Announcement of New Birds: Collecting Franchisee Channel Support Management Fees

Event: The company announced today that it has received a channel support management fee for each franchisee's sales outlets at the rate of RMB 30,000/year since 2010. According to the company's current number of stores, it is estimated that it will receive about RMB 17 million in management fees in 2010.

our opinion:

According to our understanding, the company will collect channel support management fees for franchisees at the same time, it will also appropriately increase the franchiser's ex-factory price discounts and support for promotional activities, so it has no effect on franchisees. For the company, mainly from the perspective of taxation, it is estimated that the adjustment of the accounting project will increase the company’s profit in 2010 by about RMB 1.7 million. It is more likely that this policy will continue to be implemented in subsequent years.

According to the company's follow-up survey, the company's sales of winter clothing is good, an increase of more than 20%. In the whole year of 2009, the company's growth rate was more than 5%.

The data from the National Bureau of Statistics and the China Business Information Statistics Center recently showed that the growth rate of total retail sales of consumer goods and the retail sales of clothing in major shopping malls nationwide increased by 25.8% and 31.48%, respectively, in November. After the holiday, the chain growth rate still increased by 3.1 and 5.75 percentage points respectively, indicating that domestic clothing consumption is in good condition and the consumption of high-end branded clothing is showing signs of high growth. We expect that the growth of domestic apparel consumption in 2010 will be between 15% and 20%. After destocking and internal integration in 2009, the growth of branded apparel companies will again significantly exceed the growth rate of the industry.

We maintain our opinion on the company in the previous issuance tracking report, and believe that with the additional funds raised and the good brand foundation accumulated in the previous period, the company will appropriately speed up the expansion of channel expansion. The company's subsequent revenue and profit growth will mainly come from the rapid expansion of channels. With the optimization of channel structure, steady increase in product unit price, the release of profit after the sub-brand San Jiro reached scale effect, and the strengthening of the professional service business of Shanghai Bao bird.

The company's current "multi-brand, diversified business" development strategy is increasingly clear and firm. Gradient growth and the complementarity of various businesses in the future will help the company grow from a small and exquisite brand company to a more scale and influential apparel. Retail Enterprises.

We basically maintain our profit forecast for the company. We expect the company's earnings per share for 2009-2011 to be 0.66 yuan, 0.88 yuan and 1.14 yuan, respectively, with profit growth rates of 56%, 34%, and 29%, respectively, and maintain "overweight" rating. . We believe that the recent decline in the stocks brought by the broader market adjustment is a good opportunity to intervene in such high-quality companies.

Stock catalysts: The company's possible future high delivery.

Investment risk: uncertainties in macroeconomic fluctuations and the nurturing of new brands.