\u3000\u3000 Bros Eastern Co.Ltd(601339) (601339)
Bros Eastern Co.Ltd(601339) : after more than 30 years of deep cultivation of color spinning, the volume and price rise together to promote the high growth of performance
As one of the leading color spinning companies in China, the company is mainly engaged in medium and high-end color spinning threads. At present, it has formed a business model of "small batch, multi variety and rapid response" dominated by self production and supplemented by outsourcing. Pay attention to innovative development strategies such as product differentiation, functional value-added and chain value-added, and continuously improve the product development and innovation mechanism to provide the source power for the long-term development of the company.
The rise of cotton price combined with the recovery of capacity utilization boosted the company's performance. Benefiting from the rise in cotton prices and the increase in the number of orders, the revenue of q1-3 in 2021 increased by 32.95% year-on-year to 5.557 billion yuan. The company expects the net profit attributable to the parent company to be 1.33-1.39 billion yuan in 2021, an increase of 263% - 280% at the same time, which is mainly due to the comprehensive impact of factors such as the improvement of capacity utilization, the increase of orders and the growth of main business profits.
The leading enterprises of color spinning have a stable position, and fashion and fast reverse fit the downstream demand to boost the penetration rate
Compared with other printing and dyeing methods, color spinning has the advantages of high technology, environmental protection and energy saving, fashion and high performance. The application in the field of sweater and knitted fabrics is relatively mature. Woven fabrics are still in the initial stage and have a large growth space in the future. Stabilize the customer base, process technology and sufficient cash flow to build barriers in the color spinning industry. It is difficult for small and medium-sized enterprises to enter. The leading enterprises occupy a solid share of the medium and high-end market, Bros Eastern Co.Ltd(601339) , Huafu Fashion Co.Ltd(002042) two enterprises occupy most of the medium and high-end color spinning Market in China.
Comply with the industrial trend, release the bureau to Vietnam first and enjoy the advantage of tariff and low-cost expansion
Since its layout in Vietnam in 2013, the company has expanded rapidly with the advantages of tax preference and low production cost. It has both first mover and scale advantages. At present, it has formed a production capacity of 1 million spindles. In July 2021, the company will raise no more than 1 billion yuan to expand the 390000 spindles yarn project in Vietnam. It is expected that the production capacity will be gradually released in 22 / 23 years.
The growth of top quality customers is steady, and the supply share ranks first and continues to improve
With the rapid development of fast fashion and sports and leisure brands in the downstream, the company continues to polish its own advantages by virtue of innovative R & D, global layout and rapid response ability, and gradually occupy the core position of high-quality customer supply chain; The revenue proportion of the largest customer has increased steadily, accounting for more than 25% of the total revenue in 2020.
The upward trend of cotton price may continue, and the downstream transmission is smooth, which is good for performance
The global cotton demand is released and the supply shrinks. China's cotton gap exists for a long time and is highly dependent on imports, supporting the upward trend of cotton prices in the future; The company has low-cost cotton inventory, and cotton is the main raw material. Therefore, the rise of cotton price will greatly increase the gross profit margin of products, with strong bargaining power and smooth transmission downstream, which is good for performance.
Raise the profit forecast and maintain the buy rating
Bros Eastern Co.Ltd(601339) mainly engaged in color spinning, paying attention to product R & D and innovation; High quality customer resources and global production capacity layout to build core competitiveness; In the future, with the rise of cotton price and the recovery of capacity utilization, the company's performance is expected to continue to improve.
We raised the profit forecast. It is estimated that the operating revenue of the company from 2021 to 2023 will be 8.3 billion yuan, 9.6 billion yuan and 10.9 billion yuan respectively (the original value of 21-22 is 6.4 billion yuan and 7 billion yuan), the net profit attributable to the parent company will be 1.35 billion yuan, 1.36 billion yuan and 1.37 billion yuan respectively (the original value of 21-22 is 328 million yuan and 391 million yuan), the corresponding EPS will be 0.90, 0.91 and 0.91 yuan / share respectively, and the corresponding P / E will be 7.9, 7.8 and 7.8 times respectively. The average PE valuation of comparable companies in 2022 is 9.2 times, giving the company a reasonable PE of 9.2 times in 2022 2 times, corresponding to the share price of 8.4 yuan.
Risk tip: raw material price fluctuation, RMB exchange rate fluctuation, repeated epidemic and other risks.
