Grace (603808): The acquisition of IRO to increase profits, EH, light equipment, and recovery in sight

Grace (603808): The acquisition of IRO to increase profits, EH, light equipment, and recovery in sight

This report reads: ADON WORLD’s acquisition is completed and its profits are increased, which will benefit the development of the IRO brand in the long run.

Ed hardy brand adjustment is in progress, and is expected to resume growth in 2020, maintaining the overweight rating.

Investment Highlights: Maintain Overweight Rating: Taking into account the impact of the hardy brand adjustment on performance, the EPS for 2019-2021 is reduced to 1.

19 (-0.

13) / 1.

37 (-0.

23) / 1.

59 (-0.

34) yuan, with reference to comparable peers giving about 11 times PE in 2020, lowering the target price to 15.

05 yuan.

Completed the acquisition of IRO’s global equity and consolidated profits.

The company obtained global control of the IRO brand in December by completing the acquisition of the remaining 43% equity of ADON WORLD SAS.

From a financial point of view, since the Air Force has consolidated the IRO income, the acquisition will not affect the income side of the consolidated statement; on the profit side, 100% holding will increase the profit contribution.

The opening of stores in China 天津夜网 accelerated, and IRO’s high growth continued.

Overall IRO revenue for the first three quarters4.

9.6 billion, an increase of 20.

29%, sales in China increased sharply by 181.

53% to 61.52 million yuan.

Opening of stores in China accelerated, with a net increase of 7 channels from the earlier period to 20, and there are now 35 overseas stores.

After gaining global control of IRO, the company re-integrated the perspective of overall planning for brand operations, expanded overseas promotion efforts, made good use of international R & D talents, and further promoted the healthy development of the brand.

Ed hardy adjusted his performance under short-term pressure, and is expected to improve in the future with light loading.

Ed hardy implemented brand strategy adjustments and reintroduced franchisee inventory, resulting in changes in brand revenue in the first three quarters.

17% to 3.

1.5 billion.

After the inspection of the goods, the overall store operation is in a benign state, and the pressure on inventory and funds is reduced.

The company launched a new channel image, expanded store area and focused on improving store efficiency. At the same time, it actively upgraded its design fabrics and other aspects to attract young customers. The proportion of new customers continued to increase. Brands are expected to enter a healthy development channel in the future.

Risk warning: terminal demand is the highest, and multi-brand operation is worse than expected.

Author: admin