\u3000\u3 Shengda Resources Co.Ltd(000603) 889 Zhejiang Xinao Textiles Inc(603889) )
Company overview
In 2021, the company's revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company were RMB 3.445298/284 billion respectively, with a year-on-year increase of 51.57% / 96.93% / 182.02%, which is in line with the performance forecast. In 2021q4, the company's revenue / net profit attributable to the parent company / net profit deducted from non attributable to the parent company were RMB 740 million / 42 million / 38 million respectively, with a year-on-year increase of 33.65% / - 13% / - 27.82% and a month-on-month increase of - 21.73% / - 49.66% / - 52.09%. The year-on-year decline of Q4 single quarter profit was mainly due to the increase of single quarter sales and management expense ratio and the provision of asset impairment loss. Operating cash flow was -121 million, mainly due to the increase of inventory. A cash dividend of 3 yuan will be distributed for every 10 shares, with a dividend rate of 5%.
Analysis and judgment
Wool yarn sales slightly exceeded expectations. (1) In terms of products, in 2021, the company's wool fine spinning yarn / wool top / modification treatment, dyeing and finishing and cashmere processing / cashmere yarn / other revenue were 20.60/4.95/0.41/8.3/0.22 billion yuan respectively, with a year-on-year increase of 29.15% / 24.87% / - 38.04% / 324.6% / 3.73%, accounting for 60% / 14% / 1% / 24% / 1% respectively. (2) In terms of component price, the sales volume was 1.34/0.53/0.3/0.13 million tons / 58.47 tons respectively, with a year-on-year increase of 36% / 23% / - 12% / 368% / 8.06%. According to our analysis, the sales volume of wool yarn exceeded the 13000 tons plan of the company at the beginning of the year, mainly due to the improvement of capacity utilization brought by the company's fixed sales based on production and tapping the potential of customers. We calculated that the prices were 15 / 9.4/1.36/6437000 yuan / ton respectively, with a year-on-year increase of - 4.8% / 1.16% / - 29% / - 9% / - 4%. We analyzed that the price decline was mainly due to the company's appropriate acceptance of some low unit price orders in order to improve capacity utilization.
The improvement of capacity utilization contributed to the increase of gross profit margin. The gross profit margin was 19.06%, with a year-on-year increase of 4pct, and the gross profit margin in the first and second half of the year was 20% / 18% and 5 / 3PCT respectively; In terms of products, the gross profit margin of wool fine spinning yarn / wool top / modification treatment, dyeing and finishing and cashmere processing / cashmere yarn / others was 23.23% / 8.45% / 28.62% / 13.71% / 17.57% respectively, with a year-on-year increase of 6.4/5.7 / - 3.37 / - 4.19/4.76pct. We analyzed that the increase of wool yarn gross profit margin was mainly due to the increase of self-produced energy utilization rate (estimated to increase by 33pct to 105%), and we calculated that the capacity utilization rate of cashmere yarn was increased to 54% However, the unit price fell by 9%, resulting in a decline in the gross profit margin. The net profit margin was 9.09%, with a year-on-year increase of 2pct, which was lower than the increase of gross profit margin, mainly due to the income from asset disposal in 2020. During the period, the cost rate decreased by 0.89pct to 8.25%. Asset impairment increased by 649% to 21 million yuan and asset impairment / income + 0.5pct, mainly due to the increase of inventory falling price provision due to the increase of inventory goods. The income tax rate increased by 0.86pct to 11.74%. In terms of business, we estimate that the net interest rates of wool fine spinning / wool top / modified treatment, dyeing and finishing and cashmere processing / cashmere yarn are 10.9% / 3.8% / 16.5% / 5.8% respectively, with a year-on-year increase of 4 / 3 / - 34 / 1PCT. The decrease in the net interest rates of modified treatment, dyeing and finishing and cashmere processing is mainly due to the compensation contribution of the retreat of Houyuan textile in the past 20 years.
The inventory comes from the increase of raw material reserves. The inventory was 1.497 billion yuan, a year-on-year increase of 76%, mainly due to the increase in output and raw material procurement. Accounts receivable were 265 million yuan, a year-on-year increase of 2%.
Investment advice
According to our analysis, (1) in the short term, the first phase of xinzhonghe's "6000 tons of wool tops and 12000 tons of functional fiber modification processing line project" is currently in the stage of equipment installation and commissioning, which is expected to contribute to the growth in the first half of 22 years; From the perspective of outside China, we analyze that affected by the epidemic, Chinese orders will be delayed, which may have a certain impact on upstream orders. (2) In the medium term, the company launched the convertible bond raising project in December 2020 and plans to invest 60000 high-grade worsted ecological yarn project (phase II). After putting into operation, the production capacity of wool worsted woven yarn will be increased by 3840 tons, an increase of 29% compared with the current production capacity; (3) In the long run, the profitability of the company's cashmere business has improved and is expected to form a two wheel drive. The revenue forecast of 22 / 23 years is 4.284/5.114 billion yuan respectively, the new 24-year revenue forecast is 5.87 billion yuan, the net profit forecast of 22 / 23 years is 361 / 450 million yuan, the new 24-year net profit forecast is 529 million yuan, the EPS forecast of 22 / 23 years is 0.71/0.88 yuan, the new 24-year EPS forecast is 1.03 yuan, and the closing price of 5.91 yuan on April 25, 2022 is 8 / 7 / 6x respectively. At present, the market is worried that the epidemic will affect the overseas return of orders, However, we believe that the wool textile industry chain is not affected much, and Southeast Asia does not have the ability to undertake temporarily, so we maintain the "buy" rating.
Risk tips
Risk of recurrent outbreaks; The epidemic affects downstream demand; Risk that the shop opening progress is lower than expected; Systemic risk.
