\u3000\u3000 Jack Sewing Machine Co.Ltd(603337) (603337)
Event:
The company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be about 480 million yuan, with a year-on-year increase of about 53%. The impact of non recurring profits and losses is expected to be about 30 million yuan.
The effect of price adjustment was obvious, and the profit was repaired in the fourth quarter
In the single quarter of 2021q4, the company expects to realize a net profit attributable to the parent company of about 143 million yuan, with a year-on-year increase of about 90.67% and a month on month increase of about 78.75%, reaching the historical high level of the company. We believe that the company’s profit recovery in the fourth quarter mainly comes from the recovery of gross profit margin. The company’s business strategy in 2021 is to rapidly increase market share through production expansion. In the face of the general rise of bulk commodities, it has not directly carried out large-scale price adjustment. In the second half of the year, with the gradual price adjustment of the company, Q3 gross profit margin began to recover, and Q4 overall gross profit margin may further recover, Bring a significant increase in profits.
The incentive plan focuses on core managers and professionals, and improves the company’s performance appraisal mechanism
The company’s 2022 stock option and restricted stock incentive plan (Draft) is mainly for the middle-level of the company. The incentive objects are 4 directors, senior managers, 215 core managers and professionals, which is expected to fully mobilize the enthusiasm of employees. The incentive plan involves a total of 9.5 million shares, accounting for 2.13% of the total share capital of the company on the announcement date, including 4.75 million restricted shares and 4.75 million stock options. The two assessment objectives of the incentive plan are: from 2022 to 2024, target B (60% of exercise / lifting of restrictions on sales) meets the requirements that the cumulative revenue is not less than RMB 69 / 14835 / 23.96 billion or the cumulative net profit is not less than RMB 69 / 14842 / 2.396 billion; A target (100% of exercise / lifting of restrictions on sales) meets the requirement that the cumulative revenue is not less than 81 / 19.035/33.797 billion yuan or the cumulative net profit is not less than 850 / 19.98/3.548 billion yuan, and a long-term performance evaluation mechanism has been established.
Expand the industrial chain horizontally and vertically to build a complete set of intelligent clothing solution supplier,
After long-term business layout, the company has become a leading manufacturer of sewing machinery and equipment. Its product line has expanded from industrial sewing machine of sewing equipment to pre sewing cloth laying machine, cutting bed and post sewing hanging equipment, and expanded horizontally and vertically based on the sewing industrial chain. The goal is to build the company into a complete set of solutions supplier for garment intelligent manufacturing integrating software and hardware, provide complete sets of solutions for new garment factories and carry out intelligent transformation and upgrading of existing garment factories. The extension of providing complete solutions to the company will significantly extend the market space for the company and improve the overall profitability by improving the added value of products. At the same time, the complete solutions are mainly for medium and high-end customers, which can also smooth out the cyclical fluctuations of the industry to a certain extent and create a steady growth through the cycle.
Investment advice and profit forecast
We estimate that the company’s operating revenue from 2021 to 2023 will be RMB 6.018 billion, RMB 7.805 billion and RMB 8.954 billion respectively, and the net profit attributable to the parent company will be RMB 480 million, RMB 727 million and RMB 928 million respectively, corresponding to the current PE of 25X / 16x / 13X respectively. Considering the leading position of the company’s sewing machinery and the layout of intelligent complete solutions, we give the company a “buy” rating.
Risk tips
The prosperity of the industry is less than expected, and the layout of intelligent complete solutions is less than expected
