The single-digit income increased in 17 years, and the profit end showed a decline.
In 2017, the company achieved operating income of 4.004 billion yuan, an increase of 7.09% over the same period last year; net profit of 360 million yuan, down 8.56% from the same period last year; and deduction of 233 million yuan of non-parent net profit, down 25.24% of EPS 1.11 yuan from the same period last year.
18Q1 realized income of 1.007 billion yuan, up 13.28% from the same period last year; net profit from home was 44.83 million yuan, down 25.20% from the same period last year; and net profit from non-return was 31.73 million yuan, down 14.93% from the same period last year.
On a quarterly basis, 17Q1-18Q1 revenue increased by 1.72%, 8.77%, 15.49%, 2.96% and 13.28% respectively, and net profit increased by 2.87%,-9.28%,-11.12%,-10.93% and-25.20%, respectively. The income end has picked up slightly since 17Q2, and the growth rate of 18Q1 has benefited from the rapid growth of cotton yarn trade business income; net profit in 17Q2 began to show a year-on-year decline, mainly affected by the decline in gross profit margin while rising in the rate of financial expenses, and the decline in 18Q1 gross profit margin exceeded the rate of expense which caused the net profit to continue to decline.
From the perspective of expense rate, the company's 17-year sales expense rate and management expense rate were 3.85% (- 0.46PCT) and 3.82% (- 0.79PCT) respectively, with good fee control and improved efficiency; but the financial expense rate increased by 1.33PCT to 2.31% compared with the same period last year, mainly due to exchange losses of 22.82 million yuan (40.62 million yuan for the same period in 16 years) caused by RMB exchange rate appreciation, and total financial expenses increased by 153.56% to 92.41 million yuan over the same period last year. 18Q1 sales, management, financial expense rates are year-on-year-0.55/-1.25/-0.42PCT.
The yarn-dyed fabrics of the main products have declined slightly, and the regional distribution of export orders is more scattered.
(1) from the perspective of sub-industries, textile and clothing (79% of revenue), thermoelectricity and other income increased by 0.97%, 35.69% and 40.35% respectively compared with the same period last year.
(2) in terms of products, the income of yarn-dyed fabrics, printed fabrics, printed fabrics, shirts and cotton yarn increased by-1.63%, 8.47%, 596.84%,-27.59% and 35.40% respectively over the same period last year. Split by volume and price, the sales volume is-4.80%, + 5.88%, + 6506.95%,-18.17% and + 1.62% respectively, and the estimated sales unit price is + 3.33%, + 2.45%,-89.45%,-11.51% and + 33.24%, respectively. Among them, the volume of yarn-dyed fabrics of the main products fell and the price of yarn-dyed fabrics and cotton yarn rose, while the volume and price of shirts decreased (mainly for 17 years, the re-export trade of shirts decreased greatly). The expansion of production capacity of printed fabric promoted the rapid increase of sales volume.
(3) from a regional point of view, domestic sales revenue increased by 17.74% over the same period last year, from 36.88% in 16 years to 40.54% in 17 years. Export revenue increased by 0.87% over the same period last year, and the distribution of orders was more dispersed, with the main selling countries the United States and Europe accounting for 16.95% and 12.14% respectively, down 23.70% and 13.91% respectively from the same period last year, and Japan (accounting for 0.96% of total revenue) increased by 15.34% year-on-year. The total income of other countries increased by 34.90% year-on-year, and the proportion of total revenue increased to 29.41% from 23.35% in 16 years.
The decline in gross profit margin is caused by the appreciation of exchange rate and the rise of costs such as cotton price.
The gross profit margin fell by 2.63PCT to 19.27% year-on-year in 17 years, mainly due to the appreciation of the exchange rate and the increase in raw material costs compared with the same period last year. In addition, the increase in the proportion of low gross margin business (printing and dyeing cloth, cotton yarn sales, etc.) also had an impact on the overall gross profit margin. According to the separation of categories, the gross profit margins of the main products of yarn-dyed and printed and dyed fabrics are 23.54% (- 3.72PCT) and 21.85% (+ 1.48PCT) respectively.
