Core view

"Brand + channel + supply chain" advantage, cast the status of "shoe king".

BELLE occupies the first place in the domestic women shoes market for a long time. We believe that BELLE's success is mainly based on its strategy of "multi brand matrix + channel horse race enclosure + strong supply chain control". On the brand side, as of the end of 2018, BELLE had 13 footwear own brands, 5 footwear agency brands, 19 sports and clothing agency brands. In terms of channel, BELLE signed an exclusive agency agreement with the distributor at first, then established a joint venture with it, and gradually acquired the retailer's retail business, and finally realized the control of the terminal channel. In terms of supply chain, the company adopts a vertically integrated organization mode to enhance the management capacity of inventory.

　　 Traditional channels have been shocked and stacked with insufficient brand strength. BELLE has undergone a long period of adjustment.

Women's shoes industry ushered in inflection point in about 2012-2013 years, and then the market size gradually slowed down. At the same time, with the development of electricity providers, traditional channels have been impacted. In the past, the extensive channel expansion of the company was difficult to sustain. Although the company tried to enter the online business and set up its own vertical e-commerce platform, it failed finally. In addition, the lack of brand tone and the lack of innovation in product design also began to highlight the same slowdown in the same store revenue, the expansion of the channel slowed down, the company's performance declined gradually, and the market value continued to shrink.

　　 After privatization, BELLE actively adjusted, its sports and apparel business sought to spin off.

In April 2017, Gao Ling capital and CDH investment and other agencies bought and privatized BELLE and delisting the market. Gao Ling became the controlling shareholder of BELLE. After the delisting, BELLE carried out a series of business adjustment, especially in the promotion of channel efficiency. Offline channels, a series of digital upgrading; online channels, began in Tmall, vip.com (VIPS.US), Jingdong (JD.US) and other platform electricity providers set up flagship stores, online sales grew rapidly. In 2019, BELLE's sports business Tao Bo international submitted a prospectus to the HKEx to be listed on the main board of Hongkong.

　 From BELLE to see the logic of investment in consumer goods in the new era

BELLE can be regarded as a model of the complete life cycle of consumer company. In the past, investors used to study consumer company from the perspective of growth stocks. As more and more consumer company entered maturity, the traditional investment framework should be adjusted. To grasp the key of investment in consumer goods in the new era, we need to return to the fundamental value of enterprise value, that is, "enterprise value comes from excess earnings". Looking for long-term bull stock is looking for companies that can continue to create excess returns in different life cycles. We believe that the excess revenue of consumer company comes from the premium of brand, product, efficient supply chain and excellent channel efficiency. These three aspects of consumer company remain competitive, so that they can gain sustained excess profits and create value for shareholders. In terms of subject matter, Semir clothing and singer are recommended.