\u3000\u3 Shengda Resources Co.Ltd(000603) 558 Zhejiang Jasan Holding Group Co.Ltd(603558) )
Investment advice
We estimate that the company’s seamless production capacity will increase by nearly 60% in 2021 compared with 2019. However, in 2020 and 2021, under the influence of the epidemic, customers cut orders and the epidemic in Vietnam, and the capacity utilization rate is low. We estimate that Vietnam will reach full production until September 2021. Therefore, we analyze: (1) in the short term, seamless has ushered in normal development in the past 22 years, and the recovery of capacity utilization has contributed to the profit elasticity; (2) In the medium term, the production of seamless and cotton socks will continue to expand; (3) In the long run, the company’s purchase share in customers will increase.
Considering that the forecast of the annual report is lower than expected, the revenue forecast for 2021, 2022 and 2023 is reduced from RMB 2.12/26.9/3.288 billion to RMB 2.074/25.45/2.944 billion, the forecast of net profit attributable to the parent company is reduced from RMB 248 / 3.31/424 million to RMB 185 / 3.23/408 million, the corresponding EPS is reduced from RMB 0.63/0.84/1.08 to RMB 0.47/0.82/1.04, the closing price on March 23, 2022 is RMB 11.1, and the corresponding 21 / 22 / 23pe is 25 / 14 / 11x. Combined with the absolute and relative valuation methods, the company is given a target market value of RMB 6.06 billion Corresponding to the target price of 15 yuan, maintain the “buy” rating.
Seamless underwear: expand customers, expand production and improve capacity utilization
According to the announcement, at the beginning of 2021, the company actively took measures to expand new customers and successfully expanded Li Ning, HM, Israeli customers tefron, ikar and online customers ubras. Our judgment: (1) among the old customers: decathlon is expected to be stable, UNIQLO benefits from the rapid growth of new product development and the recovery of delta growth; (2) Among new customers, HM and ikar have a large increment. Looking forward to 22 and 23 years, the increase of capacity utilization + the resonance of capacity expansion of Vietnamese factories will drive the sales volume to increase by 51% and 13% respectively. It is estimated that the seamless net profit margin in 22 and 23 years will be 12.3% and 13.5% respectively.
Cotton socks business: in the short term, the price increase will continue to contribute, and the share will increase in the medium and long term
Under the influence of the epidemic, the capacity utilization rate of the company’s cotton socks business is still about 95% in 2020 and 2021. We estimate that the production capacity of cotton socks in 22 and 23 years will reach 410 million pairs and 440 million pairs respectively, with a year-on-year increase of 17% and 7%, driving the compound annual growth of sales volume of 12%, mainly from the gradual production and climbing contribution of the 60 million pairs of medium and high-grade cotton socks expansion project in Guizhou, China and the 90 million pairs of cotton socks expansion project in Qinghua.
Risk tips: uncertainty of epidemic development, cotton price fluctuation risk, reduction risk of major shareholders, exchange rate fluctuation risk and systemic risk.
