Hangzhou Honghua Digital Technology Stock Company Ltd(688789) (688789)
The Chinese market needs economic and environmentally friendly textile digital printing: Digital substitution in the field of textile printing is a global trend. From 2015 to 2020, the global penetration rate of textile digital printing increased from 3.7% to 9.5%. Since the output of digital printed cloth in Asia surpassed that in Europe in 2018, the market share has further expanded. As a large textile printing and dyeing country, digital printing can save water, electricity and reduce pollution emissions. Zhejiang Province clearly supports the transformation and upgrading of local printing and dyeing enterprises to digital printing in the form of documents. The developed e-commerce industry needs an economic and fast supply chain. Digital printing has the advantage of saving cost in small batch production and can meet the personalized demand of rapid response. It is expected that the penetration rate of digital printing in the Chinese market will lead the world.
Focus on subdivided tracks and point to the global leader: the company has nearly 30 years of technology accumulation in the field of textile printing. Starting from textile printing software, it broke the foreign technology monopoly and launched China's first digital jet printing machine. Different from the main competitors at home and abroad, the company is optimistic about the market space in the field of textile printing and focuses on segmenting the track. Under the business model of "equipment first, consumables follow-up", the sales of equipment and ink complement each other and jointly achieve high-speed growth. The company's sales volume and profitability are significantly ahead of Chinese peers, and its technical performance is equivalent to world-class. China's supply chain is cost-effective in the international market competition, and its overseas sales revenue is expanding, accelerating to catch up with Italy's leading MS and REGGIANI.
Downstream extension and exploration of flexible fast reverse supply chain: the company jointly establishes Honghua Baijin and plans to establish a fashion digital green enabling platform in Changxing, Huzhou. With digital jet printing technology as the core, combined with design resources and AI platform, the company provides a flexible supply platform for fashion fabrics and finished products for the home textile industry. As a demonstration project of the company's "digital equipment + intelligent chemical plant + fast reverse supply chain", Changxing project is conducive to realizing the layout of upstream and downstream industrial chains and accelerating the green innovation of traditional textile printing market. From home textile to clothing, the flexible fast reverse supply chain model can be replicated in different terminal applications in the future, promoting the transformation and upgrading of textile industry 4.0, and the company will also deeply benefit from industry changes.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 244 / 364 / 512 million respectively, and the corresponding PE of the current stock price is 101 / 68 / 48 times. The penetration of textile digital printing has great room to improve. The company focuses on textile printing, has significant advantages in industrial chain layout, integrated supply of equipment and ink, has a stable leading position, and maintains the "overweight" rating.
Risk warning: textile digital substitution is less than expected risk; The risk of repeated epidemic impact on the downstream industrial chain; Risk of uncollectible accounts receivable.
