\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
The company released its 2021 annual report on April 7, 2022. In 2021, the company realized a revenue of 17.469 billion yuan, a year-on-year increase of 25.40%, and a net profit attributable to the parent company of 2.77 billion yuan, a year-on-year increase of 47.34%, continuing the high growth rate. We are optimistic about the long-term stable growth brought by the landing of the company’s production capacity and the improvement of its share, and maintain the buy rating.
Key points supporting rating
Under the epidemic situation in 2021, the advantages of production capacity layout in North Vietnam are prominent, the production capacity and output are significantly improved, and the customer structure is further optimized. In 2021, the company realized a revenue of 17.47 billion yuan, a year-on-year increase of 25.40% (excluding the influence of exchange rate, an increase of 34.09%), and the net profit attributable to the parent company was 2.77 billion yuan, a year-on-year increase of 47.34% (excluding the influence of exchange rate, an increase of 57.55%). In 2021, under the Vietnam epidemic, the company’s supply chain advantages became prominent, the production capacity maintained stable and high growth, and the capacity utilization ratio increased by 4.95pct to 95.88%; The output increased by 27.76% to 209.57 million pairs. The company responded quickly to changes in customer demand, developed new products, expanded production capacity and attracted a large number of sports brand orders. The proportion of revenue from the top five customers increased by 1.99pct to 91.65%, of which the revenue of high-quality customers Nike, Deckers and UA increased by 43.72%, 57.84% and 44.86% to $959, 584 and 150 million, promoting order optimization. In addition to traditional customers, the company’s orders from new customers ASICs, onrunning and NewBalance have been mass produced and shipped, and are expected to continue to grow at a high speed in the future.
The profitability increased well, and the inventory turnover improved efficiency. In 2021, the gross profit margin increased by 27.23% and 2.41pct at the same time. The improvement of profitability is mainly due to the optimization of order structure and the improvement of production capacity automation brought by the increase of the proportion of high-quality customers; The adjustment of accounting policies led to the decrease of expenses. The sales rate decreased by 1.04pct to 0.37% year-on-year, and the management rate decreased by 0.48pct to 5.27%; The net interest rate increased by 2.36 PCT to 15.84%. The number of days of inventory turnover decreased from 8 days to 67 days, indicating the enhancement of the company’s operating capacity.
In the future, the leading advantages will be further consolidated, and the company is expected to achieve growth by relying on the growth of key customers. In the post epidemic period, the prosperity of the sports shoes industry is rising. It is expected that the orders from core customers are expected to further increase and the expansion of new customers is accelerated. At present, the epidemic situation in Vietnam has been repeated, but from the whole year of 2022, the company’s capacity expansion and the simultaneous rise of order volume and price are expected to continue.
Under the current share capital, the earnings per share from 2022 to 2024 are expected to be 3.047 yuan, 3.814 yuan and 4.571 yuan respectively; The P / E ratio was 24 times, 19 times and 16 times respectively, maintaining the buy rating. Main risks of rating
Consumption recovery is less than expected, Vietnam’s epidemic control is less than expected, and exchange rate fluctuations are expected.
