The company's main business is stable and skilled. Shandong Ruyi listed in 2007, the company's main business is the production and sales of worsted wool. Over the years, the company adheres to the high-end product orientation of "high-tech content, high quality and high added value", paying attention to innovation and technology research and development, and its fabric level and product level have always been at the international advanced level. Products are widely used by international high-end brand-name clothing. The company's revenue remained at about 600 million in 11-15 years, with a revenue growth rate of 2% in 15 years, but the company still has a competitive advantage over other peer companies. The company's gross profit margin is about 20%, which is still high in the industry; with the research and development of new fabrics and technological innovation, the company's performance has a strong support.
After the management buyout, the company will rely on the group to move forward into the clothing industry. Over the years, Ruyi Technology Group has developed rapidly in the field of textile and clothing manufacturing. In February 2014, the company implemented a management buyout, and the actual controller of the company was changed from Oriental Asset Management Company to Chairman Qiu Yafu. Through the equity change, Ruyi Technology has become the largest shareholder in Shandong Ruyi, which is conducive to the future listed companies to integrate the clothing industry chain under Ruyi Technology Group and play a synergy effect.
The company is set to increase the landing, will integrate the industrial chain to improve performance. Dingzeng was announced on August 12, 2016, raising 1.838 billion of capital, with an issue price of 18.07 yuan and a total share capital of 262 million after listing. The fund-raising will be used to purchase downstream clothing high-quality assets, extend the industrial chain, improve the company's profitability, and invest in new projects to improve the company's product technology. After this increase and injection of assets, the company will move from the textile industry to the clothing industry, organically combining the advantages of fabric manufacturing with the advantages of clothing manufacturing to play a synergistic role. In the future, the company will mainly enter the high-end suit manufacturing industry, revenue and profit margins will increase significantly, and future growth is expected. The acquisition of downstream assets and the completion of new projects will greatly increase the performance of the company.
The Group continues to expand its overseas layout and transform into a fashion brand operation company strategy. Ruyi Group is actively expanding its overseas layout and integrating global resources through the acquisition of the whole industry chain. Through the acquisition of Australian and New Zealand wool and cotton field resources, the Group has won the initiative in the pricing of raw materials. Acquire Indian GWA, British Taylor, improve the manufacturing level, and further strengthen the cooperative relationship with international high-end brands. The group also acquired Japanese Renown, Korean YeonSeung, German Peine and French SMCP, which enabled the group to master rich resources in high-end fashion design, production, brand operation and management, realized the transformation of the group into a fashion brand operator, and provided rich experience in building its own fashion brand in the future, opening up the growth space of the company in the future.
Profit forecast and investment advice. After considering the additional issuance, the acquisition of clothing assets will be consolidated in 2016, and it is estimated that the diluted EPS in 2016-2018 will be 0.11,0.39 and 0.53 yuan respectively. With reference to the current average valuation level of the fine woolen and suit industry, the 2017 PE50 will be valued at a target price of 19.50 yuan, with a "overweight" rating.
Risk hint: project acquisition is not up to expectations; fund-raising projects and main business performance further decline.