Why Can Bienlefen Achieve High Growth For 11 Consecutive Quarters?

All roads lead to Rome. The highlight of China's textile and clothing market at the moment is not to take advantage of the so-called rise of the national tide, but to complete the original accumulation of brands along different tracks, and now start to compete on the same stage.

Whether it's Shenzhou International, Bosideng and Anta Sports with OEM background, or Disu Fashion and Jiangnan Clothes with pure brand mentality, or Hailan Home and Taipingbird with asset light model, or La Chapelle, the "store king" with direct stores, the listed enterprises in this sector are gaining more attention and immediate feedback in the capital market.

Biemlfdlkk, known as "the first stock of golf apparel in China", may be one of the most low-key enterprises, but recently it has received frequent attention from the capital market. On the other hand, more and more consumers are interested in this "mysterious" brand that can be seen everywhere in major airports and high-speed railway stations in China. In view of its slightly awkward Chinese and English name, many consumers do not even know that this is actually a local golf clothing brand from Guangzhou, China.

Yesterday, Bienlefen announced that its net profit in 2019 is expected to increase by 30% to 50% year-on-year to 380 million to 438 million yuan, that is, the net profit in the fourth quarter will be between 68.66 million and 127 million yuan. This means that the company has maintained high profit growth for 11 consecutive quarters.

Bienlefen said that the positive growth of performance in the fourth quarter was mainly due to the company's continuous high-quality channel expansion, including expanding the store area, adjusting the location, etc., and constantly enhancing the user experience. For the whole year, the number of main brand stores of Biyin Lefin will increase by 80 to 100 on the basis of 730 last year, and the number of holiday tourism brand stores in Venice will increase by 30 to 40.

In the first three quarters of this year, Bienlefen's revenue rose by 24.95% year-on-year to 1.323 billion yuan, and its net profit rose by 51% year-on-year to 311 million yuan. The growth rate in the third quarter reached 27%, 22% and 25% respectively, and the growth rate of net profit attributable to the parent company reached 53%, 17% and 64% respectively.

In 2018, the total operating revenue of Biyin Lefin increased by 39.96% year-on-year to 1.476 billion yuan, and the net profit attributable to the parent company increased by 62.16% to 292.3 million yuan. In 2017, the revenue of Bienlefen exceeded 1 billion for the first time, reaching 1.054 billion.

There is no doubt that Bienlefen has become the dark horse of the domestic textile and clothing sector in the last two years. Since its listing on the Shenzhen Stock Exchange in December 2016, its share price has risen by 27.7% to 25.65 yuan per share, with a total market value of about 7.9 billion yuan. As a comparison, the market value of Taipingniao listed in A-share market is 7 billion, that of Disu Fashion is 9.9 billion, that of the parent company of GXG listed in Hong Kong is 7.3 billion Hong Kong dollars, and that of Jiangnan Puyi listed in Hong Kong is 5.4 billion Hong Kong dollars.

Biyin Lefin, listed in Shenzhen Stock Exchange, was invited to display on the screen of NASDAQ in New York on China Brand Day this year

Some analysts call this brand the invisible champion of the segment track. Its success benefits from the brand's adherence to and deep exploration of the golf apparel market segment. As a traditional noble sport symbolizing the status of elite, golf determines that golf clothing is targeted at the niche market of middle and high-end, which also clarifies the differentiated positioning of Biyinlefen.

In 2003, Wenzhou businessman Xie Bingzheng officially set up Biyin Lefen in Guangzhou, which was at the time when golf broke out in China. Although the first golf course in China appeared in Zhongshan, Guangdong Province in 1984 in order to meet the needs of foreign investors, the sport did not really enter the development track until the 21st century. In 2001, the population of Chinese golf increased to 500000 because Tiger Woods came to China for the first time to participate in the challenge. In 2003, the population of golf in China grew to 1 million, and in 2009, it has soared to 3 million.

Golf originated in Britain in the 15th century, but it has been less than 20 years since it entered the Chinese public life. Bienlefen has grasped this window period. According to the "Toward White Paper - China Golf Industry Report" issued by Toward Group, an enterprise in the golf industry, there were nearly 700 golf courses in China during the peak period, and now it has dropped to about 400.

During this period, the scale of China's high net worth people and middle class consumers has continued to grow, they have more disposable income and time, and began to upgrade their consumption and lifestyle, so the golf course has become a new business and leisure occasion.

