\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 339 Bros Eastern Co.Ltd(601339) )
Benefiting from rising cotton prices, capacity expansion and strong orders, the performance increased significantly. The Vietnam epidemic blockade in 2021 led to a loss of about 8% of the company's output, but benefited from the capacity expansion of 100000 ingots, the improvement of capacity utilization caused by strong orders, and the transmission of the rise in cotton price to the yarn end during the period, the company's sales volume / unit price were + 12% / + 13% respectively, and the revenue increased by 26.7% to 7.8 billion yuan. Cotton prices rose sharply during the period (328 cotton prices in 2021 increased by 38% year-on-year), benefiting from low-cost inventory, and the company's gross profit margin increased by 15.2 percentage points to 26.2%. The three expense rates decreased by 2 percentage points, the net interest rate increased by 11.7 percentage points to 17.6%, and the net profit attributable to the parent company was 1.37 billion yuan, + 275%. Inventory turnover days decreased by 11 days to 240 days year-on-year. In 2021, the capital expenditure was 570 million yuan, an increase of 85% year-on-year.
The gross profit margin in the fourth quarter hit a record high, benefiting from the performance in the first quarter, and the cotton price maintained a high growth. In 2021q4, the company's revenue was 2.22 billion yuan, + 13.4%, and the net profit was 580 million yuan, + 210%, of which the gross profit margin was + 23.8 percentage points to 36.4%, a record high. In 2022, Q1 company's revenue was 1.98 billion yuan, + 5.4%, net profit was 345 million yuan, + 54.6%, gross profit margin was 26.1%, + 8.2p p. , net interest rate 17.4%, + 5.6p p. , continue to benefit from the substantial increase in cotton prices (2022q1328 cotton prices increased by 44% year-on-year). Inventory turnover was 259 days, with a month on month increase of 19 days.
Outlook: cotton prices remain high and are optimistic about the recovery of capacity utilization this year. Vietnam's textile and garment export growth has maintained a high prosperity since the opening in November last year, with a growth rate of 20.3% in the first quarter, the highest year-on-year growth since 2012. We expect the company's annual capacity utilization rate to be significantly improved year-on-year. From the perspective of cotton price, 328 cotton price has remained at a high level of about 22700 yuan / ton since this year. It is expected that the company's annual gross profit margin will continue to maintain a good level.
Risk tips: repeated outbreaks, sharp fluctuations in raw material prices, less than expected order demand and systemic risks.
Investment suggestion: there is great demand potential for medium and high-end yarn. We are optimistic about the recovery of capacity utilization and the production of new capacity in Vietnam. In the short term, since the opening of Vietnam in October last year, Vietnam's textile exports have been booming, the company's production has returned to the right track, and the capacity utilization rate is expected to increase in 2022. In the medium and long term, the penetration rate of color spinning in China is still low, and the demand potential of medium and high-end yarn is large. As the world's second largest color spinning manufacturer, the company arranged a new round of capacity expansion of 390000 yarn in July 2021, and is expected to continue to consolidate its leading position and further improve its market share with its own scientific and technological strength and automation level. Maintain the profit forecast. It is estimated that the net profit from 2022 to 2024 will be 1.32/15.0/1.62 billion yuan respectively, with a year-on-year increase of - 3.9% / + 13.7% / + 8.1%, corresponding to 8-8.5xpe in 2023, maintain a reasonable valuation of 8-8.5 yuan and maintain the "overweight" rating.
