Soochow: JNBY (03306) rated as "buy" for the first time, decrypting JNBY's business resilience.

Soochow has released a research report, initiating coverage of JNBY (03306) with a "buy" rating. The bank expects the company's net profits attributable to shareholders for FY2026-2028 to be 0.969/1.046/1.125 billion yuan, with year-on-year growth rates of +8.5%/8.0%/+7.6% respectively. The corresponding PEs are 9/8/8 times, which are lower valuations compared to peers and with a higher dividend yield, providing a sufficient safety margin. JNBY is a rare counter-cyclical growth target in the mature and diversified women's clothing track, supported by a relatively affordable price range, a unified design style, a strong membership operation, a fan economy, and a four-year lifecycle + inventory sharing + returnable goods bottoming mechanism. The company has the most robust distribution model in the industry and effectively controls its risk, demonstrating outstanding operational resilience. Soochow's main points are as follows: Intense competition in the women's clothing track, strong performance by JNBY against the trend The women's clothing sector is a large, low-concentration track in the apparel sub-industry, with intense competition and high profitability difficulties. Against this backdrop, JNBY has maintained a compound revenue growth rate of 12.3% for FY2020-2025, making it the only women's clothing brand among the four A+H dual-listed companies that the bank has tracked whose net profits attributable to shareholders have increased positively for three consecutive years from 2023 to 2025. Its strong operational resilience is worth analyzing. Comparison with peers: Combining growth, profitability, and operational advantages Compared with four comparable women's clothing companies (Shenzhen Ellassay Fashion, Dazzle Fashion, Xin Hee Co., Ltd., EEKA FASHION), JNBY shows three main characteristics: 1) its revenue growth in the past five years (2020-2025, with JNBY being on a fiscal year) has been the most stable, with revenues increasing from 3.103 billion yuan to 5.548 billion yuan, a CAGR of 12.3%. All three major channels- self-operated, distribution, and online have shown positive growth, making it the only company among its peers; 2) Its net profit margin has been stable in the long term, with an average of around 14% from FY2016-2025. While the net profit margin of peers decreased in 2024-2025, JNBY's net profit margin remained the highest among peers; 3) Inventory turnover days decreased from 254 days in FY2020 to 156 days in FY2025, the fastest among peers in FY2025. Attribution analysis: Positioning, brand genes, and the bottoming model of inventory support the heavy distribution model The bank believes that the shared root of these advantages lies in JNBY's choice of a heavier distribution model in women's clothing (with distribution revenue accounting for approximately 41% in FY2025, the highest among peers), which makes the financial indicators relatively smooth. There are three underlying conditions supporting the continued operation of heavy distribution: 1) Relatively affordable price range (mainly 500-2000 yuan) provides a foundation for market expansion, with more than 65% of stores in third-tier cities and below in FY2025; 2) A strong fan economy built on a unified design style and strong membership operation, with members contributing over 80% of retail sales in FY2025; 3) The four-year product lifecycle + inventory sharing + returnable model serves as a safety net for distributors to mitigate inventory risks. A well-rounded multi-brand matrix, long-term and stable growth in performance The company is a leader in domestic designer clothing brands, evolving from a single brand to a multi-brand matrix covering mature, growing, and emerging brands; the founder holds a high stake in the company, the governance structure is stable, and the core management team has deep industry expertise, leading to long-term and stable growth in performance and a diverse and healthy revenue structure. The company's revenue increased from approximately 1.38 billion yuan in FY2014 to approximately 5.55 billion yuan in FY2025, with a CAGR of about 13.5%; net profits attributable to shareholders increased from approximately 150 million yuan to 890 million yuan, with a CAGR of about 17.6% from FY2014 to FY2025. Both revenue and profit achieved double-digit growth in the long term, with profit growth exceeding revenue growth, demonstrating the scale effect and operational efficiency improvement. Risk factors Slow recovery in consumer end demand; pressure from distributors' inventory, returns, and impairment; slower than expected store expansion and market penetration in lower-tier cities; changes in design and brand image; slower than expected cultivation and realization of profit from emerging brands.