\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 18 Shandong Nanshan Fashion Sci-Tech Co.Ltd(300918) )
Overview of the event: in 2022q1, the company’s revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company were RMB 322 million / 28 million / 27 million respectively, with a year-on-year increase of 8% / 18% / 12%. The revenue was lower than expected and the net profit met the expectation.
The company purchased the land use right from the related parties Nanshan Group, Shandong Nanshan Aluminium Co.Ltd(600219) located in Nanshan village, Dongjiang Town, Longkou City, Shandong Province and the Song family in front of Dongjiang for the expansion and use of ultra-high molecular weight polyethylene fiber project in the future, with a total land area of 114500 square meters and a total consideration of 51.09 million yuan. The company’s employee and executive shareholding platforms Yantai Nansheng (employee shareholding platform) and Yantai Shengkun (executive shareholding platform) plan to reduce their holdings of no more than 3.375 million shares by block trading, accounting for 0.9375% of the company’s total share capital respectively. At present, Yantai Nansheng and Yantai Shengkun hold 13.5 million shares respectively, accounting for 3.75% of the total share capital of the company.
Analysis and judgment:
In terms of splitting, we estimate that the revenue of woolen fabrics / clothing is 180 / 138 million yuan respectively, with a year-on-year increase of 11% / 4%. We analyze that the lower than expected revenue growth is mainly due to the multi-point rebound of China’s epidemic, which affects the company’s delivery.
The gross profit margin of 2022q1 company was 31.15%, with a year-on-year decrease of 0.08pct; The net interest rate of 22q1 company was 8.8%, with a year-on-year increase of 0.75pct, mainly due to the decrease of expense rate, the improvement of credit impairment loss, the increase of investment income and the decrease of income tax. The ratio of sales / management / R & D / financial expenses of 22q1 company was 10.4% / 3% / 4% / 0.7% respectively, with a year-on-year increase of – 0.9 / – 1.9/0.2/0.3pct; Investment income / income increased by 0.46pct; Credit impairment loss / revenue was 0.31%, with a year-on-year improvement of 0.39pct; Income tax / income decreased by 0.57pct to 1.43%. However, the company’s impairment and taxes and surcharges increased. The asset impairment loss / income was 2.13%, with a year-on-year increase of 2.18pct, and the taxes and surcharges / income increased by 0.76pct to 0.96% year-on-year.
The inventory amount increased month on month, and the accounts receivable and accounts payable improved. At the end of 2022q1, the company’s inventory was 643 million yuan, an increase of 19% year-on-year, an increase of 13% month on month compared with the end of 21, and the inventory turnover days were 246 days, an increase of 10 days year-on-year. The turnover days of accounts receivable were 51 days, a year-on-year decrease of 16 days, and the turnover days of accounts payable were 89 days, a year-on-year increase of 14 days.
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.
To maintain the profit forecast, it is estimated that the revenue of 22 / 23 / 24 years will be RMB 1.795/20.79/2.330 billion respectively, the net profit attributable to the parent company will be RMB 193 / 236 / 267 million respectively, the corresponding EPS will be RMB 0.54/0.66/0.74 respectively, the closing price on April 19, 2022 will be RMB 10.21, and the corresponding PE will be 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.
