\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
Event: the company released the performance express for 2021. During the reporting period, the company achieved revenue of 17.47 billion yuan, an increase of 25.40%, net profit attributable to the parent company of 2.768 billion yuan, an increase of 47.34%, deduction of non net profit of 2.761 billion yuan, an increase of 47.21%, and EPS of 2.45 yuan. The company’s performance growth is in line with expectations, the impact of the epidemic is well controlled, and customer orders continue to expand. In 2021q4, the company realized a revenue of 4.835 billion yuan, an increase of 33.46% and a net profit attributable to the parent company of 771 million yuan, an increase of 37.39%, which was higher than that in 2021q3.
Comments:
The company’s customer orders grew rapidly, driving the revenue performance. In 2021, the global epidemic prevention and control continued, the epidemic control of the company’s factories was relatively strict, the production was less affected by the epidemic, and the production capacity maintained steady expansion. The company has promoted the business strategy of high-quality key customers. The revenue of main customers has increased significantly year-on-year. The orders of new customers such as ASICs, onrunning and NewBalance have achieved mass production and shipment. The company’s revenue has increased rapidly in 21 years. Excluding the influence of exchange rate, the revenue has increased by 34.09% and the net profit attributable to the parent company has increased by 57.55%. The company optimized the structure of products and customers, promoted automatic production, improved production efficiency, increased gross profit margin year-on-year, and promoted a higher growth rate of net profit.
Customer orders continued to grow, and the company continued to expand production capacity. The company’s sports shoes production capacity is mainly distributed in northern Vietnam. At present, Vietnam has adjusted the epidemic prevention policy to “coexist with the virus” and no longer implements the strict isolation policy. The company’s Vietnamese factory has realized normal operation, and the order scheduling and shipment have maintained a stable growth. As the global demand for sports shoes and clothing remains high, the orders of downstream customers of the company have increased rapidly. The orders in 2022 have been basically finalized. New factories in Vietnam, Indonesia and other places are expected to start production, and Myanmar factories will also be constructed according to local forms to meet the needs of downstream customers.
Profit forecast and investment suggestions: we slightly raised the company’s EPS forecast from 2022 to 2023 to 2.97/3.48 yuan (the original value is 2.95/3.42 yuan), and the current stock price corresponds to 27.35 times PE in 22 years. We are optimistic about the long-term growth of sports shoes and clothing track. As a leader in the supply chain, the company has obvious advantages, establishes a solid and lasting cooperative relationship with international leading brands, and continues to expand more brand customers. With strong certainty of performance growth and large long-term development space, the company maintains the “buy in” rating.
Risk factors: concentrated production areas, rising labor costs, and the spread of covid-19 pneumonia in Vietnam.
