\u3000\u3000 Huafu Fashion Co.Ltd(002042) (002042)
The company released the performance forecast for 2021. Under the background of rising cotton prices, the intelligent upgrading of the company’s own production capacity has achieved remarkable results. It is expected to realize a net profit attributable to the parent of 550 ~ 630 million yuan and deduct a non net profit of 330 ~ 410 million yuan to turn losses into profits. With the support of cotton price in the future, the intelligent reform of the company will be promoted, the performance will be high and the growth can be expected, and the overweight rating will be maintained.
Key points supporting rating
With the rapid development of industrial Internet business and the consolidation of cotton socks business, it turned losses into profits in 2021, and Q4 grew brightly in a single quarter. In 2021, the company is expected to realize a net profit attributable to the parent company of 550 ~ 630 million yuan, deducting a non net profit of 330 ~ 410 million yuan, and turn losses into profits in the whole year. Among them, 2021q4 is expected to realize the net profit attributable to the parent company of RMB 100 ~ 180 million and turn losses into profits. In 2021, the company consolidated its cotton socks business, further extended its product line and entered its own brand to improve its profitability; The company further implemented the strategic layout of industrial Internet, completed the digital reform of production capacity of one million ingots in Xinjiang, and achieved remarkable results in improving production efficiency.? The cotton price is in the upward channel, and the company has the advantage of low-cost inventory, which further improves its profitability. Since 2022, the cotton price has been at a high level of 22000 ~ 23000 yuan / ton. Under the gap between supply and demand, the high level of cotton price is expected to continue until the first half of 2022. As the leader of cotton spinning, the company has the advantage of low-cost inventory for 3 ~ 6 months, which will further enhance the performance elasticity of the company.
In the future, with the continuous support of cotton prices, the company’s industrial Internet business will continue to promote, and its performance is expected to grow at a high speed. At present, the company has completed the intelligent upgrading of the production capacity of about 1 million ingots in Xinjiang, China. It is expected that the intelligent industrial Internet business will continue to be promoted to the company’s domestic and foreign production capacity in 2022, and the production efficiency can be greatly improved. Under the support of cotton price, the company’s low-cost inventory advantage is further highlighted, and its profitability is expected to increase in 2022. In terms of cotton socks business, with the goal of building a scientific and technological socks industry, we will carry out independent brand business, brand authorization business, OEM processing business and yarn business. The rapid growth in the future is expected to boost the company’s performance.
Valuation
Considering the great flexibility of the company’s performance, under the current share capital, the earnings per share from 2021 to 2023 are raised to 0.32 yuan, 0.37 yuan and 0.42 yuan respectively (the original forecast data are 0.30 yuan, 0.35 yuan and 0.41 yuan); The P / E ratios were 14, 12 and 11 respectively, maintaining the overweight rating.
Main risks of rating
Consumption recovery is less than expected, Vietnam’s epidemic control is less than expected, and exchange rate fluctuations are expected.
