Huali Industrial Group Company Limited(300979) (300979)
Deeply cultivate the sports shoes manufacturing industry, with high growth. The company is engaged in the development, design, manufacturing and sales of sports shoes, and has long-term and stable cooperation with many well-known sports brands around the world. The company grows together with customers with high quality and steady performance growth. From 2017 to 2019, the CAGR of the company's operating revenue and net profit attributable to the parent company were 23.09% / 28.31% respectively. In 2021, q1-q3 achieved an operating revenue of RMB 12.634 billion, a year-on-year increase of 22.57%, and a net profit attributable to the parent company of RMB 1.997 billion, a year-on-year increase of 51.57%, maintaining a high growth.
The company has strong management advantages, customer resource advantages and cost advantages, and its profitability continues to increase. Zhang Congyuan family, the actual controller of the company, has more than 50 years of shoe manufacturing experience, and most of the company's executives have rich industry-related experience. The cooperation relationship between the company and customers is stable, with the top five customers accounting for more than 85%. At the same time, onrunning and ASICs have started shipping this year. It is expected that the volume will continue in the future with the deepening of cooperation. The company began to transfer its production capacity to Vietnam in 2005. At present, Vietnam's production capacity accounts for 99%. The company's production capacity is mainly distributed in northern Vietnam, making use of North Vietnam's low labor cost and low transportation cost, and strengthening equipment automation to effectively reduce costs and improve production efficiency and profitability.
The industry has a large scale, fast growth and high barriers to entry. Since 2021, the global economy has recovered, and the scale of the global sports shoe market will maintain steady growth. It is expected that the scale of the global sports shoe market will reach about US $379.1 billion in 2025, and the compound growth rate from 2021 to 2025 is expected to remain above 14%. The sports shoes industry has high barriers to resources, technology and scale, high entry threshold and stable leading position in the industry.
Profit forecast and investment suggestions: Based on its management experience advantages, customer resource advantages and cost advantages, the company has high growth and strong profitability, high industry entry barriers and consolidated leading position of the company. We expect that the company's operating revenue from 2021 to 2023 will be 175.83/215.08/25.815 billion yuan respectively, the net profit attributable to the parent company will be 27.45/34.79/4.288 billion yuan respectively, and the EPS will be 2.35/2.98/3.67 yuan / share respectively. It is expected that in the future, with the continuous increase of orders from old customers, the large volume of orders from new brands and the expansion of production capacity, we are optimistic about the company's long-term profitability and give the company a PE valuation of 37-41 times in 2022, The corresponding reasonable price range is 110.26-122.18 yuan, and the company is given a "recommended" rating for the first time.
Risk tip: capacity expansion is less than expected, and terminal demand is less than expected.
