Main points of investment:
Today, Huafang issued three announcements: (1) the company will realize industrial transformation and upgrading in the technological transformation of high-grade fine real and imitation wax printing in different places, with a total investment estimated at 247 million yuan; (2) the company buys the whole assets of the home textile finished products and clothing workshop under the wholly-owned subsidiary Binzhou Huafang Real Estate Co., Ltd., the transaction price is 53.32 million yuan. (3) Binyin Group intends to transfer all its 87.65 million state-owned shares to Binzhou State-owned assets Management Co., Ltd.
The implementation of the wax printed fabric upgrade project will help the company's performance to grow steadily. The company's wax printed fabric has a high gross profit margin and strong competitiveness, and its revenue share has increased steadily in recent years, which has become a stable profit growth point for the company. The company's products are welcomed by customers in the African market, with a compound growth rate of 17% in the past three years. The expansion and transformation of wax printed fabric not only ensures the demand for export orders, but also improves production efficiency and product quality to further consolidate the company's international competitiveness of wax printed fabric. In 2014, the company will comprehensively promote the "strengthen fabric, break through home textile, enlarge fabric" strategy, wax printed fabric is one of the important links. After the project reaches production, it is estimated that the annual increase in income will be 1.15 billion yuan, with a gross profit of 88.18 million yuan. All fixed asset investment can be recovered four years after the project reaches production.
Overall acquisition of wholly-owned subsidiaries of home textile products, clothing workshop, continue to vigorously develop their own brand "Blue Platinum". In 2014, the company expects to produce 9.6 million pieces of home textile products and 1.92 million pieces of clothing. This acquisition is conducive to the optimization of production resources to improve the efficiency of the company's internal operations. The company will continue to promote its own brand "Blue Platinum", which has been launched in Tmall, JD.com and Amazon.Com Inc, and is expected to generate tens of millions of dollars in revenue this year, a year-on-year growth rate of 200% +. In addition, the Blueplatinum brand has reached a cooperation with Walt Disney Company of the United States, and cooperative bed products can be expected to appear on the market in August this year.
We believe that the company, as a state-owned enterprise in transition, has great potential to improve its internal efficiency. On the basis of ensuring the sustainable growth of superior business, we can look forward to the future development of the company by expanding its own brand extension industry chain. We expect the growth rate of the China report to be 20%-30%, maintaining the forecast of 0.06 EPS of 0.20 yuan for 14-15-16. Considering the small market capitalization of 1.76 billion yuan, the company's restorative growth is relatively fast, and the company's overweight rating is maintained.
