This week we released Jinhong Fashion Group Co.Ltd(603518) in-depth report. In the short term, (1) revenue side: the main business is expected to maintain double-digit growth in 22 years; (2) Expense side: the financial expense ratio is expected to improve significantly in 22 years, driving profit growth higher than revenue growth. In the medium and long term, (1) we estimate that the target market size of vgrass is 2.5-3.4 billion yuan and that of TW is 5-6 billion yuan; (2) Expense side: on the one hand, there is room for further improvement in financial expenses. On the other hand, with the improvement of store efficiency and the optimization of cost structure, there is room for 3-5pct improvement in sales expense rate. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 220 / 350 / 427 million respectively, which is rated as “buy”.
At present, we recommend four main lines:
(1) optimistic about the sustainability of the performance in the first half of the year, and the performance is expected to continue to exceed the expected target, recommend Bros Eastern Co.Ltd(601339) : in the medium and short term, on the one hand, 200000 ingots are expected to be put into production in 22 / 23 years; On the other hand, the company’s low-cost cotton inventory in Vietnam is expected to last until the first half of 22 years. In the long run, we put more emphasis on the company’s non cyclical growth logic, that is, the improvement of bargaining power brought by the increase of the company’s share. In addition, focus on the company’s growth with the expansion of Shenzhou, the largest customer.
(2) if the value is underestimated and the performance elasticity is large, the object of benefit is Jinhong Fashion Group Co.Ltd(603518) .
(3) target with high-end track positioning and extension expansion space, recommend Baoxiniao Holding Co.Ltd(002154) : 1) the main brand increases the efforts to open stores in the central region by creating sports suits and broadening application scenarios, maintaining a growth rate of more than 15% higher than that of the industry; 2) Hazys: on the basis of high efficiency, the brand still has extension shop space; In addition, the brand still has the logic of expanding categories such as shoes, bags and golf series, which is expected to maintain an increase of more than 25% in the future; 3) BAONIAO is expected to maintain an increase of more than 10%, and usher in the improvement of net interest rate with the production of Hefei factory; 4) Small brands zhonglefeiye and kemiche are expected to maintain an increase of more than 35% and gradually contribute to profits.
(4) high view track target, recommended Comefly Outdoor Co.Ltd(603908) : 1) there are sufficient export orders and it is expected to grow steadily in the future; 2) Domestic business benefited from the policy of superposition and double reduction of epidemic situation, driving the hot demand for camping. In the medium and long term, the proportion of domestic sales revenue is expected to exceed half in the future, and the superimposed net interest rate will be improved to 15% +.
Market review: outperforming the Shanghai Composite Index by 1.40pct
This week, the Shanghai Composite Index fell by 0.11%, the gem index fell by 3.75%, the SW textile and garment sector rose by 1.29%, outperforming the Shanghai Composite Index by 1.40pct and the gem index by 5.04pct, of which SW textile manufacturing rose by 0.72% and SW clothing and home textile rose by 1.56%. At present, the PE of SW textile and garment industry is 15.26. This week, mothers, infants and children performed best, with an increase of 4.19%; Outdoor and sports performance was the worst, with a decrease of 6.09%.
Market data tracking: China’s cotton price index fell 0.5% this week
As of March 4, China’s cotton 328 index was 22700 yuan / ton, down 0.5% this week, and China’s imported cotton price index (1% tariff) was 21211 yuan / ton, up 0.01% this week. As of March 3, the closing price of cotlooka index (1% tariff) was 20909 yuan / ton, down 2.37% this week. On the whole, the price difference of cotton inside and outside this week was 1489 yuan / ton, which was 118 yuan / ton lower than that at the end of last week. As of February 28, the price of seed cotton in Xinjiang was 4.42 yuan / kg, which was flat compared with last week.
Industry news
Adidas: complete the sale of Reebok, carry out stock repurchase of 1.5 billion euros and return the proceeds to shareholders; Fanatics: refinance US $1.5 billion with a valuation of US $27 billion.
Risk tips
Second outbreak of the epidemic; Fluctuation risk of raw materials; Systemic risk.
