The company has five core points.

(1) the public

The industry's competitive pattern is stable, and the impact from external and economic deceleration is relatively small. The company's leading position is stable, and the future growth trend is expected to be closer to business men's clothing.

(2) the solid foundation of the brand is deep rooted in the two / three line cities with the fastest growing consumption in China.

(3) with quality ahead of peers, we have firmly grasped one of the core drivers of men's shoes consumption.

(4)

Having a single store sales capacity far higher than domestic counterparts provides the cornerstone for continuous expansion.

(5) the company has one of the most stable and professional management teams in China's men's shoes industry, which is conducive to long-term sustainable development of the company.

The steady expansion of the main brand and the rapid expansion of the sub brand are expected to drive the company's expansion in the next three years, and the annual compound growth rate will be around 15%.

We expect that in addition to AOKANG's main brand, it is expected that there will be about 300 stores opening each year, and the two brands of Kanglong and red Firebird will become the new driving force for future expansion of channels.

(1) in 2011, the sales of Kanglong and red bird were 346 million and 153 million respectively, all of them had entered the brand rapid development period.

(2) Kanglong and Red Flamingo have established a certain brand effect depending on the channels of some provinces, which have been restricted by resources in the previous years. The focus of the company's development is mainly in the main brand. After the listing, there will be a better platform and resources inclined to the two sub brands.

(3) from the report shop effect, Kanglong is close to AOKANG, and the red Firebird is showing rapid growth, which will strongly promote the expansion of franchisees.

(4) the adjustment of sports brand provides better street resources for the company.

The company's single store sales will continue to show steady improvement in the future.

(1) companies in recent years

Sales of leather products increased significantly, with an average annual growth rate of 175%. We expect that the company's high value-added leather business will become a new revenue growth point for the company, and its revenue share is expected to increase steadily, promoting the promotion of single store sales.

(2) with the gradual implementation of the investment projects and upgrading of the old stores, the company's future single store area will gradually improve.

(3) upgrading the distribution management system will speed up the response speed of terminal salesmen to market changes, and enhance the overall sales ability of the company.

Finance and valuation

We expect the company's earnings per share for 2012-2014 years to be 1.42 yuan, 1.78 yuan and 2.23 yuan respectively, giving the company 21 times PE in 2012, corresponding to the target price of 29.82 yuan, the first time the company increased its rating.

Risk warning

The risk of expansion and management of Direct stores and the risk of rents rising sharply.