\u3000\u3000 Huali Industrial Group Company Limited(300979) (300979)
Event: the company released the performance forecast for 2021. During the reporting period, the net profit attributable to the parent company was RMB 2.630 ~ 2.912 billion, with an increase of 40% ~ 55%, and the net profit deducted from the non parent company was RMB 2.626 ~ 2.975 billion, with an increase of 40% ~ 55%. The performance growth was in line with the expectation, the dominant position of the company's supply chain appeared, and the profitability improved rapidly.
Comments:
With the rapid growth of global sports demand, the company benefits from its performance as a leader in the supply chain. In 2021, with the accumulation of global epidemic prevention and control experience and rapid vaccination, the consumption of sports shoes and clothing resumed rapid growth. However, the supply side is relatively affected by the epidemic. As an industry leader, the company has the advantages of product development, rapid response and lean production, expanding production capacity, improving efficiency and promoting rapid growth of income and profit. In terms of spin off, 2021q4 company achieved a net profit of 633 ~ 915 million yuan, an increase of 12.82% ~ 63.08% at the same time, and the net profit maintained a rapid growth trend.
Vietnam's epidemic prevention has improved, and the company continues to expand production capacity. The company's sports shoes production capacity is mainly distributed in northern Vietnam. At present, Vietnam has a high covid-19 vaccination rate, and the epidemic prevention policy has been adjusted to promote the resumption of factory work and restore economic growth. The company actively implements strict epidemic prevention measures, and the attendance rate is at a high level, which is less affected by the local epidemic. At present, the company's downstream customer orders are still strong. The company will continue to promote the construction of factories in Vietnam, Indonesia, Myanmar and other countries to improve production capacity to meet customer needs.
Profit forecast and investment suggestions: we maintain the company's EPS forecast of 2.38/2.95/3.42 yuan from 2021 to 2023. At present, the stock price corresponds to 27.78 times PE in 22 years. We are optimistic about the long-term growth of sports shoes and clothing track. As an industry leader, the company has established a solid and lasting cooperative relationship with international leading brands. The order increment and capacity expansion of various brands have been basically determined in 2022, The company has strong performance growth certainty and large long-term development space, and maintains the "buy" rating.
Risk factors: concentrated production areas, rising labor costs, and the spread of covid-19 pneumonia in Vietnam.
