Sen-Ma Apparel performance growth slightly lower than market expectations

2011 Quarterly EPS for 0.39 Yuan, an increase of 28%, the performance growth rate is lower than the market expectations. The company's first quarter to achieve operating income of 1.567 billion yuan, an increase of 30.24%, the ownership of the listed company's shareholders net profit of 261 million yuan, an increase of 27.83%, the total diluted EPS for 0.39 yuan, the performance growth rate of 28% lower than we in the first quarterly forecast of 40% growth expectations.　　Company forecast January-June net profit year-on-year growth 20-50%, that corresponds to the report EPS in 0.61-0.76 yuan.　　Gross margin and expense rate in the first quarter changed little, and the slowing of income growth was the main reason for lower performance than expected. The company's gross profit margin rose 0.3% to 36.1% year-on-year, the cost of sales rose 0.9% to 9.8% year-on-year, the rate of management costs rose 0.2% to 2.8% year-on-year, net profit margin fell 0.3% to 16.6%. This year, as cotton and other raw material cost prices rose sharply, as a cheap clothing is difficult to increase the price to completely transfer the cost of pressure, we expect the gross margin this year more difficult to upgrade.　　The company 2010-year revenue growth rate of 48%, 2011-year first quarter revenue growth of 30%, we are expected to be in the last year in the four quarter of early focus on shipments, the first quarter of the slowdown in income growth is the main reason for less than expected. The financial situation is still more healthy, inventory control is good, pay the bill payable 486 million yuan, resulting in a net operating cash outflow of 296 million yuan. From the balance sheet, the company's first-quarter inventory amount fell slightly under 1 billion, also reflects the company's ability to control inventory. Accounts receivable change is not large, compared to the beginning of the growth of 30%, mainly with the expansion of the business in the first quarter to pay for the fall and winter installed suppliers face accessories margin, prepaid accounts have declined. However, at the end of the first quarter of the bill from the beginning of the 620 million yuan to 135 million yuan, mainly the company on schedule to pay the early issuance of the Bank acceptance bill led to a decline in the notes payable 78.3%.　　Operating cash flow net outflow of 296 million yuan, but we believe that the company's financial situation is still relatively healthy, the net outflow of cash is mainly to pay bills and pay for the winter and spring summer clothing shipments. Maintain the profit forecast, the current PE valuation is reasonable, but the PS valuation is high, the total market value is large, the first rating for overweight. We maintain the company 11-13-year EPS for 2.28/3.21/4.43 profit forecast, the current PE for 25.3/17.9/13 times, although the horse PE and the United States close, both in 2011 about 25 times times, but due to the net profit margin of Sen horse is higher than 10% of the net profit margin of the United States, So the ps of the horse is 4.2 while the U.S. state PS is 3. We are optimistic about the long-term prospects of the company, but this year, inflation pressure, raw material growth, parity casual wear consumption rate may slow down, more difficult to improve the gross margin, the first rating for overweight.