To Boost Morale, Semir Apparel Announced ESOP.

In March 4th, the Zhejiang Semir apparel Limited by Share Ltd (hereinafter referred to as Semir dress) announced the second phase of the employee stock ownership plan. It intends to raise funds of not more than 118 million yuan, with the closing price of 8.04 yuan / share in March 2nd, the maximum number of shares it can buy is about 14 million 699 thousand shares, accounting for 0.54% of the total share capital.

It is understood that Semir apparel this ESOP intends to raise no more than 118 million yuan of funds, stock sources for the two market purchase, the duration is two years, lock up period is completed one year after the purchase. The shareholding plan covers 2 executives (including deputy general managers, secretaries, etc.), accounting for 3.38% of the shareholding ratio, and 96 key employees. Compared with the first phase of employee stock ownership plan released in April 2018, the total amount raised was basically flat (the first phase was 120 million yuan). In terms of participants, the number of employees covered by the shareholding scheme increased from 93 to 98 in the first phase, and the holders were adjusted from senior managers to high management and key employees, further binding the core management level and enhancing the overall staff confidence.

At present, Semir's apparel industry is stable in 2019, and K is still adjusting. Overall, in 2019, the company's revenue was maintained at a faster rate of 23.15% because of the rapid growth of children's clothing business and online channels, and Safiza SAS.

Main business, Semir's main business revenue is expected to maintain about 10% growth (the online growth rate is expected to maintain 25-30%), and the overall income of casual wear is basically flat (double digit growth rate and slightly below the line) due to 2019Q3 transformation and adjustment. The main brand Balabala of children's clothing has adjusted the frequency of delivery due to 2019H2, and the growth rate has slowed down by about 20% (30% and 10% respectively below the online and offline). The brand grew rapidly. The mini Bala brand grew by about 68% in 2019, and the overall retail sales of marcard brand reached about 46%.

(2) overseas, due to factors such as net business, brand and business adjustment of overseas business, K company's revenue has declined year by year (about 3 billion in 2019), with a loss of around 300 million yuan. Net profit fell to 8.72% in 2019 compared with the same period in the previous year. If the overseas business was excluded, the profits of the domestic main industry would be about 1 billion 850 million yuan, up by about one digit over the same period last year.

The company's leading position in children's wear industry is steady, and the layout of new retailers strengthens competitiveness.

(1) industry: Children's clothing industry is highly scenic. Benefiting from 2011-2016 years and three times, the "two child policy" (2013, 2016, "separate two children" and "comprehensive two children" policy have more obvious impact), the children's wear industry has maintained a strong economy, 2013-2018 years CAGR is 14.57%, leading other subdivision clothing fields. Small children's clothing (0-3 years old), although the birth rate began to decline in 2017, the overall price increased slightly, driving the retail sales of children's wear industry to maintain a high level. In 2018, the average per capita expenditure of children's clothing increased by 20.67% over the same period last year. Because the children's clothing was 4-14 years old and the birth rate of 2015 and 2016 increased, the impact on children's wear has not yet ended. In 2018, the per capita expenditure of children's clothing increased by 15.25% over the same period last year. Short term epidemic has a great impact on consumption, but the long-term trend of children's clothing is upward.

(2) business: the leading position of children's clothing is stable, and the brand matrix is perfect. The company's children's clothing brand target population is 0-15 years old, positioning the public and the high-end market, for children's clothing field absolute leader (market share 5%, other largest 2.3%). The main brand balbara has obvious advantages, and the new brand MiniBala and Ma Caron are developing rapidly. In the first half of 2018, we completed the acquisition of European children's wear Kidiliz, extending to the high-end market, and further improving the brand layout.

(3) new retail: actively promote digital transformation and new retail layout. In the second half of 2019, the company promoted the digital transformation construction, and promoted the online sales mode combined with the promotion of online and offline businesses in the direct and franchise systems. The online private sector traffic dividends in the form of APP, WeChat live broadcast and so on, played a major role in the epidemic. Future cloud stores, online and offline integration of the store mode to replace a single store, will promote sales growth.

(4) channels: rapid expansion of offline channels. Online has been developing rapidly since its establishment in 2012, and its online sales reached 4 billion 109 million yuan in 2018, accounting for 26% of total revenue. In 2019, it maintained a relatively high growth rate of about 25-30%. Offline channels, as of the end of the third quarter of 2019, the company's total stores (except Sofiza's Kidiliz) amounted to 9582 (a net increase of 459 compared with the beginning of the year, +4.8%). Among them, 5682 children's clothing, an increase of 389, the annual Barbara brand is expected to increase by 400-500, still maintained a relatively fast growth; 3900 adult wear, an increase of 70, the annual Semir brand adult stores are still expected to grow by dozens, but due to the impact of some other brand shops, adult stores are expected to be a net decrease. French business stores are in a net reduction and adjustment phase, and 2020 of the trend is expected to continue and decrease.

In terms of risk, there are three hints: (1) macroeconomic growth is slowing down and consumption growth is slowing down. (2) two main business development of children's wear and leisure is lower than expected. (3) the acquisition of new brands is not as good as expected. Author: Fang Yi Fang Feng Yi team