\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
Event: the company achieved an operating revenue of 17.47 billion yuan in 2021, a year-on-year increase of + 25.4% (excluding the impact of exchange rate changes, a year-on-year increase of + 34.09%); The net profit attributable to the parent company was 2.768 billion yuan, a year-on-year increase of + 47.34% (excluding the impact of exchange rate changes, a year-on-year increase of + 57.55%).
Comments:
Full customer orders & ramp up production capacity promoted revenue growth, and the annual performance was in line with expectations. In terms of products, the company’s revenue of sports and leisure shoes / outdoor boots / sports sandals and slippers in the whole year was RMB 14.211/15.83/1.637 billion respectively, with a year-on-year increase of + 25.9% / + 6.2% / + 46.6% respectively. The sales volume of sports shoes increased by 29.46% to 210 million pairs year-on-year, the output increased by 27.76% to 210 million pairs year-on-year, and the capacity utilization rate reached 95.9%. The company is favored by brand customers with its development and design advantages and rapid delivery ability. At the same time, the company expanded its production capacity by building and expanding factories. In 2021, three new factories in North Vietnam were put into operation and the production capacity climbed rapidly. In a single quarter, the company achieved a revenue of 4.835 billion yuan in 21q4, a year-on-year increase of + 33.5%; The net profit attributable to the parent company was 771 million yuan, a year-on-year increase of + 37.4%, continuing the trend of high growth.
Increase in gross profit margin – good cost control and improved profitability. In 2021, the company’s gross profit margin was + 3.4pcts to 27.2%, mainly due to the improvement of operation efficiency due to the optimization of customer and product structure & capacity expansion. The sales / management / R & D / financial expense ratio decreased by 1.1/0.3/0.2/0.7pct to 0.3% / 3.9% / 1.3% / – 0.3% respectively. The decrease in the sales expense ratio was mainly due to the transfer of customs declaration fees and transportation fees to operating costs, and the sorting expenses were well controlled. Under the comprehensive influence, the net interest rate increased from 2.4pcts to 15.84% year-on-year.
Strong orders from key customers drive the rapid growth of revenue. In 2021, the revenue of the company’s top five customers accounted for 91.65%, of which the revenue from Nike / Deckers / VF / puma / underarmour was 61.81/37.63/32.08/18.93/965 million yuan respectively, accounting for 35.38% / 21.54% / 18.37% / 10.84% / 5.52% of the current revenue respectively. If the impact of exchange rate changes is excluded, it will increase by 43.72% / 57.84% / 13.44% / 26.05% / 44.86% year-on-year respectively. The company has established long-term and stable cooperation with international sports leaders, benefiting from the improvement of the prosperity of the global sports shoes industry after the epidemic, and strong orders from core customers; At the same time, the global supply chain tension continues, and the company’s production capacity advantage is prominent. It is expected to continue to improve its supplier position in core customers such as Nike and potential new customers, and obtain high-quality orders.
Investment suggestion: the global sports shoes market scene has improved, and the tight supply chain continues to be affected by the epidemic. Under the epidemic situation, the company’s production capacity advantage is prominent, and customer orders are expected to continue to be strong; At the same time, the company continues to optimize its product structure and improve its operating efficiency, and its profitability is expected to be further enhanced. We maintain the profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 35.5/43.0/5.11 billion respectively, corresponding to the current market value PE of 24 / 19 / 16x respectively, maintaining the “buy” rating.
Risk tip: the cost of raw materials fluctuates sharply, and the global “covid-19” epidemic repeatedly affects end consumption.
