Relying On The New Policy, Posture Or Transformation

The main business is deep adjustment and extension. This year, the fundamentals will be bottomed up, and the elasticity of performance will be apparent next year. We think that the worst stage of the posture has passed. In the past two years, the income side is affected by the downturn of demand environment and the sharp decline of shopping card consumption. As well as the adjustment of the internal management structure, the promotion of new brand and the online business mode, the cost rigidity has increased. We expect that the profit in 2014 will decline by about 45%. We believe that in 2015, the brand can maintain a steady growth (Li Ya to enhance the quality and customer price), Rhine brand product belt extension and channel subsidence expansion (15 year plan to expand 40-50 stores), outstanding brand store efficiency improvement, the rest of the new agent brand cultivation period into the end, gradually contribute to income. From the expense point of view, the company's organizational restructuring is basically in place. The increase in labor costs brought by the introduction of high-end talent is coming to an end. The budget management system with the core of improving operational efficiency and the benefit sharing mechanism directly linked to performance and remuneration will be fully developed in the enterprise. The implementation of employee stock ownership plan will inject new vitality. Fundamentals are being built up, based on 14 years of low base, and 15 year performance elasticity.

Relying on the China South Korea free trade zone policy, he is expected to transform the fashion group. In November 10th, President Xi Jinping and South Korean President Park Geun hye jointly confirmed the end of substantive negotiations between China and South Korea free trade zone. We believe that (1) the FTA agreement is expected to reduce the company's customs clearance costs and improve the efficiency of customs clearance.

Most of the fabric and some garments from the Republic of Korea are purchased from Korea. If the tariff falls from 30-35% to 5%, it will be a great advantage for the Chinese market. The price difference between the two countries will be reduced to about 15%. If the imported garments are all imported, the net profit will be increased by 20%+. (2) is conducive to the introduction of talents and management models in Korean fashion industry. (3) conducive to investment and docking Korean fashion industry, such as clothing, beauty, cosmetic, culture, film and television media and other aspects of deep cooperation. President Shen is always Korean, whose ancestral home is South Korea. Language and culture are interlinked with Koreans. It has rich connections and resources advantages in the fashion industry in Korea. In October, holding Korean children's clothing Akbar also showed the close ties between the company and the Korean fashion industry.

Holding Korean National Children's clothing akakon, layout green baby market. At present, the infant market is at an early stage in China. The market share of the first big brand Barbara is only 3%, and there will be huge room for future development. Akakon owns 8 series of low to middle and high-end brands, and has realized the comprehensive coverage of clothing and supplies from the beginning of pregnancy to the infant to the children. The company plans to build an integrated green baby industry in China, set up a collection store (300 square meters or more) with experience shopping as a whole, and plan to introduce early education resources to realize the integrated industry of "early education + pregnant women + infant products and clothing", and will continue to expand in the related fields of infant industry in the future, and does not exclude the cross-border integration with children's games and entertainment industries.

Investment suggestion: up to the recommended rating. (1) because of the deep adjustment and extension of the original main business performance, the company's stock price basically did not increase in the 2013 and 2014 years. (2) the main industry adjustment in depth is in addition to the industrial reasons, and the company has invested heavily in the organization structure, personnel introduction and new operation mode cultivation. (3) the lifting of the major shareholders in August 2014 and the implementation of the board of directors' employee stock ownership plan in November 2014; (4) the long-term development of the company, based on the close cooperation with the Korean fashion industry, holding the state of, the layout of the baby market, and the cooperation with the Korean fashion industry. We estimate that the scale of revenue in 2014 was 1 billion 213 million, down 12% compared to the same period last year, and the profit scale was 129 million, down 45% compared with the same period last year. In 2015, the scale of revenue was 1 billion 335 million, the growth rate was 10%, the profit scale was 154 million, and the growth rate was 20%. The current stock price corresponds to 31 PE in 15 years. At present, the company has a market value of 4 billion 800 million, accounting for 1 billion 200 million of its idle cash, and 23 times its value after excluding cash.