\u3000\u3000 Huali Industrial Group Company Limited(300979) (300979)
The company announced the performance forecast for 2021. The company expects the net profit attributable to the parent company to be RMB 2.63-2.91 billion in 2021, with a year-on-year increase of 40% ~ 55%, exceeding our previous expectations. The net profit attributable to the parent company in 2021q4 was 633 ~ 915 million yuan, with a year-on-year increase of 13% ~ 63%.
Head customers have high stickiness and fast growth of revenue contribution. In the first three quarters of 2021, the company's top five customers were Nike, Deckers, VF, Puma and UA, with their contribution to revenue accounting for 35% / 22% / 19% / 11% / 6% respectively, with a total of 93%, further increasing compared with 91% in 2021h1. In terms of growth rate, in the first three quarters of 2021, the revenue contributed by the above five major customers (in US dollars) increased by 49.2% / 57.7% / 9.4% and 23.7% / 69.5% respectively year-on-year, with Nike and Deckers leading the growth rate. In addition to the existing head customers, the company has actively promoted new brand cooperation with its rich OEM experience, product quality and delivery capacity. As of 2021h1, on running and ASICs orders have been shipped and new balance orders have been placed. In the future, the company's orders are expected to maintain sustained and stable growth.
Orderly breakthrough of production capacity bottlenecks to ensure steady improvement of sales volume. 1) In terms of production capacity, by the end of 2020, the company had 21 shoemaking factories in Vietnam, China, Dominica, Myanmar and other places, and more than 90% of the production capacity was distributed in Vietnam. The total production capacity of the company is 2029.51 billion pairs of shoes and 2020h1 / 2019.01 billion pairs of shoes respectively. In 2021q1, three new factories in Vietnam Yongshan, Vietnam Weilin and Vietnam Hongxin were put into operation. We expect that the company's production capacity is expected to exceed 200 million pairs in 2021. 2) In terms of capacity utilization, the capacity utilization rates of 2019 / 2020h1 / 2021h1 companies are 95.3% / 85.7% / 96.9% respectively. Since the Vietnamese factories are mainly located in North Vietnam, the attendance rate of workers will be less affected in 2021. We expect that the capacity utilization rate and order delivery will be less affected. 3) In terms of sales volume, comprehensive capacity expansion + capacity utilization picked up. The sales volume of Q1 / Q2 / Q3 in 2021 was 4774.98/5379.83/51791900 pairs respectively, with a year-on-year increase of + 4.22% / + 50.26% / + 44.09%. We expect the annual sales volume to increase by about 20% year-on-year.
High quality customer resources + enhanced scale effect, leading peers in profitability. In the first three quarters of 2021, the gross profit margin was 27.87% / yoy + 3.90pct, the net profit margin of sales was 15.81% / yoy + 3.03pct, and the profitability was significantly higher than that of peers (in the first three quarters of 2021, the gross profit margin of Yuyuan group / Fengtai enterprise was 24.22% / 21.75% and the net profit margin of sales were 2.11% / 6.51% respectively). The company's high-quality customer resources and capacity expansion bring scale advantages, and the high profit level is expected to be maintained in the future.
Profit forecast and investment rating: the company is a leading professional manufacturer of sports shoes in the world, with stable and concentrated orders and deep barriers to customer resources. It is expected to continue to benefit from the improvement of the concentration of the OEM industry in the future. In 2021, the company achieved good results in expanding capacity, improving capacity utilization and expanding new customers. From 2021 to 2023, we raised EPS from 2.20/2.84/3.31 yuan to 2.36/3.02/3.81 yuan, corresponding to PE 37.1/29.0/23.0x respectively, maintaining the "buy" rating.
Risk tips: Vietnam's rising labor costs, exchange rate fluctuations, repeated overseas epidemics, etc.
