\u3000\u3 Shengda Resources Co.Ltd(000603) 558 Zhejiang Jasan Holding Group Co.Ltd(603558) )
Seamless and rapid recovery, driving high performance growth from January to February
The company released the operating data from January to February: the revenue from January to February was about 355 million, with a year-on-year increase of 38%; The net profit attributable to the parent company was about 48 million, a year-on-year increase of 136.7%; The net interest rate is about 13.5%, returning to the best state since the epidemic.
Cotton socks grew steadily, and seamless officially entered an upward turning point. 1) It is estimated that the income of cotton socks from January to February is about 230 million, with a year-on-year increase of about 25%. When the low-cost cotton yarn inventory was no longer available last year, with the high gross profit margin of high-end customers such as Bombas, the net profit margin of cotton socks is expected to continue the high level since last year (about 15%). 2) Seamless clothing has a rapid restorative growth, and its revenue is expected to increase by about 70% year-on-year to about 120 million. Since Vietnam’s capacity utilization has remained above 80% this year, the net interest rate is expected to recover to about 10%. With the gradual stabilization of capacity, we believe that there is still room for improvement in the net interest rate.
Orders are full, production capacity continues to climb, and we are optimistic about the high growth of the whole year
Two major businesses continue to expand production: 1) in terms of cotton socks, it is estimated that 60 million pairs will be added on the basis of 360 million pairs of production capacity in 22 years (mainly in Qinghua, Vietnam and Guizhou); 2) In terms of seamless, it is estimated that 100 looms will be added on the basis of 660 looms in 22 years (mainly in Xing’an, Vietnam), and the number of looms in Vietnam is expected to reach 400450 in 23 years (120 at present).
The orders in hand are full, and the expected orders for the whole year are optimistic. On the basis of stable orders for cotton socks, it is expected that the orders of seamless old customers Delta and UNIQLO will recover and grow driven by new products; With the production capacity of Vietnam put into operation, the new customer ikar will rapidly increase, and the order volume of new customers such as Li Ning and HM will also continue to increase.
Profit forecast and valuation
As the leading manufacturer of globally integrated cotton socks and seamless clothing, the company has strong main business strength, seamless production capacity and customers have come out of the bottom. It is estimated that the net profit of the company in 21-23 years will be 190 / 32 / 420 million yuan, with a year-on-year increase of 68% / 32% in 22-23 years, corresponding to the current market value of 4.4 billion PE of 23 / 14 / 11x, maintaining the “buy” rating!
Risk tips
Repeated outbreaks outside China have led to lower customer orders, production expansion rhythm or capacity utilization than expected
