\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 18 Shandong Nanshan Fashion Sci-Tech Co.Ltd(300918) )
Event overview
In 2021, the company’s revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company were RMB 1.492/1.52/140 billion respectively, with a year-on-year increase of 9.88% / 74.17% / 75.19%, an increase of – 15.75% / 24.59% / 28.44% compared with 19 years. The revenue did not recover to the level of 19 years, which was mainly affected by the western-style clothing business. The performance exceeded our previous expectations and mainly came from non economic contributions. Non economic losses were RMB 2.13 million from the disposal of non current assets, RMB 6.52 million from government subsidies, and RMB 8.08 million from investment (financial income) Other non operating income is 1.81 million yuan and the impact of income tax is – 1.99 million yuan. 21q4 company’s revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company were 473 / 56 / 45 million yuan respectively, with a year-on-year increase of 31% / 433% / 374% and a significant acceleration month on month. The company distributed 0.126 yuan per share, with a dividend rate of 30% and a dividend rate of 1.3%.
Analysis and judgment:
Worsted fabric revenue recovered to the 19-year level, and volume / price contributed 29% / 9% respectively. Affected by the transformation of production line, the production capacity utilization of suits fell sharply, and shirt orders were good. In 2021, the income of worsted fabrics / clothing / other items was 867 million yuan / 608 million yuan / 17 million yuan respectively, with a year-on-year increase of 40% / – 15% / – 36% and a year-on-year increase of 0% / – 30% / – 38%. Among them, (1) the sales volume / unit price of worsted fabrics were 136685 million meters / 63.43 yuan / meter respectively, with a year-on-year increase of 29% / 9% and 14% / – 13% compared with 19 years. The volume increase was mainly due to the improvement of capacity utilization. According to the announcement, the capacity utilization rate of worsted fabrics in 2021 was 79%, with a year-on-year increase of 5.5pct. (2) The 15% decline in clothing revenue was mainly due to the decline in suit sales. In 2021, the sales of suits / shirts were 838500 sets / 878000 pieces, with a year-on-year increase of – 26.12% / 10.84% and a decrease of 37% / 15% compared with 19 years. It was mainly due to the change in capacity utilization. According to the announcement, the capacity utilization of suits in 21 years was 55.33%, with a year-on-year decrease of 11.4pct. It was mainly affected by the unfinished upgrading of suit production line. The capacity utilization of shirts was 148.93%, with a year-on-year increase of 35PCT, Mainly due to the increase of orders.
The increase in the proportion of high value-added products led to the increase of worsted wool interest rate by 9pct. The gross profit margin of the company in 2021 was 34.17%, a year-on-year increase of 3.39pct, and that in 21q4 was 34.44%, a year-on-year increase of 7.33pct and a month on month increase of 1.87pct. In terms of products, the gross profit margin of worsted fabric / clothing / others was 35.35% / 31.10% / 84.72% respectively, with a year-on-year increase of 9.36 / – 1.74 / – 3.52pct. According to our analysis, the increase of worsted fabric gross profit margin was mainly due to the increase of capacity utilization and the proportion of high value-added products (optim fabrics). The decrease of clothing gross profit margin was mainly affected by the decrease of capacity utilization.
The increase in net profit margin comes from the contribution of the increase in gross profit margin. In 2021, the company’s net profit margin was 10.22%, with a year-on-year increase of 3.78pct, mainly due to the contribution of gross profit margin. The net profit margin of 21q4 was 11.86%, increased by 8.93pct year-on-year and 1.79pct month on month, mainly from the contribution of gross profit margin. In terms of expense ratio, the company’s sales / management / Finance / R & D expense ratio in 2021 was 10.46% / 4.18% / 0.60% / 4.18% respectively, with a year-on-year increase of 0.95/0.16 / – 0.38/0.07pct. In terms of breakdown, the increase of sales expense ratio was mainly due to the increase of consumption service expense ratio, business publicity sample expense ratio and market promotion expense ratio of 0.5/0.2/0.3pct. The significant decrease in the financial expense rate is mainly due to the decrease in interest expenses, exchange gains and losses and the increase in interest income. The company’s annual net income / income from new investment is 0.51pct, mainly from financial products; The income tax / income was 2.28%, with a year-on-year increase of 1.49pct, and the income tax rate was 18.23%, with a year-on-year increase of 11.05pct, mainly due to the low base caused by the deductible loss of unrecognized deferred income tax assets in the early 20 years of use, and the income tax rate in 21 years was basically the same as that in 2019 (18.15%). The asset impairment loss was 40.05 million yuan, a year-on-year decrease of 42.08%, and the asset impairment loss / income was 2.68%, a year-on-year decrease of 2.41 PCT, mainly due to the decrease in the provision for inventory falling price.
In 2021, the company’s accounts receivable / inventory / accounts payable were 167 / 568 / 209 million yuan respectively, with a year-on-year increase of – 15.70% / 6.82% / 22.45%. The turnover days of accounts receivable / inventory / accounts payable were 44 / 201 / 69 days and a year-on-year decrease of 29 / 25 / 4 days respectively. In 2021, the net cash flow from operating activities was RMB 252 million, and the operating cash flow / net profit was 165%. The higher operating cash flow than net profit was mainly due to the provision of asset impairment of RMB 41 million, provision of depreciation of RMB 44 million, decrease of operating receivables of RMB 38 million and increase of operating payables of RMB 30 million.
Investment advice
According to our analysis, (1) woolen fabrics: the company has a leading edge in fabric research and development. It is the only high-tech enterprise in the world that can produce and manufacture optim fabrics. Through optim fabrics, it has achieved a breakthrough in the wearing performance of wool fabrics and expanded wool textile products from traditional winter products to four seasons products. In the future, with the continuous optimization of product structure, the unit price is expected to lead the growth. (2) Clothing business: in the short term, the capacity utilization rate of suits in 21 years is only 55%, and it is expected to increase with the completion of production line transformation in 22 years; In the medium and long term, the company is committed to optimizing the product structure and increasing the proportion of high-quality suits and shirts, which is expected to drive the increase of unit price in the future. (3) UHMWPE sector: the company has UHMWPE new material technology, invested 128 million yuan to build a factory and cut into the field of high-tech fibers. In the first half of 2022, the project with an annual output of 600 tons of UHMWPE new material will be put into operation. According to our analysis, on the one hand, the sideline is expected to open the ceiling of the company’s revenue and profit, on the other hand, the high profit margin is expected to improve the overall profit margin of the company. Considering that the income slightly exceeded the expectation, the income in 22 / 23 years was increased from RMB 1.743/2.050 billion to RMB 1.795/2.079 billion, the new 24-year income was RMB 2.330 billion, the net profit attributable to the parent was increased from RMB 163 / 206 million to RMB 193 / 236 million, the new 24-year net profit attributable to the parent was RMB 267 million, the corresponding EPS was increased from RMB 0.45/0.57 to RMB 0.54/0.66, the new 24-year EPS was RMB 0.74, the closing price was RMB 9.6 on April 7, 2022, and the corresponding PE was 18 / 15 / 13X respectively, maintaining the “buy” rating.
Risk tips
The price increase of the main business is less than expected; The market competition of UHMWPE intensifies the risk; Systemic risk.
