Sales slowed in the fourth quarter: the single quarter revenue growth in the four quarters of 2011 was 30.2%, 44.4%, 22.5% and 11.4%, respectively. The growth rate of single quarter net profit was 27.8%, 31.1%, 22.9% and 10.6% respectively.

It can be seen that the warm weather in the fourth quarter has a more serious impact on the company.

In the two categories of casual wear and children's wear, the signs of slow down sales of casual wear are obvious, and the franchisees' inventory is also more. This is more obvious in the variety of women's clothing, but the sales growth of children's wear is still strong.

In the past 12 years, the company's product style has increased by more than 20%, and we insist on the strategy of stimulating sales growth with the rich category. Therefore, we expect that 12 years casual wear can gradually come out of the adjustment period.

Annual store expansion is lower than expected: as rents rose too fast,

The gross profit margin of the fourth quarter is estimated to decline: 2011Q3, the gross profit margin of the company is 36.44%.

Fourth quarter

The cost rate has increased: as the headquarters moved from Wenzhou to Shanghai in 2011, there has been a large increase in personnel resettlement and other related expenses. Meanwhile, the related expenses of the company listing and the marketing expenses of the stores have also increased. Therefore, we estimate that the annual cost rate is about 2.6% higher than that in 2010.

Earnings forecast: it is estimated that in the 12-13 years EPS is 2.17 yuan and 2.58 yuan respectively. The leading position of the company in the children's wear industry is still unshaken. After a few years of high growth, casual wear also needs a period of adjustment, but the long-term growth trend remains unchanged.

Therefore, we have long been optimistic about the company, giving "overweight" rating.