Soochow Securities has initiated coverage on JNBY (HKEX: 03306) with a "Buy" rating. The firm forecasts the company's net profit attributable to shareholders for FY2026-2028 to be 969 million, 1.046 billion, and 1.125 billion yuan, representing year-on-year increases of 8.5%, 8.0%, and 7.6%, respectively. This corresponds to price-to-earnings ratios of 9, 8, and 8 times, which are relatively low within the peer group and coupled with a high dividend yield, providing a solid margin of safety. JNBY stands out as a rare case of counter-cyclical growth in the mature and fragmented women's apparel sector. Its resilience is built on a relatively accessible price range, a unified design aesthetic combined with strong membership operations that foster a fan economy, and a merchandise safety net featuring a four-year product lifecycle, inventory sharing, and returnable goods. This foundation supports the industry's heaviest reliance on the distribution model while effectively controlling associated risks.
Strong Performance Amidst a Competitive Landscape
The women's apparel segment is a large-scale yet highly fragmented sub-sector of the fashion industry. Against a backdrop of intense competition where profitability is challenging, JNBY achieved a compound annual growth rate of 12.3% in revenue from FY2020 to FY2025. Notably, it was the only women's apparel brand among a select group of A+H-listed fashion companies tracked by the firm to report consecutive year-on-year growth in net profit from 2023 to 2025, demonstrating remarkable resilience and standout performance.
Comparative Advantages: Growth, Profitability, and Operations
When compared with four peer women's apparel companies, JNBY exhibits three key characteristics. First, it has shown the most stable revenue growth over the past five years, with revenue increasing from 3.103 billion yuan to 5.548 billion yuan at a CAGR of 12.3%, and is the only company among peers to achieve growth across all three channels: self-operated, distributor, and online. Second, it maintains a consistently high net profit margin, averaging around 14% from FY2016 to FY2025, and boasted the highest net margin among peers in FY2024-2025. Third, its inventory turnover days have improved significantly from 254 days in FY2020 to 156 days in FY2025, the fastest rate in its peer group.
Root Causes: Positioning, Brand DNA, and Inventory Risk Mitigation
Soochow Securities attributes these advantages to JNBY's strategic choice to employ a heavier distribution model, with distributor sales accounting for approximately 41% of revenue in FY2025, the highest proportion among peers, which contributes to smoother financial metrics. This model is sustained by three underlying factors: a relatively affordable price point, which facilitates market penetration; a unified design style and robust membership system that cultivate a strong fan economy; and a comprehensive inventory risk mitigation mechanism for distributors, including a four-year product lifecycle, inventory sharing, and returnable goods.
Diversified Brand Portfolio and Long-Term Growth
As a leader in China's designer apparel market, JNBY has evolved from a single brand into a multi-brand portfolio covering mature, growing, and emerging segments. With a stable ownership and governance structure led by its founder and a deeply experienced core management team, the company has achieved long-term, steady growth and a diversified, healthy revenue structure. From FY2014 to FY2025, revenue grew from approximately 1.38 billion yuan to about 5.55 billion yuan, a CAGR of roughly 13.5%, while net profit attributable to shareholders rose from about 150 million yuan to approximately 890 million yuan, a CAGR of about 17.6%. This long-term track record of double-digit growth in both revenue and profit, with profit growth outpacing revenue, reflects improving economies of scale and operational efficiency.
Key Investment Risks
Potential risks include a slower-than-expected recovery in consumer spending; pressure from distributor inventory, returns, and potential impairment flowing back to the company; slower-than-anticipated store expansion and penetration into lower-tier markets; changes in design and brand image; and delays in the development and profitability of emerging brands.
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