The printing and dyeing industry giant with outstanding technical strength is bidding farewell to the historical burden and ushering in the inflection point of performance. Huafang is a state-owned textile enterprise in Binzhou City, Shandong Province, with printing and dyeing as its main industry. The company is very strong. It is a national printing and dyeing product development base and a demonstration enterprise of textile technology innovation in China. It has presided over the drafting of national textile industry standards for many times and won the second prize of national scientific and technological progress. After the listing in 2001, there are some differences in the management ideas between the major shareholder Huacheng Investment and the second shareholder Binyin Group. Although the management of the company devotes itself to technical research and stable operation, the two loss assets contributed by the major shareholders have affected the performance of the enterprise. Internal friction has also delayed the development of the enterprise's most golden decade. In 2011, the central enterprise Huacheng Investment went bankrupt, and the ownership structure was gradually straightened out. At present, the largest shareholder is Shandong Binyin Group, which is owned by Binzhou State assets Commission, which holds 20.82% of the shares. The company stripped of its loss-making assets in 2012 and bid farewell to the historical baggage. At present, Binyin Group is very supportive of Huafang's development, and the company is expected to usher in a performance inflection point.
Excellent quality, stable customers, outstanding core competitiveness, printing and dyeing business as the core, the industrial chain extends upstream and downstream, the future development plan has been realized. The company's 2012 revenue reached 2.154 billion yuan, but its net profit was only 8.29 million. The printing and dyeing business accounts for 88% of the income, the sales volume of printing and dyeing cloth is 210 million meters, the production capacity is equal to that of the airline shares, and exports account for 70% of the income. it has a good reputation and reputation in the industry, and the customers are concentrated in North America, Africa and Southeast Asia. the top five customers accounted for 42%. The company's business is divided into three parts: clothing fabrics, wax printed fabrics and home textile products. The company's professional clothing fabrics account for 70% of the medical tooling market in the United States; wax printed fabric is very popular in the African market; the company manufactures for international well-known brands in the field of home textiles, and actively arranges its own brands and channels. Relying on its strong technical advantages and production strength, we strive to create independent home textile brands "Blue Platinum" and "Xiao Ni". The company's fixed increase project has been approved, and plans to issue 110 million shares to raise no more than 400 million yuan (89 million contributed by major shareholders with land assets), acquire Yaguang Industrial Park, build yarn and home textile base, extend the industrial chain to enhance competitiveness, and the project is expected to greatly increase performance.
We believe that the company is a state-owned enterprise in transition, with great potential to improve internal efficiency, and the expansion of the industrial chain opens up room for development. at present, the market capitalization is only 1.2 billion yuan. If the performance inflection point appears, it should be paid more attention from the investment point of view. 2012 is a watershed for the development of the company. after clarifying the equity relationship and dealing with loss-making assets, the interests of the management team and shareholders are consistent, and with the strong support of major shareholders, future incentives will also be in place. The company is expected to achieve high profit growth from a low base, although net profit is only 8.29 million in 2012 and is expected to reach 83 million in 2015 and a tenfold increase in net profit in three years. We estimate that the EPS for 13-15 will be 0.05ax 0.10 / 0.26 yuan (EPS is 0.04 / 0.07 / 0.19 yuan after dilution), covering for the first time, the company's current PEG is 0.6, which is at a low level. Considering the strong performance growth in the future, we will be rated as overweight.
Investment case
Investment rating and valuation
Although the net profit in 2012 is only 8.29 million, it is expected to reach 83 million in 2015, a tenfold increase in net profit in three years. We estimate that the EPS for 13-15 years will be 0.05x0.10xpx (0.04 / 0.07 / 0.19RMB after dilution). For the first time, the company's current PEG is 0.6, which is at a low level. Considering the strong performance growth in the future, we will be given an overweight rating.
Key hypothetical point
The growth rate of clothing fabric income is 2%, 5%, 1% in 13-15 years, 9%, 25%, 8% in 13-15 years, 3%, 26%, 160% in 13-15 years, clothing income 13-15 growth rate 4%, 0%, 8%; fabric income 13-15 growth rate 2%, 9%, 60%; import and export income 13-15 growth rate 25%, 25%, 25% Other business income 13-15 growth rate of 8%, 8%, 8%
Different from the public's understanding
1. The company is in transition, is a state-owned enterprise in transition, there is great potential to improve internal efficiency, and the expansion of the industrial chain opens the space for development. at present, the market capitalization is only 1.2 billion yuan. If the performance inflection point appears, it should be paid more attention from the perspective of investment. 2012 is a watershed for the development of the company. after clarifying the equity relationship and dealing with loss-making assets, the interests of the management team and shareholders are consistent, and with the strong support of major shareholders, future incentives will also be in place. The company is expected to achieve high profit growth on the basis of a low base.
two。 In the future, the company's fixed increase project has been approved, and plans to issue 110 million shares to raise no more than 400 million yuan (89 million contributed by major shareholders with land assets), acquire Yaguang Industrial Park, build yarns and home textile bases, and extend the industrial chain upstream and downstream. The overall industrial chain is extended to enhance competitiveness, and the project is expected to greatly increase performance.
The management efficiency of the company which is the catalyst of stock price performance has gradually improved, and the peripheral exports have recovered.
Core hypothesis risk
Exports fall short of expectations
