\u3000\u3000 Zhejiang Xinao Textiles Inc(603889) (603889)
For 30 years, we have become a leading woolen textile enterprise
Founded in 1991, the company is one of the world’s leading wool and worsted subdivision industries, and realizes an integrated spinning industry chain integrating top making, modification, spinning, dyeing and finishing. The brand matrix covers the middle end, high-end and luxury end. The product application is diversified, covering the application scope in the fields of underwear, woolen socks, uppers, sports and outdoor clothing, home textiles and the application time in four seasons.
From 2015 to 2019, the company’s revenue scale continued to expand, with a CAGR of 13.71%. The revenue and net profit of 21q1-3 company increased significantly, reaching a double record high, realizing a revenue of 2.705 billion yuan, an increase of 57.34% at the same time; The net profit deducted from non parent company was 246 million yuan, an increase of 417.23% at the same time, mainly due to the increase in sales volume and the increase in revenue caused by the new cashmere business.
Expand the application field of wool products, focus on the main industry, carry out broadband development, cashmere and build a new business growth pole. The company implements the broadband development strategy, carries out diversified expansion of categories based on the main spinning industry, establishes Ningxia Xinao, acquires Duncan, UK, and develops cashmere yarn to become a new business growth pole. 21h1 Ningxia Xinao cashmere production and sales doubled year-on-year, the scale of revenue increased 10 times year-on-year, and the profit contribution rate increased to 17%.
The cashmere business revenue of 21h1 company reached 399 million yuan, showing a rapid volume.
Relying on its outstanding new product R & D and technological innovation capabilities, the company reshapes the versatility of wool fiber. Product R & D focuses on high-quality tracks such as functionality, sports and leisure, ecological and environmental protection, and fully promotes the broadband strategy. Relying on the platform of Xinao textile technology and wool knitted product R & D Center (KDC), the company continues to carry out technological innovation, and product development moves towards differentiation, functionalization High value-added development.
Expand high-end production capacity, optimize production capacity layout, intelligent manufacturing, reduce cost, wool price rebounded and gross profit improved
The company adopts the mode of actively promoting production by sales, strengthens team incentive assessment in sales, gives full play to the scale advantage of existing production capacity in production, and releases the overall output at a high level. In 2020, the company has an annual production capacity of 13300 tons of wool worsted yarn, 7000 tons of wool top, 10000 tons of modification treatment and 13000 tons of dyeing and finishing. The raised investment project focuses on the main business, expands high-end production capacity, gives full play to the integration of equipment efficiency, and fully releases the spinning capacity. Strengthen cooperation with customers in the supply chain and deepen and improve the global industrial layout.
The company strengthened cost control, improved quality and efficiency, further improved the level of intelligent manufacturing, large-scale automatic production, improved product quality, reduced labor costs, improved capacity utilization, reduced unit fixed costs, and driven the coordinated development of front and rear supporting facilities,. After the low price of raw material wool was repaired and rose, it turned to the upward channel of stable fluctuation, improved the unit gross profit and gross profit margin of the company’s products, and improved the profitability as scheduled.
First coverage, buy rating
We estimate that the company’s revenue from 2021 to 23 will be 3.444/4.306/5.200 billion yuan, the net profit attributable to the parent company will be 303/4.02/502 million yuan respectively, the corresponding EPS from 21 to 23 will be 0.59/0.79/0.98 yuan and PE will be 12x / 9x / 7X. On the basis of the weighted average PE valuation of 2022 market value of the comparable company is 11x, the company is given pe11x in 2022, and the corresponding share price is 8.69 yuan / share.
Risk tips: macroeconomic, industry and market fluctuation risk, raw material fluctuation risk, exchange rate fluctuation risk, and production capacity is lower than expected.