17Q1~18Q1 's single-quarter gross profit margin is 17.66% (year-on-1.43PCT), 18.66% (- 2.32PCT), 19.15% (- 4.92PCT), 21.39% (- 2.00PCT) and 14.29% (- 3.37PCT), respectively, with a quarter-on-quarter gross margin of-5.73,+ 1, + 0.49, + 2.24 and-7.10PCT, respectively.
Over the past 17 years, gross profit margin has continued to decline compared with the same period last year, mainly due to the appreciation of the exchange rate and the rise in raw material costs (cotton prices, coal prices, etc.). 1) in terms of exchange rate, the company's export income accounts for about 60%, and the exchange rate has appreciated over the past 17 years. On the one hand, the impact is reflected in the impact on the company's RMB pricing price (thus eroding the gross profit margin), on the other hand, the company's dollar net assets have corresponding exchange losses. The 17Q1~Q4 exchange rate has appreciated by 0.54%, 1.81%, 2.03% and 1.55% respectively. Since the beginning of the year, the 17Q1~Q4 exchange rate has continued to appreciate by 3.74%, which has adversely affected the gross profit margin. 2) on the cost side, cotton accounts for nearly 60% of the company's main product costs. Domestic spot 328 cotton prices climbed to a high at the end of 16 years and stabilized over the past 17 years. In 17 years, the average price of cotton was 15926 yuan / ton, an increase of 16% compared with 13728 yuan / ton in 16 years, putting some pressure on the cost side. In addition, the price of coal, the company's main energy, has also shown a year-on-year rise over the past 17 years.
Although the company made a slight increase in product prices in response to rising costs and exchange rate appreciation (the unit price of yarn-dyed fabrics increased by 3.33% in 17 years), the increase on the price side was less than that of cotton prices and exchange rate appreciation, resulting in a loss on the gross margin side.
The first half of the year performance pressure still exists, long-term attention to the leading advantages and new production capacity
The company expects the net profit of homecoming to fall by 0% in the first half of 18 years. We believe that: 1) the yarn-dyed fabric production capacity of the sales end company is relatively full, and the steady growth is expected in the future (the growth mainly comes from the change of product structure, such as the promotion of spot fabric model, etc.) In addition, the company still has room to release the production capacity of printing and dyeing cloth, printed fabric and shirts (see Table 1) to contribute to future growth, and the company plans to build a home textile project in Xinjiang and a number of capacity projects in Ethiopia. After the release of production capacity, the development space will be further expanded. 2) at the subsidiary level, MediaTek leaders have reduced their losses from 16 years' net profit-1264 million to 17 years'- 7.55 million. Tianxiang Home Textile has gradually reversed its losses with the production capacity of home textile (printed fabric) (it has been profitable for 18 years). The clothing brand business is still in the training period after the direct operation to join the mode switch. 3) short-term performance pressure, exchange rate appreciation, raw material cotton and coal prices have a negative impact on 17 years to 18H1 profits, the follow-up still need to observe the exchange rate and cotton price trend.
The company has a sound operation and a prominent position in the industry. in the long run, the leading advantages and economies of scale in the competition are expected to be released, and the ability to control fees is strong, and the operation is relatively solid. The 14-year dividend yield for 17 years is 3.64%, 5.45%, 5.45, 4.55%, with a low valuation and a robust return. There is some pressure on the short-term performance side, slightly downgrading the 1819 EPS and increasing the EPS in 2020 to 1.13Unix1.20 EPS, corresponding to 18-year PE10 times, maintaining the "overweight" rating.
Risk hint: the lower-than-expected growth of overseas demand leads to a decline in the bargaining power of the company to take orders, the lower-than-expected production capacity, the risk of cotton price fluctuation and the risk of exchange rate fluctuation.