The growing high net worth crowd has supported the golf apparel brand with sufficient market scale. According to the 2019 China Private Wealth Report jointly released by Bain and China Merchants Bank, the number of high net worth people in China reached 1.97 million at the end of 2018, an increase of about 400000 compared with 2016, including about 170000 ultra-high net worth people and about 320000 people with more than 50 million investable assets.

Although Nike, UnderArmour, adidas, Puma and other sports brands, as well as PXG, Titleist and other professional golf brands provide golf apparel, this segment of the track is relatively blank in the domestic market. Bienlefen hit this fast rising and uncompetitive market segment and laid a solid foundation in the first 10 years.

In 2004, Biyin Lefen dismissed its first store in Nanjing, Nanjing Golden Eagle Store. In 2007, Bienlefen officially entered the headquarters building in Panyu, Guangzhou. In the same year, the first golf course store "Shenzhen Mission Hills Golf Club Store" officially opened.

In 2009, the International Olympic Committee listed golf as an official event of the 2016 and 2020 Olympic Games. Bienlefen also continued to make efforts in the field of professionalism, and officially became the partner of China's national golf team in 2013, providing professional competition and training clothing for the national team.

Bienlefen hit the track of the sports market segment. The picture shows Bienlefen's holiday travel series fashion show held in the Spanish arena

In view of the high threshold and professional positioning of golf, Bienlefen has made great efforts in product research and development. According to public data, the company's product research and development team is composed of well-known designers from China, the United Kingdom and South Korea. Paul Rees, the former Burberry golf design director, serves as the research and development creative consultant to accurately grasp the trend and consumer preferences.

Long term fabric suppliers of the brand include Itochu Corporation of Japan, Toray Group of Japan, Comolini of Italy, Gore of the United States, Polartec LLC of the United States, etc. In February 2013, Bienlefen cooperated with Beijing Institute of Fashion Technology to establish the first "golf clothing ergonomics research center" in China.

However, in view of the restrictions of domestic government policies and the impact of anti-corruption, the domestic golf industry entered a low point around 2015. In fact, due to the large amount of water and land resources occupied by golf and the image of the noble sport in the public's mind, many control policies have been introduced in China until 2016, when the clean-up and remediation was basically completed.

The reason why Bienlefen is not obviously affected by the cold weather of golf is that the brand has adjusted its brand positioning in the changing market environment, not only limited to golf professional sports clothing, but also carries out lifestyle expansion, focusing on high-end golf casual clothing. The target group is golf enthusiasts and identifies with golf culture Consumers with middle income and above who tend to dress in golf style.

In view of the suspicion of single product, performance growth or ceiling at the initial stage of listing, Biyin Lefin has diversified its product line, including golf series, life series and fashion series.

In August 2018, Bienlefen launched a new brand, CarnavaldeVenice, which officially launched a dual brand operation and officially entered the holiday travel clothing market. According to the survey data of iResearch, in 2017, among the major consumption expenditures of the Chinese middle class, tourism consumption has exceeded children's education, ranking first.

The 2019 meeting of the directors of the National Department of Culture and Tourism pointed out that China's tourism consumption continued to grow in 2018, with the number of domestic tourists expected to reach 5.54 billion person times, up 10.76% year on year, and the number of outbound tourists of Chinese citizens expected to reach 148 million person times, with the total tourism revenue expected to reach 59900 million yuan, an increase of more than 12% year on year. From the data of the tourism industry from 2012 to 2018, the national tourism revenue has maintained a stable double-digit growth.

Tourism has become an indispensable way of life for the middle class. Biyin Lefen has taken a fancy to brands that have no real positioning for holiday travel clothing in the current market. Some analysts believe that Carnaval de Venise Venice will enrich the product structure of Beinlefen, expand the consumer group, or bring a new round of strong growth of Beinlefen.

It is worth noting that in order to ensure that the brand value and high-end positioning are not diluted, Biyin Lefin has played an unexpected role in the channel layout. For a long time, Bienlefen stuck to the physical channel. By the end of 2018, Bienlefen had almost covered 31 provinces, autonomous regions and municipalities directly under the Central Government in China, with 764 terminal stores, mainly located in the airport and high-speed rail, golf courses, shopping malls, outlets and other channels.

