Song: The Introduction Of War Network And The Long-Term Development Of The Layout.

In December 15, 2019, the Shenzhen song's clothing Limited by Share Ltd (hereinafter referred to as "Song Si Si") announced that the A round of Sequoia Capital and other investors were allowed to have 28.69% stake in the network of Bai Qiu, which was owned by the singer, while the Sequoia Capital increased 150 million yuan to the hundred Qiu network. In addition, for the purpose of encouragement, he agreed with the founding shareholders and their concerted action to subscribe to the 163 thousand yuan new registered capital of the 100 autumn network, corresponding to 14% equity interest.

Fangyi textile team Feng Yi group analysis:

(1) the original shareholders and their concerted persons increased their capital by 163 thousand yuan.

1. Transaction price: the founding shareholders of Bai Qiu network and their concerted action subscribed 163 thousand yuan to the 100 yuan network to increase the registered capital by 163 thousand yuan, corresponding to the 14% stake in the A network.

2. Changes in ownership structure: the registered capital of the company increased by 163 thousand yuan to 1 million 163 thousand yuan. After the transaction, the stake of Liu Zhicheng, Hu Shaoqun, Zhao Ling, Qiu Yuhong and Bai Qiu Ting Ni changed to 17.05% (-1.09pct), 4.80% (-0.32pct), 1.18% (-0.07pct), 0.47% (-0.03pct) and 12% (+12.00%) respectively.

3. Cost attribution and performance conditions: the total incentive cost is 150 million yuan, which is included in the network payment fee. From 2019, the average annual composite growth rate of audit net profit reached 30% during the 3 years of equity incentive cycle, or the average annual compound growth rate of audited net profit reached 30% before the IPO listing.

(2) investors in the A round increased 150 million and were granted 28.69% of the shares.

1. Trading price: Sequoia capital subscribed to 150 million yuan for 100 yuan network, 166 thousand yuan added new registered capital, corresponding to 12.5% equity. Investors in the A round bought a registered capital of 381 thousand yuan, which corresponds to 28.69% of their shares, and paid the corresponding rights and obligations of 340 million yuan.

2. Changes in ownership structure: the registered capital of the company increased by 166 thousand yuan to 1 million 329 thousand yuan. After trading, five strategic investors of Sequoia Capital, Hangzhou Jie Bai, Ningbo Feng Shang Guan Miao, Shanghai love clothing and Shenzhen Zhi Cheng Dong Sheng share 27.75%, 5%, 4.17%, 0.94% and 3.33% respectively. After the completion of the transaction, the founding shareholders and their concerted action become the actual controllers of the 100 autumn network, which together hold 31.06% of the 100 autumn network.

3. Capital ownership and repurchase conditions: Sequoia Capital increase of 150 million yuan, 166 thousand yuan will be included in the company's registered capital, the remaining funds are included in the 100 billion net capital reserve. If the Bai Qiu network fails to complete the initial public offering or serious violation of the transaction documents within 5 years after the A delivery date, the investor shall not be able to make timely remedies, and the investor shall have the right to repurchase the shares.

(3) the introduction of Bai Qiu network into the long term strategic development of good investment, while he also gained an investment income of 320 million yuan.

(1) the important subsidiary company and strategic cooperative partners. The 100 autumn network was established in September 16, 2010, and was incorporated into the song's banner in September 2016, under which there are hundreds of autumn electricity suppliers, 100 autumn shoes, 100 autumn storage and 100 autumn advertising. Among them, Bai Qiu electricity supplier is an important subsidiary of the song's important company, providing online and offline full channel brand consultation, brand business operation, digital marketing, new retail and other services for international fashion brands. So far, it has established long-term cooperative relationship with more than 50 international fashion and light luxury brands. In 2018, ARRIVE, an overseas subsidiary, will continue to increase the layout of Southeast Asia's e-commerce operation.

Second, the business development of Bai Qiu has been rapid and its performance has increased rapidly. In 2018, Bai Qiu achieved an income of 220 million yuan, a net profit of 60 million 137 thousand yuan, an increase of 20% compared with the same period last year. 2019H1 realized 140 million yuan in revenue, an increase of about 73.2%, a net profit of 25 million 754 thousand yuan, an increase of 18.92% over the same period, and a leading growth rate in the song's brand. 2019Q1-Q3 revenue, net profit has reached 220 million yuan, 40 million 264 thousand yuan, is expected to maintain high growth.

Third, favorable future strategic development. Bai Qiu network is expanding rapidly. The 150 million increase in Sequoia Capital provides the company with sufficient funds for strategic development, and at the same time helps to prepare for the company's initial public offering in the future. On the one hand, after the transfer of shares, the company is expected to get an investment income of 320 million yuan from the transaction. On the other hand, after the completion of the transaction, the hundred hundred net real control is made by the founding shareholders and their concerted action partners, to further facilitate the cooperation of Geers, Bai Qiu network and strategic investors, and to raise the efficiency of the operation and management of GEIs itself, and to ensure the overall coordinated development.
 
[investment advice]

It is expected that the 2019/2020/2021 company will achieve net profit of 3.92, 4.54 and 520 million yuan, up 7.29%, 15.95%, 14.62%, EPS 1.18, 1.37, 1.57, corresponding to P/E 12, 10 and 10, and maintain "highly recommended" rating. (due to the fact that the time of equity transfer has not been confirmed, the impact of equity transfer is not considered yet. The transfer of shares will be expected to significantly increase the net profit of the company in 2020).

[risk hint]

(1) lower demand recovery is lower than expected; (2) the main brand stores exceed expectations; (3) brand development is lower than expected.

Related information:

The 100 autumn network was established in September 16, 2010 and incorporated into the group in September 2016. At present, it has set up 100 subsidiaries, 100 autumn shoes, 100 autumn storage and 100 autumn advertising. Bai Qiu network business channel includes online and offline brand operation, covering a wide range of online operation and business platforms including Tmall, glamour, Jingdong, vip.com, Xiao Hong Shu, NetEase koala, brand official website and other offline operation channels such as shopping centers, department stores, self catering and consignments.

Its profit pattern mainly includes two categories: service advisory commission income and trade income. Among them, service revenue involves all channel operation services and solutions, digital marketing, high-end logistics services, official website development and maintenance, and merchandise shooting. Trade income includes online self catering, offline distribution, offline consignment, brand joint venture and franchise business.

Author: Fang Yi Fang Feng Yi team