\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
Key investment points
The company announced the first quarterly report of 2022: 22q1 revenue of 4.12 billion yuan / yoy + 11.4% (excluding the impact of exchange rate yoy + 14.1%), and the net profit attributable to the parent company of 650 million yuan / yoy + 12.4% (excluding the impact of exchange rate yoy + 15.2%). The performance was slightly lower than expected, mainly due to the spread of the epidemic in northern Vietnam in February, which had a certain impact on the attendance of Vietnamese factory employees.
Core customers maintained high growth, and both volume and price increased to promote revenue growth. 1) In terms of customers, the top five customers of 22q1 Nike / VF / Deckers / puma / UA contributed revenue year-on-year (excluding the impact of exchange rate) + 23.1% / 14.7% / 12.8% / 0.7% / 53.2% respectively, accounting for 38.51% / 20.6% / 15.74% / 11.35% / 5.45% respectively. The total contribution revenue of the top five customers accounted for 91.65% (flat compared with the end of 21) and the total revenue was + 17.5% year-on-year. Among them, Nike includes two brands, Nike and converse. Converse is the same year-on-year, and the year-on-year growth rate of Nike single brand is more than 40%; In addition, Hoka (a brand owned by Deckers) maintained a high growth rate, and 22q1 revenue increased by 40% - 50% at the same time. 2) In terms of component price, the sales volume of finished shoes in 22q1 reached 51 million pairs / yoy + 7.1%, and the estimated unit price was + 4% year-on-year. The sales volume of 22q1 decreased slightly compared with 57 million pairs of 21q4, mainly due to the impact of the epidemic in northern Vietnam on employee attendance in February and the climbing period of new production capacity. In terms of unit price, excluding the impact of exchange rate, the overall ASP is about + 6.8% year-on-year, higher than the increase of the previous year (ASP + 4.5% in 2021), mainly benefiting from the upgrading of product structure of core customers.
The gross profit margin declined, while the net profit margin remained flat and increased slightly. 1) Gross profit margin: 22q1 fell from - 2.7pct to 25.7% year-on-year, mainly due to the impact of the epidemic in Vietnam in February on employee attendance, the ramp up of the capacity of 21h2 new factory, and the superposition of accounting policy adjustment (transportation and packaging expenses were adjusted from sales expenses to operating costs), which lowered the gross profit margin. With the recovery of employee attendance in March, the annual gross profit margin is expected to be better than Q1. 2) Expense rate: during 22q1, the expense rate increased from -1.77pct to 5.42% year-on-year, of which the sales / management / R & D / financial expense rate increased from -1 / - 0.06 / - 0.12 / - 0.58pct year-on-year respectively, mainly due to the adjustment of the above accounting policies. 3) Income tax: the income tax rate of 22q1 is - 5.3pct to 20.4% year-on-year (the income tax base of 21q1 is high due to the dividend of 21q1 overseas subsidiaries). The company expects to maintain the income tax rate of 20% - 21% in 22 years. 4) Net profit margin attributable to parent company: with the change of comprehensive gross profit margin, expense rate and income tax rate, the net profit margin attributable to parent company in 22q1 increased from + 0.14pct to 15.72% year-on-year, and the profit level remained stable.
The short-term epidemic disturbance does not change the annual performance expectation. In February, the epidemic situation in Vietnam disturbed the performance of 22q1. Since March, the epidemic situation in Vietnam has improved, and the operation of all factories has returned to the level before the Spring Festival. The company expects that the delayed orders of Q1 are expected to be made up in the following quarters. The production capacity of two of the three new plants in Vietnam is expected to be fully released in 22 years (the output has reached about 80% of the total production capacity by the end of 21). At the same time, the second phase of the new plant is expected to be opened and the production capacity is expected to climb in 22h2. Since March, the impact of the epidemic in China has been limited. 60% - 70% of the company's raw materials have been purchased from China. At present, the transportation checkpoints have been partially affected, but the degree of impact is limited.
Profit forecast and investment rating: the company is the world's leading professional manufacturer of sports shoes. The epidemic in Vietnam in February 22 had a certain impact on the output and gross profit margin, but the industry demand is strong. With the recovery of the epidemic and the liberalization of entry restrictions in Vietnam in March, the follow-up production is expected to make up for the Q1 gap and the annual goal is expected to be achieved. The company's income and procurement are settled in US dollars, and the impact of exchange rate fluctuation is limited. We maintain the forecast that the net profit attributable to the parent company in 22-24 years will be + 26.8% / 23.1% / 18.9% year-on-year respectively, and the EPS will be 3.01/3.70/4.40 yuan / share respectively, corresponding to PE 23 / 19 / 16x respectively, maintaining the "buy" rating.
Risk tip: repeated overseas epidemics, less than expected capacity expansion, fluctuating orders from major customers, and the ban on some restricted shares was lifted on April 26, 2022.