Bienlefen has opened a large number of stores in airports across the country, thus gaining popularity with limited marketing investment

In addition to directly opening a store on the golf course, Bienlefen has seized the traffic scene frequently seen by business people such as the airport high-speed rail, and has also established a differentiated advantage in channel distribution. This is also the reason why the decline in the flow of physical department stores in recent years has limited impact on the contrast of Lefin. In the process of physical department stores being impacted, the exit of brands with low store efficiency actually eliminated a number of competitors for Biyin Lefin, making it the champion of the market segment.

An important reason why the capital market is optimistic about Biyinlefen is that it is optimistic that its channel expansion space is still sufficient and has imagination space. With the development trend of urban communitization, the company will deeply explore high-end communities in first tier and second tier cities as potential markets, and further sink the market to fast developing third tier and fourth tier cities, with an estimated market capacity of 1500 to 2000.

In this process, outlets helped Biyinlefen to digest its inventory at a relatively small discount. In particular, Biyinlefen is currently expanding its channels for major brands and opening stores for new brands in Venice. In the first three quarters of 2019, the turnover days of accounts receivable increased by 3 to 20 days compared with the same period last year, and the turnover days of inventory increased by 122 to 414 days compared with the same period last year.

However, Guosheng Securities reports that the inventory structure of Bienlefen is relatively healthy. The company adopts an active exchange policy for franchisees to ensure healthy inventory turnover of franchisees. The company is distributing outlets at a ratio of 10:1, and strictly controlling the sales discounts of out of season products. The current brand sell out rate is 60% to 70%, and the discount level continues to improve.

It was not until this year that Bienlefen expanded its e-commerce channels. In the first half of this year, it opened Tmall flagship stores. All kinds of signs indicate that Biyin Lefin, which has always been low-key, has also entered a strategic turning point, and started to add marketing in the context of the global luxury brands' consistent preference for strong marketing strategies.

In 2017, Bienlefen held a fashion show of Bienlefen's vacation tourism series at the Cornera Elplat Stadium in Spain's La Liga stadium. In 2018, Bienlefen began to strengthen star marketing strategy, which is considered as a sign of youth. The brand has successively signed with Yang Shuo and Jiang Yiyan as brand spokesmen, and participated in the film and television series "Mr. Love". In 2019, the brand signed with Tian Liang, Lu Yi and other stars. During this year's Chinese brand date, Biyin Lefen appeared on the big screen of the NASDAQ Stock Exchange in New York.

Recently, Bienlefen has shown its youth and fashion in design. Recently, it launched the Palace Museum cooperation series, trying to seize the "national trend" sports and fashion dividends set off by Li Ning, Anta and other brands.

According to Bienlefen, the company's business model is asset light and implements the form of goods production outsourcing. Its production bases are mainly located in South Korea, Vietnam and other countries and regions. This also determines that Bienlefen will continue to focus on product research and development and marketing in the future.

In the latest profit forecast for the fourth quarter, Biyin Lefin believed that the sales growth benefited from the company's continuous increase in product R&D investment, continuous improvement of product competitiveness, increased brand promotion, optimized marketing network construction and supply chain management, and continued to launch employee stock ownership plan incentive programs.

From the macro trend, the short-term potential of Bienlefen is still considerable. According to the analysis of Zhiyan Consulting, although golf is temporarily cold in China, the rapid development of the Korean golf industry adjacent to China still has a strong reference for China. Korean golf has developed into a mainstream national sport in the 20 years since the 22-year-old Korean women's golf player Park Shirley won the US Women's Open as a newcomer to LPGA in 1998.

With the improvement of living standards, Chinese consumers have begun to pay attention to the lifestyle of sports and leisure, and the demand for clothing has also paid more attention to the quality and taste of products. On the supply side, the proportion of domestic high-end leisure clothing market has increased year by year, and the brand premium ability of clothing leading enterprises has gradually become prominent.

In fact, despite the rise of domestic clothing brands in recent years, the market for high-end domestic brands has been vacant. As Chinese young consumers become more confident in high-end domestic products, the market size of high-end leisure apparel will further increase in the future.

What is worth watching is that as young consumers take over the baton of high-end consumption, on the basis of stabilizing the traditional mature customer group of the brand aged 35 to 50, Biyin Lefin will also take over the young consumers radiated by star marketing.

There is no minority in China. In addition to the fully competitive domestic mainstream clothing market, there are still a lot of opportunities hidden in the market segment. It is a big business to achieve the perfection of each track.