\u3000\u3 Shengda Resources Co.Ltd(000603) 558 Zhejiang Jasan Holding Group Co.Ltd(603558) )
Investment logic
The world's leading manufacturer of knitted clothing: the company focuses on the OEM of cotton socks and seamless clothing, with an annual output of 300million pairs of cotton socks and more than 22 million pieces of seamless clothing. It has seven production bases in China and Vietnam. Cotton socks contribute to the main revenue, and its 1h21 revenue accounts for 71%; More than 85% of the company's orders are sold overseas. In the past 20 years, affected by the suspension of the epidemic and the cancellation of orders, the total revenue and net profit of the company decreased by 11.12% and 293.09% respectively; With the recovery of factory operation and smooth development of customers, it is expected that the net profit attributable to the parent company in 21 years will reach 160210 million yuan, with a year-on-year increase of 130.32% - 139.79%, and the loss will be reversed.
The hosiery industry grew steadily and integrated to build core barriers: the company is the world's leading supplier of cotton socks. 1h21 the business revenue and net profit increased by 28% and 114% respectively. It recovered significantly after the epidemic and showed strong toughness. The company has the advantage of industrial chain integration to ensure timely and high-quality delivery and deep binding with high-quality customers; Positioning at the medium and high end, the export unit price is higher than the average level, and the cotton price continues to rise, promoting the increase of gross profit margin. Driven by demand, the company will steadily expand production. It is expected to add 1000 / 2000 hosiery machines in Guizhou / Vietnam, and the total production capacity in 23 years is expected to exceed 450 million pairs.
The seamless business stuck in a high growth track, actively adjusted the bad situation and ushered in an inflection point: the company entered the seamless track after the acquisition of Qiao Er Tingting in 2017. In the past 20 years, overseas customers reduced orders due to the epidemic, and the seamless revenue and net profit decreased by 25.2% and 76.6% respectively. Considering that the operation of this part of the business was less than expected, the company accrued a loss of goodwill of 554 million yuan. Over the past 21 years, we have actively adjusted: 1) expand customers to reduce the risk of excessive order concentration; 2) optimize capacity layout and improve capacity utilization through hierarchical production; In addition, the company actively establishes direct cooperation with brands through ODM transformation to improve profit space and enhance customer stickiness. At present, China's seamless manufacturing industry is highly decentralized. As a leader, the company has significant advantages in capacity scale and design. Benefiting from the high growth sports track, the seamless revenue in 23 years is expected to reach 1.2 billion yuan.
Investment forecast and investment suggestions
The hosiery industry grew steadily, the integrated industrial chain built core barriers and was deeply bound with high-quality customers; With the improvement of customer structure and the optimization of production capacity, the seamless business slot sports track has sufficient momentum for long-term growth. It is estimated that the company's revenue in the year of 21-23 will be 1.953/24.47/2.828 billion yuan, with a same increase of 23.5% / 25.2% / 15.6%, and the net profit attributable to the parent company will be 1.85/3.16/397 billion yuan, with a same increase of 134.9% / 71.0% / 25.7%, corresponding to eps0.5% 47 / 0.80/1.01 yuan, give the company 18 times PE for 22 years, corresponding to the target price of 14.46 yuan / share, and give the company a "buy" rating for the first time.
Risk tips
Repeated epidemics have led to less than expected demand growth and hindered the ramp up of production capacity; Customer order transfer; Exchange rate fluctuations; Rising labor costs in Vietnam; The controlling shareholders and actual controllers of the company reduce their holdings.
