Main points:
This week’s special topic: taimushi, a knitted garment OEM, landed on the Shenzhen Stock Exchange and built its core competitiveness with the advantages of customer resources + production chain
Tamus: the company was founded in 1992 in Jiangsu Province and is a professional agent factory engaged in high-grade fabric weaving, dyeing, finishing processing and knitted garment production. It landed on the main board of Shenzhen Stock Exchange on January 11, 22. Since its establishment, the company has introduced advanced technology and equipment, made steady progress, continuously expanded production capacity and integrated products, formed a one-stop production system of knitted clothing, and established deep binding cooperative relations with decathlon, Senma and other well-known brands with excellent product quality and stable order delivery time. In the past 20 years, the revenue and net profit attributable to the parent company were 694 million yuan and 82 million yuan respectively. The company’s business recovered rapidly after the epidemic. According to the management’s prediction, the company’s revenue in 2021 is expected to reach 800-850 million yuan, with a year-on-year increase of 15.4% – 22.6%, and the net profit attributable to the parent company is expected to reach 96-106 million yuan, with a year-on-year increase of 17.1% – 29.3%. By product, the company’s 2021h1 knitted clothing revenue accounts for 96%, of which sports clothing accounts for 52.1%, followed by children’s clothing and casual clothing, accounting for 30.8% and 12.7% respectively; By region, the company’s contribution to China’s revenue is stable at more than 65%, while Europe accounts for the largest proportion of foreign revenue, followed by Asia and Africa. In terms of competitive advantage, the company has the industry-leading vertical integrated knitted garment flexible production chain and high-quality customer resources, which constitute its core competitiveness. The company has reached strategic cooperative relations with decathlon, barabarabara, Zhejiang Semir Garment Co.Ltd(002563) and other well-known clothing brands at home and abroad, and adopts a vertical integrated production mode. On the one hand, it can capture customers’ needs, market changes and technological progress, on the other hand, it can reduce customers’ overall procurement cycle, and complete the batch delivery of “yarn fabric clothing” in as short as 7 days. At present, the company’s revenue scale and profitability are at the midstream level of the industry, and the trend in recent years is basically consistent with that of comparable companies in the same industry; The inventory turnover rate is equivalent to the industry average, the accounts receivable turnover rate is slightly lower than the industry average, and the solvency has improved in recent years. After the listing of the company, the capital strength is thickened, the new capacity of raised investment projects breaks the capacity bottleneck, and the overall scale, profitability and operation indicators are expected to improve in the long term.
Garment OEM: the vertical integration of manufacturers widens the profit space, the digital transformation of leading enterprises improves efficiency, and the concentration tends to increase. (1) From the perspective of market division of labor, brands focus on brand and channel operation and entrust OEM enterprises to manufacture. Among them, OEM enterprises with the ability of multi link vertical integration business model can effectively reduce material turnover costs and broaden profit space. Brand customers inspect OEM enterprises from the aspects of development and design capacity, production capacity, supply chain management capacity and social responsibility, and bind deeply after passing the examination; (2) From the perspective of downstream market, the expansion of garment market scale is the long-term logic driving the development of garment OEM manufacturing industry. As a basic consumer goods, the market scale of clothing is affected by macroeconomic growth and the change of social concept. The increase of Chinese consumers’ per capita clothing consumption is expected to bring growth space. At the same time, the change of its consumption concept puts forward high requirements for garment manufacturing enterprises to grasp the market dynamics, improve the design ability of R & D, as well as the rapid response and personalized customization of manufacturing and production. Category: the sportswear market is expanded driven by the national support of the sports industry and the improvement of their own health awareness. Euromonitor predicts that the market scale will reach 664.4 billion yuan in 2026; Children’s clothing benefits from the consumption upgrading + three child policy, and the market scale is expected to reach 417.1 billion yuan in 2026. (3) In terms of development trend, international trend: the manufacturing industry chain of developed countries is transferred to developing countries. Although the labor and tariff costs of Southeast Asian countries are low, the management system, manufacturing technology and labor quality are not as good as China. China still maintains the operation advantage of the whole industrial chain of garment manufacturing industry all over the world. China’s trend: the automation and mechanization level of garment manufacturing is improved, and it is expected to transform to capital intensive in the future. At the same time, leading manufacturers will establish their own competitive advantages, realize the transition of the middle and high-end of the value chain, and further improve the industry concentration.
