\u3000\u3 Shengda Resources Co.Ltd(000603) 558 Zhejiang Jasan Holding Group Co.Ltd(603558) )
The company issued 2021 annual report and 2022q1 financial report, in which the revenue / net profit attributable to the parent company / net profit attributable to the parent company after deduction in 2021 were RMB 2.052167/153 million respectively, with a year-on-year increase of + 29.65% / + 131.69% / + 128.03% respectively; Among them, Q4 achieved revenue / net profit attributable to parent company / net profit attributable to parent company after deduction of non-profit of RMB 5.3 / – 0.14 / – 19 million in a single quarter, with a year-on-year increase of + 22.81% / + 97.63% / + 96.84% respectively; In 2022q1, the realized income / net profit attributable to parent company / net profit attributable to parent company after deduction of non-profit was RMB 532 / 0.82 / 0.66 million, with a year-on-year increase of + 28.54% / + 74.1% / + 40.73% respectively. In addition, the company plans to distribute a cash dividend of 0.15 yuan per share (including tax), a total of 574724 million yuan (including tax), with a dividend rate of 34.37%.
The volume and price of cotton stockings have risen, and seamless underwear has returned to growth
Cotton socks: in 2021, the revenue was 1.503 billion yuan (year-on-year 2020 / 2019 + 41.9% / + 36.1%) and the sales volume was 383 million pairs (year-on-year 2020 / 2019 + 34.4% / + 31.5%). The revenue performance of cotton socks business was good, mainly due to the increase of sales volume driven by high-quality large customers, and the average price also increased by about 7.5% year-on-year. The trend continues in 2022q1, and the revenue is expected to reach 346 million yuan (+ 17%), mainly from the increase of average price. In terms of gross profit margin, benefiting from the upgrading of customer structure, it remains at a good level. The gross profit margin in 2021 is 31.2% (+ 8.64%), and 22q1 is expected to be about 31.5%. In addition, we expect that the net profit of cotton socks business in 2021 / 22q1 will be about 189 / 46 + million yuan respectively.
Seamless underwear: in 2021, the revenue was 502 million yuan (up to + 4.8% / – 21.6% in 2020 / 2019 respectively), and the sales volume was 21.37 million pieces (up to + 23.1% / – 2.4% in 2020 / 2019 respectively). In 2022q1, the revenue is expected to be about 186 million yuan (up to + 56% / + 24% in 2020q1 / 2019q1 respectively), returning to growth. The gross profit margin has not returned to the normal level (it is estimated that it will be 11.7% / 21% in 2021 / 2022q1 and 32.8% in 2019 respectively), mainly due to: 1) Vietnam is affected by the epidemic, the overall commencement and customer development and orders are affected, but it is expected to return to normal in mid March; 2) China’s epidemic affects short-term shipments. We expect that at present, China’s capacity utilization rate is high, and Vietnam is expected to gradually reach full production in 2022h2. At the same time, with the increase of cooperation projects with old customers and the development of new customers, the overall seamless gross profit margin is expected to return to the normal level from 2022h2 to 2023. In addition, we expect that the 2021 / 22q1 seamless business will realize a net profit of about 2365 / 20 + million yuan after deducting non-profit.
Under the scale effect, the overall cost rate is optimized and the profitability continues to improve. The gross profit margin of 2021 / 22q1 was 26.76% / 28.05% (year-on-year + 6.7 / 1.45pct s respectively), which improved significantly year-on-year / month on month, mainly due to the obvious improvement of capacity utilization under the full orders of cotton socks business during the period, the increase of some product prices under the optimization of customer structure, and the continuous recovery of capacity utilization of seamless business. In terms of expenses, the ratio of sales / management / R & D expenses in 2021 was – 0.24 / – 0.22 / – 0.04pct s to 2.91% / 9.56% / 2.87% and the ratio of financial expenses was – 0.64pct to 0.98% respectively, which was mainly due to the exchange gain formed by the fluctuation of the exchange rate of vnd against the US dollar in 2021. At the same time, we expect that in 2021, the company will generate expenses of RMB 9 + / 36.52 million respectively due to goodwill provision and share expenditure, which will affect the net profit. In addition, the sales expense ratio of 22q1 + 0.33pct s to 3.76% year-on-year, while the management expense ratio / R & D expense ratio decreased by 0.49/0.21pcts to 6.81% / 2.77% respectively. Overall, the net interest rate of 2021 turned positive to 8.14% year-on-year, and increased by 4.06 PCTs to 15.51% in 22q1, which is close to the normal level before the epidemic (17.04% in 19q1). In the future, with the improvement of capacity utilization of various businesses, the net interest rate is expected to increase steadily.
Epidemic & Logistics affects inventory turnover and healthy cash flow. At the end of 2021 / 2022q1, the inventory scale was 665 / 709 million yuan respectively (year-on-year + 54.44% / + 52.07%), mainly due to: 1) the company increased the stock under the sharp rise of 21h2 raw material price; 2) From 2021 to 22q1, the company’s shipment was delayed due to the shortage of international shipping and covid-19 epidemic. Therefore, the inventory turnover days in 2021 / 22q1 are + 4.75 / + 28.95 to 131.18/161.52 days respectively year-on-year, while the turnover days of accounts receivable are relatively stable, with – 5.15 / + 1 to 66.17/70.06 days respectively year-on-year. In addition, the operating net cash flow in 2021 / 22q1 was RMB 271 / 74 million (respectively + 4.3% / 130.49%), which continued to benefit from the growth of revenue scale.
Profit forecast and investment suggestion: as the leader of cotton socks and seamless underwear, the company’s cotton socks business maintains rapid growth, and maintains a high profit level as a whole with the optimization of customer structure and the increase of high-quality key customers. Under the recovery of overseas epidemic, the capacity utilization of seamless business has recovered rapidly, and the inflection point has been found. In the follow-up, with the continuous improvement of capacity and the large volume of high-quality large customers, the overall profitability is expected to return to a better level. In the short term, considering that the seamless business of Q1 is affected by the epidemic in Vietnam and the current epidemic in China affects the delivery, we expect the net profit in 2022 / 23 / 24 to be 293 / 3.8 / 478 million yuan (compared with 307 / 383 million yuan in the previous 22 / 23), an increase of 75.4% / 29.5% / 25.9% respectively, and the corresponding PE is 15 / 11 / 9 times, maintaining the “buy” rating.
Risk tip: the demand of downstream customers has fallen, the overseas production capacity expansion progress is less than expected, and the cost of raw materials and employee salaries has increased too fast, resulting in the performance growth less than expected; The intensification of industry competition leads to the loss of orders.
