\u3000\u3 Shengda Resources Co.Ltd(000603) 889 Zhejiang Xinao Textiles Inc(603889) )
The annual performance is in line with expectations. Q4 is not light in the off-season
The annual revenue and net profit reached a record high, and the profitability benefited from the recovery of raw material prices. The company released its annual report for 21 years, and achieved a total operating revenue of 3.445 billion yuan (YoY + 51.6%, compared with the historical peak + 27.1%); The net profit attributable to the parent company was 298 million yuan (YoY + 96.g%, compared with the historical peak value + 43.8%), and the performance of Q2 and Q3 was the best in a single quarter. Benefiting from the recovery of raw material prices (wool / cashmere), the gross profit margin was 19.1% (YoY + 4. Opct) and the net profit margin was 9.1% (YoY + 2. Opct), which was at an all-time high.
The performance of single Q4 is also bright, and the off-season is not light, highlighting the strong endogenous force. Single Q4 company achieved operating revenue / net profit attributable to parent company of 740 million yuan / 42 million yuan (+ 33.7% / - 13.1%). The main reason for the decline in profit is that Q4 is usually the off-season of production, but in 20 years, q1-3 was blocked due to the production of epidemic factories, and orders piled up to Q4 centralized production, resulting in a high base. If compared with the same period of 19 years, the growth rate of operating revenue / net profit attributable to parent company is + 48.6% / + 7286.0%, achieving considerable growth. Even if we consider that the 19-year Sino US trade war and the decline of wool price affect profitability, compared with the 18 years when the external environment is stable and the wool price is at an all-time high, the growth rate of operating revenue / parent net profit in a single quarter is + 33.8% / + 28.6%, showing its strong growth.
The leading position of the main wool industry is prominent, and the cashmere business creates the second growth curve
The booming production and marketing of wool business has driven the rapid growth of the company's performance. Benefiting from the reform of the company's production promotion strategy in 21 years, the revenue of the company's wool business (including wool worsted yarn, wool top, dyeing and finishing business, etc.) increased by 26.1% year-on-year to 2.596 billion yuan, realizing a gross profit margin of 20.5%. Among them, the main business income of wool and worsted yarn increased by 29.1% year-on-year to 2.06 billion yuan, realizing a gross profit margin of 23.2%, achieving an annual output of 14000 tons (YoY + 45.6%), sales of 13400 tons (YoY + 35.7%), and the inventory level is low. According to our calculation, the company's wool imitation yarn business has achieved a capacity utilization rate of more than 100% and a production and marketing rate of more than 95% in 21 years. In recent years, the capacity of Xintuo wool worsted yarn has been fully released, and it is expected that some products have been processed through strategic cooperation.
Cashmere business has excellent cost control in the first year, and business collaboration contributes to the second growth curve. 2021 is the first full year of the company's new expansion of cashmere spinning business. Although it is still in the middle of expanding the market and capacity climbing, it still achieves an income of 830 million yuan (YoY + 324.6%) and a gross profit margin of 13.71%. According to our calculation, the net profit margin of cashmere yarn business is expected to be ~ 6.0%, showing excellent cost control ability. In the future, with the production and operation of Ningxia Xinao cashmere gradually on track, the proportion of high value-added orders will be increased and the order structure will be diversified. Combined with the coordination of the company's wool business sales team, there is a huge room for improvement in the profit of the company's cashmere business.
Profit forecast and valuation
We expect the company's revenue to increase by 20% / 15% / 13% year-on-year to RMB 41.3/47.3/5.36 billion in 22 / 23 / 24, and the net profit attributable to the parent company to increase by 30% / 22% / 22% year-on-year to RMB 388 / 473 / 575 million. According to the closing price on April 25, 2022, the corresponding PE from 2022 to 2024 is 8 / 6 / 5x respectively. Considering that the leading share of the industry is expected to accelerate after clearing, the high outlook of the industry is expected to continue, the profits are expected to release, and there is considerable potential to maintain the "buy" rating.
Potential risk factors
Risk of excessive fluctuation of wool price; The expansion of production is less than expected; Repeated outbreaks; Risk of poor destocking;
