\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
Matters:
Company announcement: on March 3, 2022, the company announced the performance express of 2021, with a total operating revenue of 17.47 billion yuan, a year-on-year increase of 25.4%; The net profit attributable to the parent company was 2.77 billion yuan, an increase of 47.3%.
Guoxin textile and clothing’s view: 1) the annual performance of 2021 increased significantly by 47%, with a strong growth momentum of 37% in the fourth quarter; 2) Strong downstream demand, orderly expansion of production capacity and sufficient growth momentum; 3) Investment suggestion: excellent performance, optimistic about the certainty of the company’s medium-term growth. The company achieved high-quality and rapid growth in 2021, with strong operation ability and outstanding competitive advantage. In the future, as the new production capacity climbs and the share of core brands continues to increase, we are optimistic about the company’s sufficient growth potential and high-quality return on investment. Due to the strong downstream demand and positive capacity expansion of the company, we slightly raised the profit forecast. It is estimated that the net profit of the company from 2021 to 2023 will be RMB 2.77/35.5/4.44 billion respectively (originally RMB 2.76/34.6/4.15 billion), with a year-on-year increase of 47.3% / 28.4% / 25% respectively, and EPS of RMB 2.37/3.04/3.8 respectively. The current share price corresponds to PE of 34.2x/26.7x/21.3x. Considering the strong certainty of the company’s medium-term growth, The reasonable valuation is 107110 yuan (corresponding to 35-36xpe in 2022), maintaining the “buy” rating. 4) Risk tip: the epidemic situation is repeated, the downstream demand is less than expected, the systematic risk of the market, and the international political and economic risk. 0）
Comments:
Performance in 2021: the annual performance in 2021 increased significantly by 47%, and the performance in the fourth quarter alone increased by 37%
Revenue increased by 25% year-on-year, and the performance increased by 47% driven by the optimization of customers and product structure and the improvement of production efficiency. The company achieved a revenue of 17.47 billion yuan in 2021, with a year-on-year increase of 25.4% (excluding the impact of exchange rate changes, a year-on-year increase of 34.1%); The company’s revenue from major customers has increased significantly, and the company’s orders from new customers ASICs, on and NewBalance have been mass produced and shipped. The net profit attributable to the parent company was 2.77 billion yuan, a year-on-year increase of 47.2% (excluding the impact of exchange rate changes, a year-on-year increase of 57.6%); It is mainly because the company continues to implement the business strategy of high-quality key customers, optimize the customer and product structure, actively promote automation and lean production and improve production efficiency. The gross profit margin has increased compared with last year, resulting in the growth rate of net profit higher than that of operating revenue.
In the fourth quarter alone, revenue / performance increased by 34% / 37% year-on-year respectively, accelerating month on month. The company’s revenue in the fourth quarter of 20121 was 4.84 billion yuan, a year-on-year increase of 33.5%, 2.0P faster than the growth rate in the third quarter of 2021 p.； The net profit attributable to the parent company was 770 million yuan, a year-on-year increase of 37.4%, 7.2p faster than the growth rate in the third quarter of 2021 p.。
Business Review and Prospect: strong downstream demand, orderly expansion of production capacity and sufficient growth momentum
The downstream demand is strong. The order growth of leading international brand customers in the first three quarters of 2021 promoted the revenue / performance of the first three quarters to increase by 22.6% and 51.6% respectively year-on-year. According to customers:
1) Nike’s revenue in the first three quarters was 4.43 billion yuan, a year-on-year increase of 38.1%, accounting for 35.0%;
2) the revenue of Deckers in the first three quarters was 2.75 billion yuan, with a year-on-year increase of 45.9%, accounting for 21.7%;
3) the revenue of VF company in the first three quarters was 2.45 billion yuan, with a year-on-year increase of 1.3%, accounting for 19.4%;
4) puma’s revenue in the first three quarters was 1.4 billion yuan, a year-on-year increase of 14.5%, accounting for 11.1%;
5) the revenue of underarmour in the first three quarters was 730 million yuan, a year-on-year increase of 56.8%, accounting for 5.8%. (the above income growth includes the negative impact of exchange rate of about 10p. P.)
The demand of downstream customers is very strong, and the company actively expands production. In the medium term, it is expected to maintain rapid capacity growth. The company’s orders have increased rapidly. Orders from major customers such as Nike and Deckers have increased rapidly. Orders from new customers ASICs, on and NewBalance have been mass produced and shipped, and are expected to continue in large quantities. In order to optimize and expand the company’s order capacity, we should actively respond to it. Vietnam Weilin, Vietnam Yongshan and Vietnam Hongxin (with a design capacity of 1 million pairs / month) established from 2019 to 2020 have been put into operation. It is expected that there is still room for capacity release in 2022. In addition, the company will also purchase existing plants in Vietnam, expand production lines in the company’s original plants, orderly promote the construction of factories in Indonesia, and continuously supplement production capacity to meet the strong demand of downstream customers.
Investment suggestion: excellent performance, optimistic about the certainty of the company’s medium-term growth
The company achieved high-quality and rapid growth in 2021, with strong operation ability and outstanding competitive advantage. In the future, as the new production capacity climbs and the share of core brands continues to increase, we are optimistic about the company’s sufficient growth potential and high-quality return on investment. Due to the strong downstream demand and positive capacity expansion of the company, we slightly raised the profit forecast. It is estimated that the net profit of the company from 2021 to 2023 will be RMB 2.77/35.5/4.44 billion respectively (originally RMB 2.76/34.6/4.15 billion), with a year-on-year increase of 47.3% / 28.4% / 25% respectively, and EPS of RMB 2.37/3.04/3.8 respectively. The current share price corresponds to PE of 34.2x/26.7x/21.3x. Considering the strong certainty of the company’s medium-term growth, The reasonable valuation is 107110 yuan (corresponding to 35-36xpe in 2022), maintaining the “buy” rating.
Risk tips
The epidemic situation is repeated, the downstream demand is less than expected, the systemic risk of the market and the international political and economic risk.
