\u3000\u3 China Vanke Co.Ltd(000002) 687 Zhejiang Giuseppe Garment Co.Ltd(002687) )
Key elements of the report:
On April 15, 2022, the company released the annual report of 2021. In 2021, the company achieved a revenue of 1.304 billion yuan (year-on-year + 19.77%) and a net profit attributable to the parent company of 187 million yuan (year-on-year + 29.88%). It plans to distribute a cash dividend of 2.00 yuan (including tax) to all shareholders for every 10 shares and increase 4.5 shares to all shareholders for every 10 shares with capital reserve.
Key investment points:
The annual performance growth was bright, and the cash flow and inventory indicators were further improved. In 2021, the company achieved a revenue of 1.304 billion yuan (year-on-year + 19.77%) and a net profit attributable to the parent company of 187 million yuan (year-on-year + 29.88%). Benefiting from the centralized purchase policy, the company has full orders and bright performance growth, which is in line with our expectations. Among them, Q4 achieved a revenue of 441 million yuan (year-on-year + 9.86%), and a net profit attributable to the parent company of 84 million yuan (year-on-year + 13.80%). In 2021, the net operating cash flow of the company was 298 million yuan (year-on-year + 64.42%), and the inventory was 272 million yuan (year-on-year – 3.0%). The indicators of cash flow and inventory further improved.
Further improve profitability, focus on R & D and expand advantages. In 2021, the gross profit margin of the company was 52.24% (year-on-year + 2.81 PCT), and the net profit margin was 14.58% (year-on-year + 1.32 PCT). The company’s sales / management / R & D / financial expense rates were 16.98% / 7.01% / 6.12% / – 0.14% respectively, with a year-on-year increase of + 0.98 / + 0.42 / + 1.06 / – 0.02 PCT respectively. Among them, the significant increase in R & D expense rate is mainly due to the company’s increase in the R & D of new clothing products and new processes, as well as the intelligent transformation of production, logistics and storage in the three factories.
The business of professional wear is accelerating upward, and the business of school uniform is growing rapidly under the partnership mode. In 2021, the business income of the company’s professional wear business was 1.272 billion yuan (year-on-year + 21.90%), and the gross profit margin increased significantly by 2.53 PCT to 52.45%, which was mainly due to the increase in the proportion of brokerage customers with high gross profit, the improvement of quality and efficiency in the intelligent transformation of the three major plant areas, and the scale effect of small orders changing into large orders under the influence of the centralized purchase policy. In addition, the school uniform subsidiary achieved an income of 938173 million yuan in 2021, with a year-on-year increase of + 32.67%. The school uniform business is expected to quickly seize the market and create the second growth curve relying on the company’s rich experience in business operation and regional partner model.
Intelligent transformation will improve quality and efficiency, and will build “satellite factories” in many places. The three plant areas of the company have completed the intelligent transformation of production, logistics and storage, ensuring the efficient combination of the personalized demand of one person, one version and one garment with the industrialized mass production. In the future, the company will build “satellite factories” in many places and export management, talents and technology to them to achieve the purpose of expanding production capacity.
Profit forecast and investment suggestions: in the short term, the company’s business growth may slow down due to the impact of the epidemic in 2022. However, in the medium and long term, the company, as the leader of China’s professional wear, benefits from the centralized purchase policy, and the main business will speed up. With the further optimization of the company’s customer structure and the cost reduction and efficiency increase of intelligent transformation in the future, the profitability is expected to rise to a higher level. In addition, the school uniform business is expected to build the second growth curve based on the experience of the original professional wear and the regional partner model. Out of careful consideration of the impact of the epidemic, we slightly lowered our previous profit forecast. It is expected that the company’s EPS in 20222024 will be 0.60/0.76/0.92 yuan / share respectively (before adjustment, the EPS in 20222023 will be 0.69/0.86 yuan / share respectively), and the PE corresponding to the closing price on April 18, 2022 will be 11 / 9 / 7 times respectively, maintaining the “buy” rating.
Risk factors: the risk of epidemic rebound, the risk of intensified industry competition, and the risk of business expansion not meeting expectations.
