\u3000\u3000 Zhejiang Jasan Holding Group Co.Ltd(603558) (603558)
It is estimated that the net profit attributable to the parent company will be 160 ~ 210 million yuan in 2021, and the cotton socks business will return to normal
The company issued a performance pre profit announcement. It is estimated that the net profit attributable to the parent company will be 160 million yuan ~ 210 million yuan in 2021, turning losses into profits, with a year-on-year increase of 130.32% ~ 139.79%, mainly because the company’s cotton socks business got rid of the impact of the epidemic and returned to the normal development track, with a large increase in sales and profits.
In addition, it is also affected by other factors: 1) in 2020, the company implemented the second phase of employee stock ownership plan, and about 40 million yuan of share based payment expenses will be amortized to 2021; 2) In December 2021, the company’s seamless Shangyu plant was temporarily shut down due to the impact of the epidemic and is still in the process of recovery. It is expected that the profit will be reduced by about 6 million yuan; 3) In October 2021, the company shut down Jiangsu Xierong factory and transferred its production capacity, and accrued goodwill impairment of about 9 million yuan. The company expects to realize a net profit of 150 million yuan to 200 million yuan, a year-on-year increase of 127.41% ~ 136.54%.
Seamless rapid production expansion, optimistic revenue growth in 2022
Orders and production have gradually recovered, and the shipment is expected to be good in 22 years. The company’s previous lack of seamless orders was mainly due to the high concentration of customers, who were greatly affected by the epidemic. With the recovery of the epidemic and the development of new seamless business customers such as HM and puma, we expect the company’s orders to improve. At present, the seamless business is recovering, and the shipment of 22q1 is expected to increase significantly.
Increase production expansion efforts, and Vietnam remains the key layout area. Overseas customers pay more attention to the seamless production base in Vietnam. Based on their confidence in the development of Vietnamese factories, the focus of the company’s seamless production capacity expansion is still in Vietnam. At present, more new production capacity in Guizhou is mainly due to the Vietnam epidemic, which leads to relatively cautious production expansion. As of 21h1, the capacity utilization rate of the company’s Vietnam seamless factory has reached 70%. The company has also continued to expand production during the epidemic in recent two years. Considering the improvement of capacity utilization rate + expansion capacity release in 2022, the revenue in 22 years is expected to grow faster than that in 21 years.
The company’s overseas customers’ capacity transfer trend to Southeast Asia remains unchanged. It is expected that Vietnam’s capacity will provide greater assistance after the epidemic is stable. Shangyu positioning new product development and high-end product production; Guizhou locates the middle end; Vietnam’s Xing’an is positioned to participate in medium and low-end competition, and seamless bases have formed a relatively three-dimensional layout.
Seamless clothing has broad prospects for development. On the one hand, seamless is currently mainly used in sports and body shaping clothing, and the terminal demand is expected to grow synchronously with the prosperity of the sports track, especially benefiting from the segmentation of women’s sports, including yoga; On the other hand, seamless application scenarios are broadened, and the demand for external wear is increasing.
In the medium and long term, the company benefits from many advantages: 1) the head enterprise effect and the trend of international orders transferring to domestic stable supply chain, and the order volume is expected to grow steadily; 2) The company’s technology is leading. 100% of seamless garment looms are imported from Italy, and its comprehensive advantages attract orders for medium and high-end products; 3) Superimposed with capacity expansion and production efficiency improvement, the company’s seamless business is expected to accelerate growth.
The cotton socks business developed steadily and the production capacity continued to expand
The production capacity of Jiansheng cotton socks exceeds 300 million pairs and will continue to expand in Guizhou and Qinghua, Vietnam in the future. The company’s cotton socks business grew steadily, with strong customer demand and short supply of products. It continued to optimize the customer structure, adjusted individual customers with strong price sensitivity, and raised the product price based on factors such as the rise of raw materials.
Adjust the profit forecast and maintain the buy rating
The company’s main business is the production and manufacturing of knitted sportswear. Its main business model is to provide professional services for world-famous brands and retailers’ own brands in the form of ODM and OEM. The company mainly serves customers and brands such as puma, Decathlon, UNIQLO, underarmour, Bombas, gap, bonds, Adidas, etc. the main sales markets are Europe, the United States, Japan, Australia and China. The company is a knitted sportswear manufacturer integrating the global industrial chain.
The company’s cotton socks business has resumed, the seamless business has a good development prospect, and continues to optimize and expand production capacity. With the release of production capacity, the improvement of production efficiency and the growth of orders in the future, it may bring large increments. The company issued a 21 year earnings forecast announcement. We adjusted the net profit attributable to the parent company in 2021 from the previous 240 million to 190 million, EPS from the previous 0.6 yuan to 0.5 yuan, and EPS unchanged from 22 to 23 years to 0.8 yuan and 1 yuan respectively; PE in 21-23 years is 22x, 14x and 11x respectively.
Risk tips: repeated outbreaks outside China, less than expected improvement in production capacity and efficiency, rising raw material prices and other risks; The performance forecast is only the preliminary accounting results. Please refer to the annual performance announcement.
