\u3000\u3000 Huali Industrial Group Company Limited(300979) (300979)
The company is in a period of rapid development, and its production capacity drives growth. 1) The rapid growth of performance was driven by large capacity and high-quality demand. The revenue / performance of 2021q1-q3 company was RMB 12.63/2 billion respectively, with a year-on-year increase of + 23% / + 52% respectively. In the same period, the company sold 153 million pairs of sports shoes, with a high-speed increase of 30%. 2) The profit quality is high, and the gross profit margin of 2021q1-q3 company is + 3.9pcts to 27.9% year-on-year. We judge that it is due to the optimization of customers and product structure, and the high gross profit margin level is expected to continue in the future. 3) The production capacity operation is stable and less affected by the epidemic situation in Vietnam: since the end of June last year, the epidemic situation in some parts of Vietnam has been repeated, and the subsequent local policies have been liberalized. The company has always strengthened epidemic prevention control. According to the company's announcement, the production and operation of its Vietnamese factory is normal.
Full demand: excellent customers and inclined orders. 1) With long-term cooperation with global sports shoes and clothing head brands, the top five customers of the company in 2021q1-q3 are Nike / Deckers / VF / puma / UA, with sales of 44.2/27.5/24.5/14.0/730 million yuan respectively, with a year-on-year increase of 38% / 46% / 1% / 15% / 57% respectively. 2) Develop new customers, such as on, ASICs and NewBalance. We judge that it is expected to consolidate and deepen cooperation in the future. 3) Large scale orders help efficient production. According to our tracking, the company focuses on large-scale and sustainable production, effectively contributing to efficient production and cost optimization. 4) High quality demand inclines to drive the optimization of product structure. The epidemic has impacted the global supply chain. We judge that the company has been highly recognized by customers and inclined orders by virtue of its efficient and stable supply capacity, so as to optimize the product structure. ① according to our estimation of orders and customer scale, the company currently accounts for about 50% + / 50% + / 20% + of Deckers / VF / UA footwear procurement respectively; ② According to the growth expectations disclosed in the announcements of various brands, we estimate that the company's orders cooperating with Nike, Puma and new customers are expected to grow rapidly in the future.
Capacity growth: rapid expansion and effective volume. Rapid expansion, continuous planning and construction in Vietnam, Indonesia and other places. According to the company's announcement: ① three new factories were put into operation in Vietnam last year and will reach production in the next few years. ② The planned scale of the plant in Indonesia is large, which will help the capacity expansion. The phase I plant is expected to be put into operation in 2022 and contribute a large amount in 2023. At present, the company is in a period of rapid development. We track the company's production capacity investment and volume expansion progress. It is comprehensively estimated that the annual output in 2021 is expected to exceed 200 million pairs (an estimated year-on-year increase of 25% ~ 30%) / the output is expected to continue to maintain a growth rate of 20% + in 2022.
Investment advice. The company is a leading sports industry chain manufacturing company with excellent customer resources and continuous large-scale production capacity. In the long run, with the inclination of customer order resources, the performance is expected to grow rapidly. We adjusted the profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 27.0/34.1/4.11 billion respectively, with a growth rate of 43.7% / 26.3% / 20.7% respectively. The current stock price is RMB 83.1, corresponding to 28 times of PE in 22 years, maintaining the "buy" rating.
Risk warning: the epidemic situation of covid-19 exceeded expectations and was unfavorable to overseas orders; Capacity expansion and production line transformation are not as expected; Order fluctuation risk of key customers; Foreign exchange fluctuation risk.
