\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
In 2021, the performance increased by 47% and the net interest rate exceeded 15%. 1) According to the company’s announcement, the company’s revenue / performance in 2021 was RMB 17.47 billion / 2.77 billion respectively, with a year-on-year increase of 25% / 47% (excluding the impact of exchange rate changes, a year-on-year increase of 34% / 58% respectively). 2) The revenue / performance of Q4 in 2021 was RMB 4.83 billion / 770 million respectively, with a year-on-year increase of 33% / 37% respectively. 3) According to the revenue data and production capacity launch progress, we estimate that the company will sell more than 200 million pairs of sneakers in 2021 (an increase of about 25% ~ 30%) / the average unit price of products priced in US dollars will rise (about single digit growth). 4) High profit quality is expected to be maintained: the net profit margin of the company will reach 15.8% in 2021. We judge that the gross profit margin has increased, which is mainly due to the optimization of customers and product structure. Most of the company’s raw material suppliers are designated and negotiated by customers, so the impact of raw material price fluctuation is small. We believe that high profit quality is expected to be basically maintained in the future.
The expansion of new customers is fast, and the orders of old customers are inclined. 1) The company has in-depth cooperation with global sports shoes and clothing head brands Nike, Deckers, VF, Puma and UA, and is expected to rapidly deepen cooperation with new customers such as on, ASICs and new balance, and orders are expected to grow at a high speed. 2) The product structure is optimized and the demand for high quality is inclined. The epidemic has impacted the global supply chain. We judge that the company has been highly recognized by customers and inclined orders by virtue of its efficient and stable supply capacity, so as to optimize the product structure. 3) Large scale and sustainable orders help optimize costs. According to our tracking, the company focuses on large-scale and sustainable production, which can effectively help efficient production and optimize costs.
Continuous capacity growth and capacity construction drive. 1) Short term: stable operation and less affected by the epidemic. According to the company’s announcement, the current local policies in Vietnam are basically liberalized. The company strengthens epidemic prevention control, actively manages and recruits employees. At present, the production and operation of Vietnamese factories are normal. 2) Medium term: rapid expansion and effective volume of production capacity in North Vietnam and Indonesia. According to the company’s announcement: ① three new factories were put into operation in Vietnam last year and will reach production capacity in the next few years. ② The phase I plant of Indonesia plant is expected to be put into operation in 2022 and contribute a large amount in 2023. 3) At present, the company is in a period of rapid development and continues to focus on capacity expansion in 2022. We track the progress of capacity construction and comprehensively estimate that the annual output in 2022 is expected to continue to maintain a growth rate of 20% + 20%.
Investment advice. The company is a leading manufacturer of sports shoes. At present, the demand of the industry is good. The company allocates production capacity and continues to produce large quantities, and its performance is expected to grow rapidly. We adjusted the profit forecast and estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 27.7/34.4/4.24 billion respectively, with a growth rate of 47% / 24% / 23% respectively. The current stock price is RMB 81.2, corresponding to 28 times of PE in 2022, maintaining the “buy” rating.
Risk warning: the covid-19 epidemic exceeded expectations and was unfavorable to overseas orders; Capacity expansion and production line transformation are less than expected; Order fluctuation risk of key customers; Foreign exchange fluctuation risk.
