\u3000\u3 China Vanke Co.Ltd(000002) 042 Huafu Fashion Co.Ltd(002042) )
On April 28, the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the revenue was 16.708 billion yuan, an increase of 17.40% and the net profit was 570 million yuan, reversing the loss year-on-year. In 2022q1, the revenue was 4.147 billion yuan, an increase of 7.87%, the net profit was 150 million yuan, an increase of 14.36%, and the net profit after deduction was 132 million yuan, an increase of 126.44%. Under the support of continuous bullish cotton prices, intelligent reform was promoted, high performance growth was expected, and the buy rating was maintained.
Key points supporting rating
The volume and price of the main yarn industry have risen simultaneously, and the cotton socks can be expected to develop in the future. The company’s revenue in the single quarter of 21q4 was 3.993 billion yuan, down 28.34% at the same time, which was mainly restricted by the repeated epidemic situation and the high Q4 base in 20 years. The company’s overall operation was stable in 2021. At the industry level, the cotton price bottomed out and rebounded after the epidemic. At present, it maintains a high level, driving the price increase of yarn business. Coupled with the recovery of demand outside Shanghai and China, the company’s yarn business showed rapid growth. In 2021, the revenue of yarn business was 6.631 billion yuan, an increase of 16.16%. At the same time, the company actively implemented the strategic layout of industrial Internet, promoted the digital reform of production capacity of one million ingots in Xinjiang, and greatly improved the utilization rate of production capacity, from 71% last year to 93%. Benefiting from the rise in cotton prices, the online chain business increased by 16.31% to 9.655 billion yuan. In addition, the company’s annual business income of cotton socks was 79.88 billion yuan, a year-on-year increase of 2.9%.
Affected by the epidemic in 2022q1, the growth rate of income slowed down and is expected to recover in the later stage. In Q1 of 2022, the company achieved revenue of 4.147 billion yuan, an increase of 7.87% and net profit attributable to the parent company of 150 million yuan, an increase of 14.36%. It is worth noting that the net profit after deduction of non-profit increased by 126.44% year-on-year to 132 million yuan, with strong endogenous growth. The decline in Q1 revenue growth was mainly affected by the epidemic, and the delay of delivery logistics affected some orders.
The recovery of cotton price drives the improvement of product profit. The gross profit margin of the company increased by 8.13pct in 2021, mainly due to the rise of cotton price and the improvement of industrial Internet layout and factory production efficiency. At the same time, the company’s expense rate has been optimized. During this period, the company’s sales / management expense ratio increased by 0.11pct and decreased by 0.26pct respectively. As of the end of the first quarter, the company’s inventory amount was 6.966 billion yuan, 41.84% year-on-year, which was mainly due to the company’s increasing the stock of raw material cotton, and the overall operation was stable.
The promotion of industrial Internet continues, and the high growth of cotton socks business can be expected. The promotion of the company’s industrial Internet is expected to continue to improve the efficiency of the factory end, improve the capacity utilization and production efficiency, and is expected to be promoted overseas in 2022. The yarn business is expected to gradually increase its output under the background of factory intelligence. In terms of cotton socks business, with the goal of building a scientific and technological socks industry, actively carry out independent brands and develop licensing business, which is expected to become the second growth pole of the company.
Valuation
Under the current share capital, the earnings per share from 2022 to 2024 are expected to be 0.36/0.41/0.45 yuan respectively; The P / E ratio was 10 / 9 / 8 times respectively, maintaining the buy rating.
Main risks of rating
Industry competition intensifies, new product expansion fails to meet expectations, and raw material prices fluctuate
