\u3000\u3000 Zhejiang Sunrise Garment Group Co.Ltd(605138) (605138)
Company profile: the whole industrial chain Garment Group has achieved rapid growth in performance
The company has a scarce integrated production mode of spinning, fabrics and clothing in the industry. Since its establishment 14 years ago, the company has expanded its scale through new construction and acquisition at home and abroad. From 2016 to 2019, the company's scale has increased steadily, the net profit has maintained a 26% growth under the optimization of gross profit margin and expense rate, the operating cash flow is healthy, the asset liability ratio is optimized year by year, and it is expected to be about 65% after IPO Financing.
Industry: leading manufacturers have high barriers, and China's supply chain is stable, accompanied by industrial migration
From the perspective of barriers, head brands generally have strict screening, assessment and elimination mechanisms for suppliers, and the barriers to entry of brand supply chain are high. From the perspective of trend, China's supply chain is stable under the epidemic, and the advantage of order return is prominent. At the same time, medium and low-end production capacity will continue to migrate to low-cost areas in the future. From the perspective of pattern, the OEM clothing industry is highly dispersed, Shengtai has a certain scale, and the market share is close to 0.2%.
With superior competitiveness and actively building new production capacity, it is expected to deepen cooperation with high growth customers
With better fabric development ability and better production efficiency, the company's products have successfully entered the supply chain of high-quality brands such as UNIQLO, Ralph Lauren, lacoste and FILA. In 2020, the company accounted for about 1.2% / 5% / 4% / 17% of the above brands respectively, and has formed good cooperation. Looking forward to the future, we believe that in the short term, with the recovery of capacity utilization under the normalization of the epidemic, the continuous release of capacity of new projects invested with raised funds, and the improvement of production efficiency brought by intelligent construction, the company is expected to restart rapid growth. With the continuous improvement of competitiveness in the medium and long term, the company is expected to deepen customer cooperation, increase customer share, and accelerate the acquisition of orders with the growth of the brand itself.
Risk tips
\u3000\u30001. Macro environment fluctuation; 2. The demand is less than expected; 3. Technology loss; 4. Price fluctuation of raw materials.
Investment suggestion: optimistic about the company's capacity expansion and efficiency improvement, and give a "buy" rating for the first time
The company has a scarce yarn fabric garment integration mode in the industry. At the same time, it cuts into the supply chain of high-end big brands through better fabric development capacity and high production efficiency. In the future, with the recovery of capacity utilization after the epidemic, the continuous production of new capacity and the construction of intelligent system driving the continuous improvement of production efficiency, we are optimistic about the growth of the company's brand customers and the increase of purchase share to drive the growth of orders. We predict that the net profit from 2021 to 2023 will be RMB 310 / 4.1 / 510 million, with an increase of 4.9% / 32.6% / 24.9% and eps0.5% 55 / 0.73/0.92 yuan, corresponding to the reasonable valuation of 19-20xpe in 2022 of 13.9 ~ 14.7 yuan. The "buy" rating is given for the first time.
