Zhejiang Weixing Industrial Development Co.Ltd(002003) (002003)
We expect the company’s orders to continue the positive growth trend, increase both quantity and quality, and verify the sustainability. Since the reversal of the company’s revenue performance in 21q2, the market is worried about the sustainability of order transfer caused by the epidemic. We are optimistic about this:
On the one hand, through the test of the epidemic, the appropriate dispersion of brand capacity may become a future trend. Nike’s recent financial report shows that the epidemic in Vietnam has led to the cancellation of about 130 million pieces of production, affecting global sales. In the future, based on resisting the risk of a single region and improving the overall production stability, brands may appropriately disperse some supply chains. China has significant advantages in controlling accidental risks such as epidemic, complete supply chain supporting facilities and advanced technology, or usher in a new round of development opportunities.
On the other hand, Weixing fully demonstrated the high-quality supply chain, opened the situation of key customers and improved the growth ceiling. The company competes positively with YKK by virtue of historical precipitation, high-quality service and production line upgrading. YKK’s advantages mainly lie in the accumulation and popularity of the brand. While the company pays attention to providing customers with high-quality products, it also provides “one-stop” services in the whole process. At the same time, the company’s zipper has the diversity and fashion of product categories, novelty and innovation ability of styles, The rapid response to the market and the supporting ability of products have formed strong competitive advantages. With the development and change of the industry, brand customers have increasingly stringent requirements for suppliers, and the company’s measures just meet the current development needs of the industry.
In the long term, we will deepen cooperation and improve customer stickiness with high-quality service
In the long run, the company’s multifaceted layout over the past years is the fundamental factor for performance growth. The company continues to promote intelligent manufacturing, globalization strategy and improving manufacturing level, and has achieved phased results: 1) promote the layout of globalization strategy, which is mainly reflected in the layout of international production base, the cultivation of international brand, the expansion of international marketing network, the establishment and expansion of international staff team and the formation and development of international business philosophy; 2) Vigorously promote intelligent manufacturing and continuously improve on-site production efficiency and manufacturing level. The company has achieved great results through continuous investment in recent years; 3) Continuously improve the manufacturing level, technical level and product quality, and respond to the requirements of first and second tier brands and luxury brands.
With the in-depth contact between the company and customers, customers have a deeper understanding and recognition of the company’s core competitiveness such as rapid response and comprehensive support services, and the company will have more and more control over orders.
Maintain profit forecast and buy rating. The company actively promotes global layout, international production base, brand cultivation and marketing expansion. At present, the strategy has achieved initial results. We continue to be optimistic about the company’s business and financial inflection point as a comprehensive head clothing accessories enterprise with leading scale and complete categories in China, actively grasp market opportunities and strengthen the expansion of high-quality customers. We expect the net profit of 22-23 years to be 560 million and 670 million respectively, and PE to be 18 and 15x respectively.
Risk warning: the price of raw materials fluctuates and rises; Overseas labor costs rise, and the per capita production efficiency is lower than expected; Capacity expansion and release were less than expected.
