Company profile
Founded in 2011, Hainer Intelligence is a manufacturer of automation machines for designing and manufacturing disposable sanitary products in China, including baby diapers, adult diapers and women's sanitary napkins. The company operates 16 and 6 production lines in Jinjiang production base and Hangzhou production base respectively (with a total floor area of about 354000 square meters). According to the industry report, the company ranks third, with a market share of about 4.0%, based on the revenue generated from the sale of disposable sanitary products machines in 2019.
Sino-Thai viewpoint
Customer demand for disposable sanitary products machines has maintained steady growth: due to the increased demand for disposable sanitary products machines from downstream customers, the overall price index of disposable sanitary products machines has increased from 100.0 in 2015 to 117.2 in 2019, with a compound annual growth rate of about 4.0 per cent. As the downstream manufacturing industry of disposable sanitary products continues to expand, driving demand for more efficient machinery of disposable sanitary products, the price index of China's disposable sanitary products machines is expected to maintain a steady growth in 2020-2024, with a compound annual growth rate of about 3.8 per cent.
In terms of operating performance: from 2017 to 2019, the company's operating income was 260 million yuan, 340 million yuan and 380 million yuan respectively, of which the proportion of income from baby diaper machines decreased from 94.4% to 59.8%. The income from baby diaper machines increased from 4.3% to 29.7%. The gross profit margin is 21.7%, 22.7% and 24.0% respectively, which is due to the increase in sales of adult diaper machines with higher gross profit margin. The main raw materials used in production include rubber machines, processed parts (such as arc cutters and indexable transmissions) and steel, which account for about 53.1%, 47.5% and 45.5% of the material cost, respectively. The inventory value accounts for about 52.1%, 42.7% and 43.2% of the total assets respectively; the inventory turnover days are 250 days, 207 days and 173 days respectively; the net interest rate is 11.5%, 11.5% and 7.0% respectively, and the decline in 2019 is due to an increase of about 74.1% in machine depreciation and listing expenses.
Valuation: based on 460 million shares after the global public offering, the company has a market capitalization of HK $500 million to HK $700 million, which is lower than the average of its peers in Hong Kong. In 19 years, the price-to-earnings ratio of the company is about 16.7-23.2 times, which is higher than the industry average; the price-to-book ratio is about 2.57-3.00 times, which is higher than the industry average. In terms of profitability, the ROE and ROA in 19 years were 27.4% and 9.2% respectively, higher than the industry average. However, due to the weak comparability between the company's disposable sanitary products machine segment and other industrial manufacturing industries in Hong Kong stocks. Sponsor Jianquan financing sponsored projects in recent years, up and down on the first day. Considering that the company is overvalued, we give it 52 points with a rating of "do not apply for purchase".
Risk tips: (1) market competition risk, (2) the impact of cost fluctuations