\u3000\u3 China Vanke Co.Ltd(000002) 042 Huafu Fashion Co.Ltd(002042) )
Events
On April 27, the company released the results of 21 years and 1q22. In the whole year of 21, the company realized a total revenue of 16.71 billion yuan (+ 17.4%), and a net profit attributable to the parent company of 570 million yuan (+ 228.25%), which is located in the forecast center. Among them, 4q21 achieved a revenue of 3.99 billion yuan, down 28% due to the impact of the epidemic; The net profit attributable to the parent company was 124 million yuan (+ 162%). 1q22 achieved revenue of 4.147 billion yuan (+ 7.9%), net profit attributable to the parent company of 150 million yuan (+ 14.36%), and net profit deducted from non-profit of 132 million yuan (+ 126.44%), which was in line with previous expectations.
Performance review
Yarn main business: remarkable repair, and the effect of digital intelligence reform is beginning to show. In terms of yarn business, the company actively expanded the Chinese market, and the capacity utilization rate rose sharply to 93% (+ 22pct), driving the revenue to increase by 16% to 6.63 billion yuan; By the end of 21, the company has completed the industrial Internet transformation of the factory with a capacity of 1 million ingots, which is expected to be fully completed in 22 years, driving the overall net profit margin to increase 2pct, and exporting the digital scheme to the industry, helping the company realize asset light expansion and open the ceiling of scale growth.
Network chain business: the front-end trade volume increased simultaneously, and the back-end socks industry expanded its borders. In terms of front-end cotton trade, the company fully grasped the market situation, and its revenue increased by 16% to 9.655 billion yuan; In terms of back-end network chain, the company consolidated its Alibaba University Internet business at the end of the third quarter, increasing its revenue by about 270 million yuan (+ 79.88%). Moreover, the gross profit margin of the socks industry is 37.41%, which is significantly higher than that of yarn (15.6%) and front-end network chain (3.63%), which is expected to promote the overall profitability of the company.
Profitability improved significantly, and 1q22 increased month on month. In 21 years, the company benefited from the recovery of capacity utilization, business expansion, digital cost reduction and efficiency increase, and the rise of cotton price. The gross profit margin increased significantly by 8.13pct to 9.64% year-on-year, and the net profit margin increased by 1.08pct to 3.67% compared with 19 years. 1q22 company’s gross / net profit margin continued to increase by 0.64/0.13pct to 10.28% / 3.80% month on month, and it is expected to continue to increase throughout the year.
Cotton inventory increased, inventory turnover weakened, and the operation remained healthy as a whole. In 21 years, the company’s overall inventory turnover days increased by 2.87 days to 139.5 days, of which raw materials (174 days) were slower than yarn business (135 days), and the balance of raw material inventory increased by 53.9% year-on-year, mainly due to the increase of cotton inventory.
Investment suggestions and risk tips
The customer structure of the company’s main business of color spinning continues to be optimized, superimposed with digital reform to improve efficiency, with prominent leading advantages. At the same time, it is expected that the back-end network chain business will maintain rapid growth and promote the overall performance. Maintain the profit forecast for 22-23 years and add 24 years. It is expected that the net profit attributable to the parent company in 22-24 years will be RMB 664 / 764 / 820 million, corresponding to 9 / 8 / 7 times of PE, and maintain the “buy” rating.
Risk tips: terminal demand does not meet expectations, RMB exchange rate fluctuations, lifting of the ban on restricted shares, etc.
