\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 79 Huali Industrial Group Company Limited(300979) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. ① In 2021, the company achieved revenue of 17.47 billion yuan / yoy + 25.40% (excluding the impact of exchange rate changes, yoy + 34.09%), an increase of 15.19% compared with the same period in 2019; The net profit attributable to the parent company was 2.768 billion / yoy + 47.34% (YoY + 57.55% excluding the impact of exchange rate changes), an increase of 51.99% compared with the same period in 2019; The net profit deducted from non parent company was 2.761 billion / yoy + 47.21%, an increase of 57.91% compared with the same period in 2019. ② In 2021, Q4 company achieved a revenue of 4.835 billion / yoy + 33.46%; Net profit attributable to parent company: 771 million / yoy + 37.39%; Net profit deducted from non parent company is 764 million / yoy + 36.29%. ③ In 2022, Q1 company achieved revenue of 4.124 billion / yoy + 11.39%; Net profit attributable to parent company: 648 million / yoy + 12.40%; The net profit deducted from non parent company was 638 million.
The revenue of sports and leisure shoes, sports sandals / slippers and other two categories of products reached a new high. Benefiting from the normal operation of Vietnamese factories, strong global consumption demand for sports shoes, the company's product design and development ability to meet the needs of many brands, new and expanded factories to help expand production capacity, the implementation of automation, the smooth promotion of new brand cooperation and other factors, the company's revenue of various products recovered in 2021, and the growth of revenue of sports leisure shoes, sports sandals / slippers and other products exceeded the performance in the same period in 2019, reaching a new high. The company's revenue of sports and leisure shoes was 14.211 billion / yoy + 25.94%, an increase of 20.01% compared with the same period in 2019; The revenue of outdoor boots and shoes was 1.583 billion / yoy + 6.16%, a decrease of 22.68% compared with the same period in 2019; Sports sandals / slippers and other revenue of 1.637 billion / yoy + 46.60%, an increase of 31.52% compared with the same period in 2019.
The company's production capacity is mainly distributed in Southeast Asia, with low labor cost and policy dividends. The production base of the company is mainly distributed in Vietnam. There are small factories in Dominica and plans to build new factories in Myanmar and Indonesia in 2022. Vietnam, Myanmar and other Southeast Asian countries have sufficient labor force and relatively low labor cost. In order to encourage foreign enterprises to invest, the company has the convenience of simplifying administrative review procedures and preferential investment policies, which is suitable for capacity layout.
The company adopts ODM OEM mode of production and establishes long-term cooperative relations with many brand customers. The company uses ODM for production. Through its complete industrial chain, the company quickly responds to the needs of downstream brand customers of sports shoes, and transforms the creativity of brand customers into practical products that are comfortable, durable, functional, mass-produced and acceptable cost. At present, the company has established long-term and stable cooperative relations with customers such as Nike, VF, Deckers, puma, Columbia and underarmour.
Investment suggestion: as the world's leading manufacturer of sports shoes, (1) the company takes China as the R & D and trade center and North Central Vietnam as the production center to expand production capacity to Myanmar, Dominica and Indonesia and enjoy the cost advantage brought by scale effect; (2) The company's industrial chain is complete and continues to try to expand, more and more automatic equipment is applied in the production process, and the cost structure will be continuously improved; (3) The company has reached long-term cooperation with many well-known sports shoe brands around the world, has stable customer resources, and the demand side is hard to restrain; (4) With the continuous development of specific drugs and vaccines, the global epidemic prevention and control has gradually become normalized, the impact of the epidemic on Residents' sports has gradually decreased, and the development of sports shoes industry is expected to be further boosted. We predict that the company's revenue from 2022 to 2024 will be 21.488/26.47/30.896 billion yuan, a year-on-year increase of + 23% / + 21% / 19%; The net profit attributable to the parent company was 3.45/4.14/4.96 billion yuan, a year-on-year increase of + 24% / 20% / 20%, and the corresponding PE was 23x / 19x / 16x. It was covered for the first time and given a "recommended" rating.
Risk warning: repeated epidemic risk and exchange rate change risk.
