\u3000\u3000 Shandong Nanshan Fashion Sci-Tech Co.Ltd(300918) (300918)
Woolen fabrics: technology led, price driven growth
The company has a leading edge in fabric research and development. According to the announcement, the company is the only high-tech enterprise in the world that can produce and manufacture optim fabrics. Through optim fabrics, the company has made a breakthrough in the wearing performance of wool fabrics, and expanded wool textile products from traditional winter products to four Seasons products, which are applied to clothing fields such as sportswear, assault clothing, leisure windbreaker and so on. According to our analysis, with the continuous optimization of product structure, the unit price is expected to lead the growth in the future.
Clothing business: with significant integration advantages, it is expected to meet the inflection point in 22 years
In the short term, due to the high proportion of overseas customers of the company, the company has been greatly affected by the epidemic and shipping costs in 20 and 21 years. According to our analysis, the clothing business of the company is expected to usher in an inflection point in 22 years with the gradual recovery of society after the epidemic and the mitigation of shipping. In the medium and long term, the company is committed to optimizing the product structure and increasing the proportion of high-quality suits and shirts, which is expected to drive the increase of unit price in the future.
Ultra high molecular weight polyethylene (UHMWPE) sector: the plant will be built to enter the UHMWPE market and is expected to be put into operation in the first half of 22 years
The company has developed new UHMWPE material technology, invested 128 million yuan to build a factory and cut into the field of high-tech fiber. The project with an annual output of 600 tons of UHMWPE new material in the first half of 2022 will be put into operation. According to our analysis, on the one hand, the sideline is expected to open the ceiling of the company’s revenue and profit, on the other hand, the high profit margin is expected to improve the overall profit margin of the company.
Profit forecast and valuation
We estimate that the company’s revenue from 2021 to 2023 will be RMB 14.49/17.43/2.05 billion respectively, the net profit attributable to the parent company will be RMB 139 / 163 / 206 million respectively, the corresponding EPS will be RMB 0.39/0.45/0.57 respectively, the closing price on January 14, 2022 will be RMB 10.76, and the corresponding PE will be 28 / 24 / 19x respectively. It will be covered for the first time and given a “buy” rating. Considering the 23-year high-molecular-weight polyethylene project, The target market value is 5 billion yuan (corresponding to 23pe20x of wool textile main industry and 23pe50x of UHMWPE sideline), and the target price is 13.89 yuan.
Risk tips
The price increase of the main business is less than expected; The market competition of UHMWPE intensifies the risk; Systemic risk.
