Liu Li Judgment: Kai Run Shares Core Performance From The Competitive Advantage Of Forward-Looking Strategic Layout

? ? ? Anhui Kai Run Limited by Share Ltd, which is committed to the R & D, design, manufacture and sale of bags, has recently disclosed its 2019 annual performance bulletin. During the reporting period, the company realized its main business income of 2 billion 609 million yuan, up 36.74% over the same period last year, and realized operating profit of 285 million yuan, up 32.91% over the same period last year. Yuan, an increase of 30.08% over the same period, and net profit attributable to shareholders of listed companies after deducting non recurring gains and losses was 207 million yuan, an increase of 35.94% over the same period last year.


The reason for the change is that during the reporting period, the company has continuously consolidated its core competitive advantage, optimized its customer structure, promoted the implementation of various strategies, and continued to upgrade its business scale and profitability.


As of the end of the reporting period, the total assets of the company reached 1 billion 972 million yuan, an increase of 39.92% compared with the beginning of the year, and the owner's equity of the shareholders belonging to the listed company was 838 million yuan, an increase of 31.71% compared with the beginning of the year. The net assets per share attributable to the shareholders of the listed company were 3.85 yuan / share, an increase of 31.85% over the beginning of the year. The main reason for the change is the continuous expansion of the scale and profitability of the shares.


GF Securities analyst Mi Hanjie believes that in the fourth quarter of 2019 single quarter, the main business income and net profit attributable to the parent company of Kai Run shares increased by 25.63% and 10.88% respectively, slower than the first three quarters, mainly due to B2C business affected by some channel adjustment. It is expected that this part of the impact is expected to gradually ease in the future. To maintain rapid growth, first of all, B2B business, business bag big customer relationship is stable, is expected to maintain steady growth, leisure bags continue to open up new customers, including the acquisition of Indonesian factories cut into Nike supply chain system, but also for the company to further win the other front-line sports brand customers in the future to lay a solid foundation, the future is expected to continue to grow rapidly; secondly, B2C industry. On the other hand, considering the huge space and low concentration of the domestic consumer goods market, the company as a leader in the industry is expected to maintain rapid growth by establishing its own brand, actively developing new marketing channels and consolidating its cooperation with existing customers.


Public information shows that Kai Run shares were established in November 13, 2009. The company is concerned about the user's travel mode and experience, the development, design, production and sales of products such as bags, suitcases, accessories and other related products. The company's chairman, fan Jinsong, started business in 2005. In 2007, it built a luggage factory in Shanghai. In 2015, it established cooperation with Xiaomi, and established Shanghai rice technology. Limited company and Shanghai explain science and technology limited company two millet ecological chain company, and launched its own brand "90 points", open the development channel of B2C business. In 2016, its own brand 90 products were sold online, and got the best results of "double eleven" sales of single products. In December 21, 2016, the shares were successfully listed on A shares. In 2019, the company acquired 100% stake in PT.FormosaBagIndonesia and PT.FormosaDevelopment and entered the Nike supply chain system.


According to the results of the financial report, the development momentum of Kai Run shares in the past was swift and violent. The net profit of 2012-2018 years of business income and attribution to parent company was 39.37% and 43.92%, respectively. In 2018, its operating income was 2 billion 48 million yuan, an increase of 76.19% over the same period last year, and its net profit to the parent company was 184 million yuan, up 30.01% over the same period of last year. CAGR


According to the results of the report, there are two kinds of open run share businesses: B2B and B2C. B2B business provides ODM/OEM bags for partners, and B2C business relies on Millet channels and its own channels for product sales. The company's B2B revenue in 2018 was 882 million yuan, an increase of 35.38% over the previous year, accounting for 46.23%. B2C earned 1 billion 26 million yuan, an increase of 102.29% over the previous year, accounting for 53.77%, and the rapid development of B2C business made it the first time to surpass the B2B business in 2018.


B2B business: 2B business is divided into ODM, OEM business, ODM main computer package, OEM products are mostly sports bags and pull rod boxes. 2B core customers include Lenovo, HP, ASUS, DELL, Samsonite, Decathlon and so on. In February 2019, the company acquired 100% stake in PT.FormosaBagIndonesia and PT.FormosaDevelopment, and entered Nike's supply chain system.


B2C business: 2C business is based on integrating technology innovation into consumer goods, providing more consumers with high quality, cost-effective and high-tech luggage, footwear and accessories. From the very beginning, relying on the millet industry chain, the company has built its own brand "90 points", to the present "90 points" brand non rice channel has grown rapidly and become an independent brand.


At present, the company has production bases in Chuzhou, India and Indonesia, of which China's factories are mainly local demand, and the demand of Europe and America is met by the capacity of India and Indonesia. With the increase in sales of luggage and bags, production capacity needs to keep up. The capacity of domestic Chuzhou industrial parks and overseas Indonesian factories will continue to increase in the future.


In February 2019, the company invested 22 million 800 thousand US dollars (equivalent to RMB 155 million yuan) to complete the acquisition of PT.FormosaBagIndonesia and PT.FormosaDevelopment.100% equity in Indonesia's high quality bag factory. The main target customers are Backpackers, sports bags and suitcases OEM business. The main customers are NIKE. One of the purposes of purchasing Indonesian factories is to enjoy the low labor costs in Southeast Asia and the bonus of export tariff preferences. What's more, it will enter the supply chain system of first-line sports brand customers including NIKE. The product category will expand to mainstream sports bags and lay the foundation for other head customers.


In the first half of 2019, Indonesia's Treasure Island factory contributed 169 million yuan, accounting for 26.64% of B2B's revenue, and surpassed Decathlon as the first major customer of B2B business.


Liu Li, an analyst with China Merchants Securities, said that in recent years, with the increase of domestic labor costs, the increase of social security and tax burden and the continuous increase of financing costs, domestic low-cost manufacturing dividends have disappeared, and the transfer trend of head brand customers' luggage manufacturing orders to Southeast Asia has been formed. For the shares of the company, the future layout of the production capacity should follow two principles. First, in the aspect of self building capacity, it will conform to the trend of industrial transfer. The domestic leading companies will focus on the high value-added links, upgrade to the strong R & D and lean management, and transfer the low value-added links to Southeast Asia through the export of management. The two is to seek the high-quality supply of the head customers in Southeast Asia in overseas mergers and acquisitions. Mergers and acquisitions can save productivity and climb time, and smoothly cut into the head customer supply system.


Taking into account the short-term impact of the epidemic, Liu Li judged that in the downward cycle of the economy, high quality prices can enjoy the growth dividends brought by the industry concentration increase than the popular brands. With strong independent innovation capability, the company has a forward-looking strategic layout perspective in the supply chain, product strength, brand, and channels, and has advanced from the millet ecological chain enterprise to the global consumer goods leader. Potential.