\u3000\u3 Shengda Resources Co.Ltd(000603) 889 Zhejiang Xinao Textiles Inc(603889) )
Q4 is a traditional off-season. Due to the inversion of the 20-year off-season and peak season, the net interest rate fell year-on-year. The annual performance is in line with expectations, and 21q4 has a strong growth compared with 19 years. In terms of Q4 alone, the company achieved operating revenue / net profit attributable to parent company of RMB 765 million (+ 38% / - 42%), which was mainly due to the fact that the epidemic situation in the first half of 2020 seriously affected the production of the company in the first three quarters, and the accumulation of orders was completed in Q4 (because wool products are mainly used for autumn and winter clothing, the company's traditional peak production season is Q2). The inversion of light and peak seasons led to abnormal data in 20 years. Therefore, if compared with Q4 in 19 years, the growth rate of the company's revenue / net profit attributable to the parent company is + 53% / + 6437%, realizing that the off-season is not light and the growth is strong. Wool business: the sales volume exceeded expectations, and the effect of production promotion reform was remarkable
The production capacity is fully released, and the production promotion effect is remarkable. Around 19 years ago, the company raised and invested in new production capacity, but the release was suppressed by Sino US trade and the epidemic. With the recovery of global consumption in the past 21 years, since the beginning of the year, the company has implemented the sales strategy of "production by production" instead of "production by sales", which has achieved remarkable results and achieved explosive growth in orders. 4 Gen according to our calculation, the comparable caliber of wool worsted yarn of the company is expected to increase by more than 30%. At present, the production capacity of 130000 spindles of the company has been basically released (it is estimated that the sales volume of 48 wool worsted yarns is between 14 Yihua Healthcare Co.Ltd(000150) 00 tons). Some products have been completed through outsourcing processing. At present, the company has reached outsourcing strategic cooperation with some manufacturers, and is expected to continue to ensure its output and supply through outsourcing on the basis of maintaining gross profit margin in the future.
Wool prices have risen steadily and are expected to continue to maintain the level of gross profit margin. The company has formed a mature price response mechanism, the profit level is positively related to the trend of wool price, and the company's gross profit margin presents a very stable seasonal characteristics with the company's production and sales. As the company's wool mainly comes from Australia, at present, the supply side of Australian wool has gradually warmed up, but the output is at a low level in recent ten years, the price has risen steadily, and has lower support.
The epidemic has accelerated the clearance of industries, and the ceiling of leading enterprises is high. In recent years, the Sino US trade war, epidemic and other factors have made the wool price exceptionally low, reaching a historical low in 20q3, accelerating the clearance of wool textile production capacity with extensive operation, and accelerating the industrial scale, standardization and specialization. Due to the small and scattered competition pattern in the wool textile industry, the company, as the leader of wool worsted yarn in the world, accounts for only? 3%, Chinese market share? 5%, which still has sufficient room for rise. Therefore, the market share of wool textile enterprises with strong profitability is expected to increase rapidly in the future, and the industry will develop in the direction of scale, standardization and specialization.
Cashmere business: looking forward to cashmere business to open the company's profit ceiling
Sacrificing part of the profit space to accelerate market development and improve the space is worth looking forward to. 2021 is the first year of the complete development of the company's cashmere business, and the company has made a slight sacrifice in terms of profit margin in order to open up market space. According to our calculation, the capacity utilization rate of the company's cashmere business (Ningxia Xinao + Duncan, UK) is expected to exceed 50% and the sales volume will grow rapidly. With the increase in the proportion of high value-added orders and the diversification of order structure in the future, combined with the coordination of the company's wool business sales team, there is a huge room for improvement in the profit of the company's cashmere business.
Profit forecast and valuation
We expect the company's revenue to increase by 53% / 26% / 20% year-on-year to RMB 34.7/43.6/5.24 billion in 21 / 22 / 23, and the net profit attributable to the parent company to increase by 93% / 37% / 25% year-on-year to RMB 293 / 402 / 503 million. According to the closing price on March 11, 2022, the corresponding PE from 2021 to 2023 is 11 / 8 / 6x respectively. Considering the revenue growth of the company in the next few years, the profit is expected to be released at a high speed and has great potential to maintain the "buy" rating.
Potential risk factors
Risk of excessive fluctuation of wool price; The expansion of production is less than expected; Repeated outbreaks; Risk of poor destocking;