Customer analysis: bind brands to grow together. After the raised investment project is put into operation, it is expected to broaden customers and spread risks. On the whole, temus is deeply bound with major brand customers decathlon and Semir. The revenue of the top two customers accounts for more than 80% and has high growth. From the perspective of customers, Decathlon is a well-known sports brand in the world. Its revenue continues to grow and its channels continue to expand, driving the revenue growth of upstream OEM factories; Samma’s leisure and children’s clothing have developed simultaneously, especially the sales revenue of children’s clothing from 2014 to 19 cagr31 9%. Affected by the epidemic in 20 years, the total revenue decreased to 15.21 billion yuan. It is expected that there will be a rebound after the epidemic. According to wind’s unanimous prediction, the revenue will increase to 20.97 billion yuan in 23 years. In comparison with the industry, the revenue of the top five customers of temus accounts for 92.2%, which is 73.4% higher than the industry average. The company is trying to expand new customers such as UNIQLO and Ningbo Peacebird Fashion Co.Ltd(603877) . After the fund-raising project is put into operation, it is expected to disperse the risk of excessive concentration of customers. Cost analysis: material and labor costs account for more than 70%, and cooperate with head brands to resist the risk of price fluctuation. The cost structure of the company is stable. Over the past 18 years, the direct material cost accounts for about 50% of the main business cost, the direct labor cost accounts for about 20%, and the outsourcing processing fee accounts for about 15%. The company cooperates with the head brand in the development of fabrics and garments, and purchases raw materials from them to achieve stable purchase prices. Small price fluctuations are conducive to cost control. In 2021h1, the price of cotton yarn raw materials rose sharply, and the purchase price adjustment of cotton yarn and other general raw materials purchased by the company from decathlon, the head customer, lagged behind, so the purchase cost was effectively reduced. The average salary of the company’s employees is at a high level in the same industry and region, which is conducive to the company to attract talents and enhance competitiveness. Capacity analysis: knitted fabrics and ready-made clothes are in full production and sales, and financing expansion is expected to solve the capacity bottleneck. From the perspective of existing production capacity, the increase of downstream demand has brought about a production capacity bottleneck. The production capacity utilization rate of knitted fabrics and ready-made clothes is close to saturation. The clothing production capacity utilization rate of 2021h1 company is as high as 143.1%, and most of them have exceeded 100% in recent years; In terms of production and marketing rate, the company adopts the production mode of “determining production by sales”. In recent years, the matching degree between output and sales volume is high, and the production and marketing rate is close to 100%; From the perspective of planned production capacity, the company plans to raise 505 million yuan to expand the production capacity of knitted fabrics and clothing. After the completion of the raised investment project, the production capacity of knitted fabrics will be increased by 8000 tons / year and the production capacity of knitted clothing will be 10 million pieces / year. The production capacity bottleneck is expected to be solved, and the market position of the company may be further consolidated and improved.
This week’s view.
Household sector: in December, the national residential sales area decreased by 19.4% year-on-year to 174 million square meters, down 10.2% from the same period in 2019, and the monthly sales data continued to decline; In December, the completed residential area in China was 234 million square meters, an increase of 0.8% year-on-year and 3.1% over the same period in 2019. It is suggested to continue to pay attention to the repair opportunities of the home sector. From the industry level, the central bank’s interest rate cut + monetary policy actively releases the easing signal. With the gradual release of real estate credit risk and the improvement of superimposed financing, the valuation of the home sector is expected to be repaired. It is suggested to give priority to companies with strong ability to bring high growth through channel reform and category expansion under the current industry background.
Paper sector: the recent price of pulp remains high and volatile due to the short-term disturbance of the supply side, but the downstream demand is weak due to the impact of the pre Festival paper mill maintenance plan.
