Chinese listed apparel companies still under pressure in Q1-Q3?

Recently, Chinese listed apparel companies have generally disclosed their earnings for the first three quarters. In the context of the rise of e-commerce but weak demand, how are these apparel firms performing? Is the pressure on their operations continuing, or is there stability with a positive trend? This article selects 12 major listed apparel companies as samples, which can give some indications.

In terms of revenue, HLA ranked highest with 15.259 billion yuan for the first three quarters, down 1.99%. Semir and Youngor ranked second and third with 9.399 billion and 8.4 billion yuan respectively, up 5.6% and 12.6% respectively. Meters/bonwe and Busen ranked at the bottom, with revenues of 525 million and 102 million yuan respectively for the first three quarters, down 37.3% and up 2.68% respectively.

The combined revenue of the 12 apparel companies for the first three quarters was 54.042 billion yuan, up 0.86%. In terms of revenue growth, 6 companies saw y-o-y increase, while HLA, Peacebird, Saint Angelo, Septwolves, Hodo, and Meters/bonwe saw y-o-y decrease, with Meters/bonwe experiencing a significant decline and Lancy seeing a notable increase.

In terms of net profit, Youngor ranked highest with 2.512 billion yuan for the first three quarters, down 6.72%. HLA and Semir ranked second and third with net profits of 1.908 billion and 755 million yuan respectively, down 22.2% and 9.3% respectively. Hodo and Busen ranked lower in net profit, with net profits of 3.2928 million and a loss of 12.9189 million yuan respectively for the first three quarters, down 91.6% and 59.56% respectively. HLA mentioned the decline in net profit: "mainly due to the decrease in revenue and the reduction in gross profit from sales."

In terms of net profit excluding non-recurring gains and losses, Youngor ranked highest with 2.449 billion yuan for the first three quarters, down 3.39%. HLA and Semir ranked second and third with 1.749 billion and 735 million yuan respectively, down 21.3% and 5.3% respectively. Hodo and Meters/bonwe ranked at the bottom, with -20.4138 million and -58.11 million yuan respectively, down 173.77% and up 39.54% respectively. Hodo believes that the company is facing certain pressures in its operations, especially with the decline in retail revenue, intensified market competition, and reduced gross profit from sales.

Overall, the combined net profit of the 12 apparel companies for the first three quarters was 6.342 billion yuan, down 14.5%. The combined profit after deducting non-recurring gains and losses was 5.507 billion yuan, down 16.8%. Four companies, Peacebird, Busen, Hodo, and Meters/bonwe, all reported losses in profit after deducting non-recurring gains and losses, while the remaining eight companies achieved profitability.

In terms of gross profit margin, Ellassay ranked first with 68.2% for the first three quarters, followed by Saint Angelo and Joeone in second and third place with 65.76% and 65.54% respectively. Busen and Meters/bonwe ranked at the bottom with gross margins of 34.16% and 33.98% respectively.

In terms of net profit margin, Youngor ranked first with 29.97% for the first three quarters, followed by HLA and Saint Angelo in second and third place with 12.87% and 12.23% respectively. Hodo and Busen ranked at the bottom with net margins of 0.27% and -14.08% respectively.

For the first three quarters, the average gross profit margin of the 12 apparel companies was 50.44%, down 0.56%, and the average net profit margin was 7.33%, up 2.2%.

In terms of inventory turnover days, Youngor ranked first with 811.3 days for the first three quarters, down 41.9%. Ellassay and Meters/bonwe ranked second and third with 374.64 days and 360.53 days respectively, up 22.3% and 4.2% respectively. Hodo had the lowest turnover days at 98.54 days, up 53.5%. The average inventory turnover days for the 12 apparel companies for the first three quarters were 298.66 days, down 10.5%.

In terms of asset-liability ratio (total liabilities/total assets * 100%), Meters/bonwe ranked highest with 76.79% for the first three quarters, followed by Busen and Lancy in second and third place with 66.7% and 54.17% respectively. Ellassay ranked lowest with 30.51%. The average asset- liability ratio for the 12 apparel companies for the first three quarters was 44.92%, down 3.5%.

In summary, the performance of apparel companies in the first three quarters was not ideal, with most experiencing pressure on their results. Although the cumulative revenue of the 12 companies saw a slight y-o-y increase and the average asset-liability ratio and average inventory turnover days decreased (except for Meters/bonwe and Busen with relatively high asset-liability ratio, the remaining 10 companies was around 30-50%), the average net profit and profit after deducting non-recurring gains and losses both showed double-digit declines. In the first half of the year, only one company, Busen, reported a loss in profit after deducting non-recurring gains and losses, while by the first three quarters, it had expanded to four companies: Peacebird, Busen, Hodo, and Meters/bonwe, all reporting losses in profit after deducting non-recurring gains and losses.

The gross profit margin of the 12 apparel companies was relatively high, averaging around 50.4%, while the average net profit margin fell to 7.3%. Among them, 6 companies had net profit margins above the average, while 6 below the average, indicating that apparel products, as optional consumer goods, are facing problems of brand aging, especially under weak consumption environment, the rise of e-commerce, changes in shopping scenes, and personalized demand, with overall performance being weak.