\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
2022q1 revenue / performance increased by 11% / 12% year-on-year. 1) In the first quarter of 2022, the company realized an operating revenue of 4.124 billion yuan, an increase of 11.4% at the same time; The net profit attributable to the parent company was 648 million yuan, an increase of 12.4% at the same time. Excluding the impact of exchange rate, revenue / performance increased by 14.1% / 15.2% year-on-year. 2) The decline of gross profit rate in February was mainly due to the decline of gross profit rate during the year-on-year period. In 2022q1, the gross profit margin was – 3.7pcts to 25.6% year-on-year, and the sales / management / financial expense ratio was – 1.0 / – 0.1 / – 0.6pcts to 0.5% / 3.7% / – 0.3% respectively. The decrease in the financial expense ratio was mainly due to the increase in the company’s interest income and the appreciation of the exchange rate of vnd. The net interest rate was basically flat year-on-year, at 15.7%.
High customer concentration and strong order demand expectation. 1) According to the split of volume and price: in 2022q1, the company sold 511368 million pairs of sports shoes, with a year-on-year increase of 7.1%. We estimate that the unit price of products priced in RMB increased by median single digits respectively. 2) The customer structure is concentrated and the order expectation is strong. 2022q1 company sold 1.59/8.5/6.5/4.7/220 billion yuan to the top five customers, accounting for 39% / 21% / 16% / 11% / 5% respectively, accounting for 92% in total. According to the business growth of the company’s main customers, the company continues to deepen the cooperative relationship with its head customers, and its share of some customers is expected to increase. In addition, the company actively promotes the cooperation with new customers such as on, ASICs, NewBalance and other brands. We judge that the sales of new customers are expected to grow rapidly in the future.
At present, the production and operation are normal, the capacity expansion continues, and it is expected to increase rapidly in the future. 1) The short-term epidemic has disturbed the operation and has returned to normal. According to the company’s announcement, the epidemic situation in northern Vietnam repeated at the beginning of the year, the attendance rate of the company’s employees was affected to a certain extent in February, and has returned to normal since mid March. 2) The large-scale construction of production capacity has been carried out smoothly and is expected to continue in large quantities. According to the announcement of the company, ① the capacity of the three new Vietnamese factories put into operation in 2021 is climbing rapidly, and it is expected to contribute a lot in 2022. ② At the same time, based on the strong demand of customers’ expected orders, the company will continue to build new factories in northern Vietnam, build bases in Indonesia and diversify the production capacity layout. The phase I plant in Indonesia is expected to make an effective contribution to the production capacity in 2023.
The operation level is expected to be optimized with the promotion of operation. 1) At the end of 2022q1, the company’s inventory was 3.05 billion yuan, with a year-on-year increase of 34%. We judge that it is mainly due to the increase of raw material inventory. 2022q1 company’s inventory turnover days are + 9 days to 84.0 days year-on-year. In the future, with the promotion of normal production and shipment, the inventory turnover is expected to be optimized. 2) 2022q1 company’s accounts receivable turnover days were + 3.6 days to 48.9 days year-on-year, and the operating cash flow decreased by 11.5% to 377 million yuan year-on-year.
Investment advice. The company is a leading sports industry chain manufacturing company with excellent customer resources and continuous large-scale production capacity. In the long run, with the inclination of customer order resources, the performance is expected to grow rapidly. We adjusted the profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 3.42 billion / 4.25 billion respectively, and the current share price is RMB 67.32, corresponding to 23 times of PE in 2022, maintaining the “buy” rating.
Risk tip: the epidemic repeatedly affects overseas orders; Capacity expansion and production line transformation are less than expected; Order fluctuation risk of key customers; Foreign exchange fluctuation risk.
