\u3000\u3 Bohai Water Industry Co.Ltd(000605) 138 Zhejiang Sunrise Garment Group Co.Ltd(605138) )
22q1 net profit attributable to the parent company is expected to increase by 42.2% ~ 70.2% at the same time, and the deduction of non net profit is expected to increase by 33.6% ~ 52.0% at the same time. The company released the performance forecast for the first quarter of 2022. It is estimated that the net profit attributable to the parent company in 22q1 will be 61 ~ 73 million yuan, an increase of 42.19% ~ 70.16% at the same time; Deduct 58 ~ 66 million yuan of net profit not attributable to the parent company, with an increase of 33.61% ~ 52.04%. The expected high increase in performance is mainly due to the gradual return to normal of national consumption level in 22q1, the good situation of the company’s overseas orders, the continuous and steady growth of Chinese orders, the release of production capacity and the obvious increase of production capacity utilization.
Sales of Ralph Lauren, the main customer, recovered, driving the company’s business bottom reversal in 22 years. Ralph Lauren has been the company’s largest customer for many years. From 2018 to 2020, the company’s revenue from Ralph Lauren accounted for 23%, 20% and 12% respectively; The decrease in 2020 is mainly due to the reduction of Ralph Lauren’s own sales affected by the epidemic, and the cooperative relationship is still stable. The cooperative business volume of the two sides may have recovered since 2021. Previously, Ralph Lauren disclosed that the revenue of fy21q3 (2021 / 09 / 262021 / 12 / 25) increased by 28% (excluding the exchange rate), and raised the guidance of fy22 annual revenue growth to 39% ~ 41%. With the recovery and continuous growth of key customer performance, the company’s order volume is expected to continue to increase.
The national brand cooperation continues to deepen, is expected to be large-scale, and the order expectation is optimistic. In addition to UNIQLO, lacoste, CK, Tommy Hilfiger, hugoboss and other overseas customers, the company is an important supplier of head national brands such as Anta Group and Li Ning, and the only platinum supplier of FILA in knitted fabrics. In 2021, FILA’s revenue increased by 25.1% to RMB 21.822 billion, the brand maintained rapid growth, and the proportion of revenue is expected to continue to increase; Shengtai and Li Ning previously established a joint venture (Guangxi Ningtai Garment Co., Ltd.) with deepening cooperation. It is expected that the order amount of Guangxi Ningtai will continue to grow in 21 years, and it may enter the top ten customers of the company in 22 years, with good order increment.
We continue to be optimistic about high-quality supply chain opportunities, and it is expected that companies represented by Shengtai will still achieve positive and optimistic growth. Looking ahead to the overall sector, we continue to be optimistic about the operation performance of textile manufacturing in the first quarter, and the top-down trend continues, mainly due to: ① most domestic high-quality supply chains have not directly affected the production plan due to the epidemic. Taking Shengtai 22q1 performance forecast as an example, the production capacity is still continuously released, the utilization rate is continuously improved, and the production stability is provided; ② Some unfavorable factors such as the rise in the price of raw materials are gradually digested; ③ After benefiting from the overseas epidemic, the demand recovered and the order trend improved; ④ High quality supply chain improves the brand power of made in China by virtue of its advantages such as production stability, delivery time and service quality; At the same time, we believe that under the epidemic, the number of new entrants in the industry is reduced, and the supply concentration is expected to continue to improve.
Maintain profit forecast and give buy rating. We continue to be optimistic about the inflection point of the company’s operation. On the one hand, the sales of Shengtai’s long-term cooperative key customers have recovered and are expected to maintain stable growth. At the same time, we have optimized the customer structure, deepened cooperation with Anta, Li Ning and other national brands, and abundant downstream orders; On the other hand, the company’s factories in Henan, northern Vietnam and other places are expanding production. 22q1 production capacity is released one after another, and the capacity utilization rate is improved smoothly. The automation transformation of some factories may further improve their profitability in the future. We expect that the company’s EPS in 202223 will be 0.74 and 0.94 yuan respectively, and PE will be 15 and 12 times respectively.
Risk warning: rely on a few customers; The progress of production expansion did not meet expectations; Repeated overseas outbreaks; Risks such as continuous obstruction of shipping. The performance forecast is only the preliminary accounting results. Please refer to the performance announcement of the first quarterly report for details.
