The company has been ploughing the wool textile industry for many years, leading many technologies of worsted wool, and has a high brand awareness in the world. 1) the company is one of the leaders in the wool textile industry, mainly producing and selling high-end worsted wool, leading in technology research and development, and mastering the core "Ruyi spinning" technology. Most of the company's overseas customers are high-end clothing brands, while domestic customers include brand clothing and professional clothing of state-owned enterprises. 2) under the influence of domestic and foreign demand, the growth rate of wool textile industry has slowed down in recent years, and the profit situation is greatly affected by raw wool. The company has an annual income of 590 million yuan and a net profit of 17.12 million yuan in 2015, turning losses into profits. Since listing, the scale of revenue has not changed much, and its profitability needs to be further improved.

The company completed its MBO in 2014 and turned into a private enterprise, and after straightening out its interests, it is expected to take off relying on the resources of the group. Due to the historical debt-to-equity swap, the actual controller of the company has been Oriental assets until 14 years ago. In July 13, the company suspended trading to do a major asset restructuring, according to the company's announcement at that time, the target volume is relatively large, involving cross-border assets accounted for a relatively high proportion, and finally failed to complete. 14 years after the completion of MBO, the company changed from a state-owned enterprise to a private enterprise, and the actual controller returned to Qiu Yafu, chairman of Ruyi Technology. For the first time since the company launched its listing in 15 years, the funds raised will be used to inject all domestic clothing assets in the group system. The growth path of the company is gradually becoming clear.

Ruyi Group is strong in science and technology, with the background of Itochu shareholders, and has carried out a number of overseas mergers and acquisitions, including high-quality light luxury brands. 1) Ruyi Technology is the major shareholder of the listed company, and Tadao Ito is the third shareholder. 2) Ruyi has a huge volume of science and technology, with a 15-year income of 22.8 billion and a net profit of 650 million. It has two complete industrial chains of cotton and wool, and its comprehensive competitiveness ranks in the forefront in the textile and clothing industry. 3) Ruyi Technology, which has completed a number of overseas mergers and acquisitions in the past few years, including upstream resources (such as Kabi Cotton Field in Australia) and downstream brands (such as Japan's Ruina), is acquiring French luxury group SMCP, which is expected to proceed smoothly. SMCP has Sandro, Maje and other light luxury brands in the growing stage, with 15 annual report income of 680 million euros and EBITDA1.1 billion euros.

The company has just completed its listing for the first time, and Ruyi science and technology subscribed 30%. We think this is the beginning of the company relying on the group to become bigger and stronger. The company has just completed a fixed increase of 1.836 billion yuan, with a fixed price of 18.07 yuan per share, of which Ruyi Technology subscribed for 30% (Ruyi Technology Lock for 3 years and other investors locked for 1 year). Raise funds for the acquisition of all domestic clothing assets in the group system + capacity expansion + repayment of bank loans. The group's domestic clothing business includes contract manufacturing and independent brand sales, and its profitability is better than the company's wool textile business. injecting into the listed companies can not only thicken the performance, but also show that the listed companies will become bigger and stronger with the help of the group resources. extend to the brand clothing business strategy in the lower reaches of the industrial chain.

The company is the most typical small company + large group, which has the smallest market capitalization in the textile and clothing industry for a long time in the past. After the completion of benefit straightening and additional issuance, it is expected to rely on the group's rich resources to achieve great-leap-forward development and maintain the holding rating. At present, the total market capitalization of the company is about 5 billion, which is still small. At present, the stock price is slightly higher than the fixed price. According to the company's progress of growth, we slightly downgrade our 16-year profit forecast. It is estimated that the net profit in 16-18 years will be 0.56 and 120 million respectively (the original forecast is 73 million yuan in 16 years), the EPS will be 0.21, 0.46 and 0.54 yuan respectively, and the PE in 17 years will be 42 times. State-owned equity is further withdrawing, and the original two shareholders, Oriental assets, have achieved the target of reducing their holdings by 4.97% this year, which is a unified financial arrangement and has nothing to do with fundamentals. We are optimistic that under the trend of overseas acquisitions and asset securitization, listed companies will continue to become bigger and stronger and maintain their overweight ratings.