(1) Cultural paper: the price of cultural paper rose slightly this week, and large-scale paper mills successively issued price increase letters. It is planned to raise 200 yuan / ton in February. The pulp price fluctuated and sorted out, and the cost support is still available. However, the orders of downstream dealers and printing factories are limited, and the demand side support is general. The shipment is limited near the holiday and the market trading is light. (2) Box tile paper: the price of box tile paper is stable, the holiday is approaching, the shutdown and maintenance plan of the paper factory is released, and the enthusiasm for price adjustment is not high. Recently, the purchasing enthusiasm of downstream packaging plants has weakened and the demand is general. The upstream raw material waste paper market weakened and the cost support was limited.
Textile manufacturing sector: in the context of repeated outbreaks, the textile and garment industry index fell 3.41% this week, of which the textile manufacturing sector fell 2.41%. (1) Textile manufacturing: China’s local epidemic situation has been repeated, and the consumption willingness has decreased under the background of economic slowdown. We believe that the textile manufacturing sector dominated by export manufacturing may have structural opportunities, and its overall prosperity is better than brand clothing dominated by domestic demand. Considering that the overall expectation of the sector is relatively pessimistic + the fund is in a state of low position + the current valuation of the sector is low and has cost performance, it is a better time point for the overall market or the left layout of the leading industry segments. Under the repeated impact of the epidemic, the performance of various brands is weak, while the capacity of OEM enterprises is expected to accelerate the release under the normalization of the epidemic, and the overall performance is better than that of brands; (2) Sports shoes and clothing: under the repeated exogenous impact of the epidemic, the valuation of brand clothing continued to fall. We believe that with the Winter Olympics approaching, it is expected to benefit high-end sports shoes and clothing enterprises, and the market share and penetration of domestic brands are expected to continue to improve. At present, the layout on the left can be appropriate. The overall prosperity of the follow-up sector needs to wait for the epidemic and the landing of economic catalysis; (3) Down jacket: from the online data, the market share of online sales categories of down jacket in 2021q4 has increased significantly, the concentration of head brands has increased, and the cold winter is expected to boost down jacket sales; (4) Outdoor sports: the growth of overseas outdoor sports demand has led to the increase of China’s corresponding product exports. The performance of professional outdoor sports equipment and product enterprises in China has been outstanding since 2020.
Investment advice
Continue to recommend the leading enterprise Quzhou Wuzhou Special Paper Co.Ltd(605007) of high growth paper-based materials in the era of replacing plastic with paper. Based on the track of high prosperity and large space, the leapfrog improvement of production capacity opens the bottleneck. At present, the company’s valuation is close to the historical low, with high safety margin and large repair space. It is recommended that wood pulp is the leading papermaking industry Shandong Sun Paper Co.Ltd(002078) . The company is diversified and takes the lead in cost control. The current valuation has been at the bottom of history. It is recommended to configure it on the left; In addition, it is suggested to pay attention to the box board leading Shanying International Holdings Co.Ltd(600567) with overseas production line layout and national waste channel construction. The key recommendation is Shantou Wanshun New Material Group Co.Ltd(300057) . Lithium battery aluminum foil is put into operation in the high boom window period and is still in a valuation depression in the industrial chain. The current market has poor expectations, and the bottom is firmly recommended. It is suggested to pay attention to the customized home leader Oppein Home Group Inc(603833) , the continuous high growth of decoration income, and continue to strengthen the front-end traffic entrance under the background of the differentiation of home consumption traffic. At present, the business model of new channels is gradually smoothed out. Software home continues to recommend Jason Furniture (Hangzhou) Co.Ltd(603816) , and it is recommended to pay attention to Minhua holdings. Jason Furniture (Hangzhou) Co.Ltd(603816) the channel reform has gradually realized the performance. Based on the original strong sofa channel, new categories such as mattresses and customized home began to increase; Minhua holdings is in the stage of continuously opening stores at a high speed in the domestic sales channel, and its market share and performance are in a strong upward channel. There is still much room for improvement in the medium and long-term functional sofa penetration.
Risk tips
Macroeconomic growth is less than expected, resulting in the decline of residents’ purchasing power; The severe real estate regulation has a negative impact on the downstream home demand; The production expansion progress is less than expected; The rise of labor costs exceeded expectations; Sales of major customers fell.
