\u3000\u3000 Huali Industrial Group Company Limited(300979) (300979)
The performance in 2021 exceeded expectations, and it is optimistic that the share will continue to increase under the tight supply chain, maintaining the "buy" rating
The company released the performance forecast, and it is estimated that the net profit attributable to the parent company in 2021 will be RMB 2.630-2.912 billion, with a year-on-year increase of 40% - 55%. The net profit deducted from non parent company was RMB 2.626 billion-2.908 billion, with a year-on-year increase of 40% - 55%. The performance exceeded the previous expectations of the market, mainly due to the excellent epidemic prevention work of the company's Vietnam factory and the unaffected production capacity. Under the background of the shortage of sports brand supply chain and the continuous recovery of sports demand and sports shoe consumption, the company seized the opportunity to expand its share through the release of production capacity and the improvement of operating efficiency, so as to achieve rapid growth of operating revenue, increase of gross profit margin and substantial growth of net profit attributable to the parent company. We raised the profit forecast and predicted that the net profit from 2021 to 2023 will be RMB 2.84/38.1/4.89 billion (previously RMB 2.59/33.0/4.0 billion), corresponding to EPS of RMB 2.4/3.3/4.2, and the current share price corresponding to PE of 35.4/26.4/20.6 times respectively, maintaining the "buy" rating.
Global sports demand and sports shoes consumption continued to recover, with strong order demand
With the continuous recovery of global sports demand and sports shoes consumption since 2021, core customer orders have continued to grow. In terms of the company's major customers, as of August 31, 2021, Nike's global revenue in the first three quarters increased by - 2% / 88% / 12% year-on-year. As of September 10, 2021, the revenue of Deckers fy2022q2 has increased by 16% year-on-year, of which ugg has increased by 8% year-on-year and Hoka has increased by 47% year-on-year. As of October 2, 2021, the revenue of fy2022q2 of VF group increased by 23% year-on-year. As of September 30, 2021, puma2021q3's revenue increased by 20% year-on-year. The company has strong new product development ability, can quickly respond to changes in customer demand, and its proportion in customers has increased steadily. In addition to Nike, the company has become the largest supplier of all customers, and the proportion of Nike is also increasing. The growth rate of orders from Nike is faster than that of Nike as a whole. From the perspective of the company's future customer development strategy, the company should not only increase the share of existing customers, but also expand new customers. The company's new customers in 2021 (Nb, Arthur, or) all hope to get more capacity in 2022. The company will decide the order undertaking situation according to the capacity expansion progress.
The release of production capacity was carried out as scheduled, and the market share continued to increase
The three Vietnamese factories that have been built have been put into operation in 2021h1. The newly-built factories in 2022 are mainly concentrated in Indonesia. At present, they are in the stage of purchasing land and building new plants. The land formalities are about 2-6 months and the capital construction period is about 8-10 months. It is expected that the construction can be completed by the end of 2022, and the climbing period of production capacity after putting into operation is about 1-2 years.
Risk tip: the release of production capacity is less than expected, international trade friction and rising labor costs.
