\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
Company overview
The net profit attributable to the parent company was 1.04 billion yuan / 2024.2% respectively, which was lower than the expected net profit attributable to the parent company. The operating cash flow was – 49 million yuan, a year-on-year decrease of – 11.5%, mainly due to the increase of inventory.
Analysis and judgment
The volume / price increased by 7.1% / 4.0% respectively, but the sales volume decreased month on month, and the unit price increased by 6.6% excluding the influence of exchange rate. (1) In terms of component price, according to the announcement, Q1 company sold 51.14 million pairs of sports shoes in 2022, with a year-on-year increase of 3.39 million pairs and a year-on-year increase of 7.09%; The sales volume decreased by 9% month on month (21q4 was 56 million pairs), mainly due to the reduction of 7-8 working days in February this year under the influence of the epidemic; The price increased by 4% and 6.6% excluding the impact of exchange rate. We estimate that it is mainly due to the improvement of Nike’s product structure. (2) In terms of customers, it is estimated that Nike has increased by more than 40%, Hoka has increased by more than 50%, vans has increased by about 15%, and converse and puma are the same.
The decline in gross profit margin is affected by capacity utilization. The gross profit margin of 22q1 was 25.65%, a year-on-year decrease of 3.7pct and a month on month increase of 0.1pct respectively. We analyzed that it was mainly affected by the epidemic, capacity utilization and the climbing of new factories.
The net interest rate remained high. The net interest rate of 2022q1 was 15.72%, an increase of 0.14pct year-on-year. In terms of expense rate, the sales / management / R & D / financial expense rate in 2022q1 was 0.46% / 3.73% / 1.48% / – 0.27% respectively, with a year-on-year increase of 1.65 / – 0.78/0.02/0.00pct. The impact of exchange rate changes on the company is limited, mainly because the company’s income and procurement are settled in US dollars.
Inventories increased month on month. The inventory increased by 14% month on month to RMB 3.054 billion, mainly due to the increase of raw materials and shipment delay. On the one hand, the production rhythm of Q1 was delayed, on the other hand, there was the problem of fabric blocking.
Investment advice
According to our analysis, (1) in the short term, the decline in 22q1 capacity utilization is expected to be compensated by overtime in the next few quarters. The contribution of 22 years’ production capacity comes from the continuous contribution of the climbing of three Vietnamese factories and the transformation of old factories in 21 years. The construction of phase II of Vietnamese factories has begun. The Indonesian plant will be put into operation at the end of 22 years and will contribute to the increment in 23 years. We expect the sales volume to increase by more than 40 million pairs in 22 years. (2) Nike China has a poor performance and has a certain impact on the supply chain, but we judge that the company still has room to increase its share and has little impact; In addition, Puma is optimistic about its own operation, and the new brands onrunning, ASICs and NewBalance are still expected to contribute to rapid growth, and the unit price growth in 22 years is expected to be higher. (3) We judge that although most of the company’s raw materials are locked by brands, there is still some pressure on the gross profit margin under the impact of the epidemic in Vietnam and the rise in freight prices, but the income tax rate is expected to decline. Maintain the revenue forecast of 22 / 23 / 24 years as 218 / 25.9/30.1 billion yuan, the net profit attributable to the parent company as 33.88/40.82/47.71 billion yuan, the EPS forecast as 2.9/3.5/4.09 yuan, the closing price of 67.32 yuan on April 27, 2022, and the corresponding PE as 23 / 19 / 16x respectively, and maintain the “buy” rating.
Risk tips
Risk of recurrent outbreaks; Risk of lifting the ban; The epidemic affects downstream demand; Risk that the shop opening progress is lower than expected; Systemic risk.
