\u3000\u3000 Anhui Huamao Textile Company Limited(000850) (000850)
Cotton textile leaders focused on the main business, with stable growth in performance. The company is mainly engaged in the production and sales of cotton textile products such as blended yarn, fabric and industrial textiles, mainly including yarn, grey cloth, yarn dyed fabric, non-woven fabric and other products. Its "Chengfeng" brand yarn and "Yinbo" brand grey cloth have high industry popularity. The company focuses on the development of its main business, actively expands the production capacity of yarn and grey cloth, and strengthens its leading position in the industry. In recent years, the company's performance has maintained a stable growth. In the first three quarters of 2021, the company achieved a revenue / net profit attributable to the parent company of RMB 2.589/344 billion, an increase of 6.23% / 35.56%, and the average annual compound growth rate from 2017 to 2021 was 12.04% / 94.57%.
China's textile production capacity is mature, decentralized, and the market share is concentrated on a large scale. The revenue of China's textile industry from January to November 2021 was 2286.8 billion yuan, and the average annual compound growth rate from 2017 to 2021 was - 11.06%. In 2020, the total revenue of 38 listed enterprises in the textile industry was 109.1 billion yuan, accounting for only 4.79% of the total industry revenue. In the long run, as China's textile downstream demand matures and labor costs rise, capacity transfer and technology upgrading are the general trend. On the one hand, the production capacity center of the global textile industry is transferred to Southeast Asia with lower production costs; On the other hand, textile enterprises will focus on high-tech, equipment manufacturing and other high value-added fields and upgrade to capital and technology intensive industries to reduce their dependence on low-end labor-intensive industries. Benefiting from the early advantages in cost and service, large-scale head enterprises grow rapidly and expand their scale. Relying on their own cost scale advantages, they take the lead in transferring production capacity to low-cost countries to strengthen the first mover advantage, and can take the lead in reducing dependence on labor and gaining more market share through automatic upgrading and transformation.
Strong technical advantages and intelligent production transformation build core competitive barriers for the company. 1) The company attaches importance to technology R & D and actively cooperates with upstream and downstream enterprises, colleges and universities and scientific research institutes to continuously improve the process level and product stability. The quality index of yarn and grey cloth of the company has always been at the leading level in the industry, and has developed and produced the first "fabric version" national flag, which is displayed on the lunar surface with Chang\'e 5, which can be seen from its technical strength; 2) The company has actively arranged intelligent spinning capacity. By 2021, the proportion of intelligent spinning has reached 50%, and the intelligent level ranks in the forefront of the industry. In 2020, the spinning intelligent transformation project won the highest award in China's industrial field "China Industrial Award". Continuous technological transformation and equipment upgrading have brought strong cost advantages to the company and helped the company achieve high-quality and efficient production. 3) With leading design capacity and high-quality and efficient production capacity, the company has established a good brand image outside China, and its products are sold to high-end markets such as Italy, Germany, Japan and Hong Kong.
The reform of state-owned enterprises has opened a new stage of development and introduced Shenzhou war investment alliance. In 2020, the state launched the "three-year reform action for state-owned enterprises", established the goal of enhancing the vitality and efficiency of state-owned enterprises, and deeply carried out the reform of mixed ownership of enterprises. The company actively responded to the national call and introduced the same industry war investment Shenzhou International (holding 21.05% of the controlling shareholder Huamao Group). It is expected to further deepen the reform of state-owned enterprises, strengthen employee incentive and promote performance growth in the future. On the one hand, the company's introduction of Shenzhou International will benefit from the transfer of its international orders to China in the short term, further deepen cooperation, improve the company's supply proportion of raw materials, and yarn orders are expected to continue to increase; On the other hand, with its profound accumulation in woven fabrics, the company will have the opportunity to share the growth dividend of Shenzhou International's expansion of new categories of woven fabrics, so as to obtain new performance growth points.
Profit forecast and investment rating. We are optimistic about the company's strong technical R & D strength and the cost advantage and stable quality guarantee ability brought by intelligent production and manufacturing. With the continuous expansion of the company's intelligent scale, the company's strong combination with Shenzhou International will further strengthen the synergy of the industrial chain, expand the yarn and woven fabric business, and the future growth can be expected. We estimate that the revenue from 2021 to 2023 will be RMB 3.489/40.02/4.625 billion, an increase of 2.9% / 14.7% / 15.6%, and the net profit attributable to the parent company will be RMB 401 / 4.82/592 million, an increase of 80.7% / 20.2% / 22.6%. At present, the valuation is at a low level. With the help of the relative valuation method, we give the company a target price of 7.4 yuan. The company has obvious competitive advantages, rapid growth of short-term performance and large space for long-term development. It is given a "buy" rating for the first time.
Risk factors: macroeconomic fluctuation risk, new production capacity falling short of expectations, raw material price fluctuation risk, etc.
