11.26% in the second half of the year and an increase of 4.78% in the whole year. From the latest tracking and research, the company's exports to the US in January-February 2012 are still steadily rising, and the sales promotion brought by product upgrades is still playing a role.

After the financial crisis in 2008, the consumption polarization of wig products in the North American market has become increasingly serious. The demand for high-end products and low-end chemical fiber products has increased, and the demand for mid-range products has shrunk because of the economic impact of the middle class. Therefore, Rebecca has been actively pursuing product upgrades and structural adjustments since 2010, clarifying that the US market's export products are positioned at the mid-end to achieve higher profitability and greater consumer stickiness.

From the product point of view, the North American market is dominated by craftsmanship, accounting for more than 80%, including ordinary craftsmanship, top-grade Gaoshunfa. In 2011, Rebecca introduced A+ between Gaoshunfa and ordinary craftsmanship. /A++ product. From ordinary craftsmanship to A+/A++ products to top-grade high-shunfa products, prices and gross profit margins have rapidly increased. According to 2010 data, Gaoshunfa products are more than twice as expensive as ordinary process springs, and the gross profit margin is higher than that of upgraded products. Ordinary process clockwork is generally 3-4 percentage points higher. Among the overall exports in 2011, including the North American market, upgraded products (Gao Shunfa and A+/A++) accounted for 40% of the total revenue, accounting for 20%, and the proportion is still rising. Among them, the proportion of high-end products in the North American market will be higher than the overall market.

In terms of unit price, Rebecca made two large-scale price increases in 2011 due to the rising cost of raw materials and manpower. Take Gaoshunfa products as an example. From the time of launch in 2009, it was only 28 US dollars, and the current average price has been At $42, the price has increased by 50%.

As the second largest market for Rebecca, the African market is based on sales growth while gradually promoting high-end brand retail business. Rebecca's sales in Africa in 2011 reached 479 million yuan, a year-on-year increase of 23.41%. It is the fastest growing among the company's several export markets. At present, Africa accounts for 21.14% of the company's overall sales.

In addition, Rebecca's sales in Europe in 2011 reached 216 million yuan, an increase of 12.81%. In the overall economic environment of the European economy, it still maintained a good growth rate.

From the perspective of product structure, the European market has a relatively high production process, accounting for more than 60%. The rest are chemical fiber springs and wig products.

Gross profit of domestic retail business exceeds 60%

The progress of Rebecca's domestic brand retail market is the most concerned about the capital market, and it is also the biggest point of view for us to think about the company's future business and investment value.

In addition to the steady growth of export business, we always believe that the more important factor of leading company's medium and long-term profit growth and valuation is the development of domestic brand retail business. The speed of its development and the contribution to overall performance are directly related to the company's profit. The growth rate and the overall valuation level have improved.

In 2011, Rebecca's domestic retail business achieved rapid development as expected. The company's domestic brand retail business achieved sales revenue of 150 million yuan, a year-on-year increase of 74.26%. Both brands' gross profit margins were above 60%; Yes, the domestic brand retail business achieved a net profit of 21 million yuan in 2011. Although the amount is not high, it indicates that the company's brand retail business has gradually passed the incubation period and is about to enter the outbreak period.

In 2011, Rebecca's marketing channel construction progressed steadily and achieved phased results: By the end of 2011, Rebecca had a total of 227 specialty stores, including 157 Rebecca stores and 70 Sleek stores. In 2011, 110 new ones were opened, and 22 were adjusted and closed. Among them, there are about 30 direct stores, mainly in some cities in Beijing, Shanghai and Southwest China.

With the increasing popularity of Rebecca's retail brand, it is expected that in 2012, brand promotion will change the original TV-based model, and more adopting more economical and sales-oriented brand promotion forms such as landing advertisements and local activities. We expect that the company's domestic brand retail business will have a significant increase in sales revenue while the sales revenue is growing. Therefore, we judge that the contribution of domestic retail business to the company's overall profit will accelerate with the further increase in sales in 2012.

In 2012, Rebecca's focus is on the mid-range Sleek brand. With the expansion of Sleek, the company's domestic retail business will gain more space. Rebecca establishes a high-end image and captures the commanding heights of the industry. The Sleek brand is aimed at mid-range consumers. The audience is wider and the price is moderate. There is no obvious distinction between the age groups in the actual purchase, and the Rebecca brand has formed a clear complement. With the joint promotion of the Rebecca and Sleek brands, we expect Rebecca to open 100-120 new stores in 2012. In addition, in the medium and long term, it is expected that the company will gradually improve its brand and channel control.