Youngor: The effect of clothing adjustment is beginning to show that the real estate transaction volume is still booming.

The revenue of the apparel sector fell to the bottom, and the channel upgrade effect began to show

The company's branded apparel business achieved revenue of 694 million yuan in the third quarter, up +2.3% year-on-year, which was a rebound from the year-on-year decline of -7.2% in the first half of the year. At the same time, at the end of the third quarter, the number of sales outlets was 3,124, a decrease of 113 from the beginning of the year, but the business area increased by 10,054 square meters from the beginning of the year. We believe that the company's "open big store" strategy and the O2O upgrade of the sales terminal have begun to show results. In the next five years, the company will invest 10 billion yuan in the apparel sector to strengthen fabrics, crafts, brands and sales channels. We believe that with the channel adjustment, the rebranding of the main brand Youngor and the continued growth of the sub-brands, the decline in the menswear sector will gradually narrow, and the performance is expected to pick up in 2018.

Real estate business volume is still booming, low-cost land reserve profits will gradually release

Affected by the project development cycle, the real estate sector's third quarter revenue was 960 million yuan, compared with -64.9%. However, the pre-sales situation in the third quarter is still good. From January to September, the transaction area of ​​commercial residential areas in the six districts of Ningbo, where the company's main development projects are located, was +40% year-on-year, and the growth rate was flat with the first half of the year. The company's real estate sector achieved a pre-sale amount of 4.95 billion yuan from January to September, compared with -13.6%. We believe that although the pre-sales amount of the property sector has decreased year-on-year, it is still at a relatively high level. At the same time, the company's land reserve price is low, and the project impairment risk is significantly reduced. Therefore, the profit contribution of the real estate sector to the group will remain stable in the next two years.

The performance in 16-18 is 1.80 yuan / share, 1.88 yuan / share, 1.93 yuan / share

The company's current share price corresponds to a 17-year P/E of 8.1x, slightly lower than the company's historical average valuation in the past five years. We believe that with the continuous investment of the company in the menswear sector, the decline in the menswear business will gradually narrow and return to the growth track. At the same time, the company's dividend yield is 5.6%, which also provides a strong margin of safety for the stock price, so we maintain our Buy rating on the company.