Main points of investment:
In the first half of the year, the company achieved operating income of 700 million yuan, an increase of 26% over the same period last year, a net profit of 64.19 million yuan, an increase of 2%, a non-return net profit of 65.64 million yuan, an increase of 3%, an overall gross profit margin of 30.35%, a reduction of 4.83pct, a decrease of 0.88pct of 7.38%, a decrease of 0.88pct of 9.12%, and a decrease of 1.06pct. The inventory in the first half of the year was 266 million yuan, an increase of 18% over the same period last year, and the turnover days accelerated from 110 days in the same period last year to 90 days in the current period. It is expected that the growth rate in the first three quarters will be in the range of-20% to 20%.
In the second quarter alone, the income was 454 million yuan, an increase of 26% over the same period last year, and the net profit of returning to the mother was 56.51 million yuan, which decreased by 0.75pct, deducted the net profit of 58.21 million yuan, increased by 0.16pct, the gross profit per quarter was 31.79%, the year-on-year reduction of 6.24pct, the rate of sales expenses was 6.14%, and the rate of management expenses was 8.14%, which was the same as the same period last year.
The growth of the company's revenue mainly comes from the recovery of downstream brand clothing and the increase in the use of auxiliary materials for contract factories. From the sales destination, the domestic income in the first half of the year was 570 million yuan, an increase of 29% over the same period last year, and overseas income was 130 million yuan, an increase of 14% over the same period last year. In terms of products, the revenue of code zippers increased significantly, while the revenue of bar zippers also maintained a high growth rate. In the first half of the year, the revenue of code zippers was 121 million yuan, an increase of 52% over the same period last year. The revenue of bar zippers was 470 million yuan, an increase of 26% over the same period last year, and the income of zippers was 83.22 million yuan, up 7% from the same period last year. 20.62 million yuan for other categories, down 7% from the same period last year.
The gross profit margin of the products decreased in the first half of the year, mainly due to fluctuations in the prices of raw materials upstream. The prices of copper and zinc alloys, the main raw materials for metal zippers, rose rapidly from the end of last year to the first half of this year, while the price of the company's finished products was less than the increase in costs. resulting in an erosion of gross profit margin.
The company has announced that it will buy 65% of the shares of the new third board cross-border e-commerce enterprise price chain with 1.01 billion yuan in cash, with an overall valuation of 1.56 billion yuan. The original shareholders of the price chain promised that the net profit for 2017-19 would not be less than 10, 600, 000, 600, 000, 600, 000, As a result, the company has determined the double main business strategy of "zipper + cross-border e-commerce", which is a solid step for the company to break through the bottleneck of traditional manufacturing and expand new industries.
Profit forecast and valuation. We estimate that the EPS in 2017-19 is 0.42, 0.65, 0.89 respectively. As the cross-border business is expected to maintain high growth in the future, we give a price-to-earnings ratio of 25X in 2018, with a "buy" rating corresponding to the target price of 16.34 yuan.
Risk hint. The rise in the price of raw materials led to a rise in costs, unable to transfer costs downstream, and the acquisition progress was not as expected.
