The 21-year operating income and homed net profit increased by 36% compared with the same period last year, and 419% of the company released its annual results for 2021, achieving operating income of 26.521 billion yuan, an increase of 35.5% over the same period last year, and an increase of 20.5% over 19 years. The net profit was 2.685 billion yuan, an increase of 419.3% over the same period last year, and an increase of 203.8% over 19 years. EPS is HK $2.93, with a final cash dividend of HK $0.57 per share. In the last and second half of the year, 21H1/H2 revenue increased by 122 times year-on-year / + 175.9% compared with the same period last year, with year-on-year earnings of + 52.5% and + 23.2% respectively.
The higher growth rate of net profit from home than the growth rate of income is mainly due to the substantial increase in gross profit margin in 21 years, which increased 8.3PCT to 22.1% year on year and 8.5PCT higher than 19 years, mainly due to the continuous rise in raw material cotton prices in 21 years and the company's corresponding contribution to low-cost raw material reserves. Operating profit margin increased 8.5PCT to 12.9% year on year, 5.5PCT higher than in 19 years. Net interest rate rose 7.6PCT to 10.3% year-on-year, 6.1PCT higher than in 19 years.
All the major products show an upward trend in volume and price.
1) in terms of products, the company's main products are yarns, accounting for 76.9% of revenue in 21 years, 34.2% year-on-year and 22.1% year-on-year increase in revenue, 38.8% and 38.1% in elastic core-spun yarn and other yarns, respectively, and revenue is + 59.2%, + 15.7%, + 27.7% and + 16.8%, respectively, compared with 19 years. The 21-year income of grey fabric, woven fabric, knitted fabric, denim, trade and nonwovens accounted for 2.2%, 9.7%, 3.9%, 2.5%, 4.2% and 0.5% respectively, and the income was + 18.4%, + 57.6%, + 38.8%, + 11.9%, + 35.0%, + 100.0%, respectively. Compared with 19 years, the revenue of knitted fabrics increased by 15.7%. The income of grey cloth, woven fabric and denim is-17.2%,-4.6% and-31.6%, respectively.
2) in terms of weight price, the yarn of the main product showed an upward trend in volume and price compared with 1920 and 1920, with sales increasing by 8.9% to 818000 tons, 9.2%, and unit price by 23.2% and 11.7%, respectively. Among them, the 21-year sales of elastic core-spun yarn and other yarns were + 29.8% and-5.4% respectively compared with the same period last year, and the unit prices were + 22.7% and + 22.2% respectively compared with the same period last year. In terms of other products, except for the decline in the quantity and price of grey cloth, all products showed a situation of simultaneous increase in quantity and price. The sales volume of grey cloth, woven fabric, knitted fabric, denim and non-woven fabric were-18.5%, + 55.4%, + 11.4%, + 9.3% and + 87.5% respectively compared with the same period last year. The unit price of the product was + 45.3%, + 1.1%, + 24.6%, + 2.3%, + 6.7% respectively. In addition, compared with the past 19 years, the sales of grey cloth, woven fabric, knitted fabric and jeans have not returned to the 19-year level, but the unit prices of other products except woven fabrics are more than 19 years.
The gross profit margin increased significantly, the expense rate decreased, and the sharp increase in inventory was mainly due to the raw material gross profit margin: 22.1% of the company's gross profit margin in 21 years, an increase in 8.3PCT over the same period last year, and an increase in 8.5PCT compared with 19 years. The gross profit margin of the main product yarn increased by 9.9PCT to 23.3% year on year and 9.8PCT higher than that in 19 years. The gross profit margin of elastic core-spun yarn and other yarns were 22.6% (year-on-year + 5.8PCT) and 24.0% (+ 13.2PCT), respectively. The gross profit margins of grey fabric, woven fabric, knitted fabric, denim clothing and non-woven fabric are 29.7% (+ 16.8PCT), 23.1% (+ 3.8PCT), + 16.0% (- 2.6PCT), + 13.3% (+ 3.9PCT) and-12.4% (- 15.7PCT), respectively.
Expense rate: during the 21-year period, the expense rate decreased from 0.7PCT to 9.5% over the same period last year, of which the sales, management and financial expense rates were 3.6% (year-0.2PCT), 5.5% (+ 0.2PCT) and 0.5% (- 0.7PCT), respectively.
Other financial indicators: at the end of 21, the company's inventory increased by 88.4% to 7.15 billion yuan compared with the beginning of 21, with a net increase of 3.36 billion yuan mainly due to a net increase of 2.73 billion yuan in raw materials; accounts receivable increased by 16.4% to 2.02 billion yuan; net operating cash flow was 2.44 billion yuan, down 26.0% from the same period last year. This is mainly due to the increase in the purchase volume and unit price of raw materials in the second half of 2021.
With strong orders in 21 years and a substantial increase in profitability, looking forward to stable production capacity in 22 years, the company's main production equipment at the end of December 21 includes about 3.87 million spindles, more than 1800 shuttle looms, knitting machines and corresponding dyeing and finishing equipment. Domestic and overseas (mainly Vietnam) have about 2.15 million spindles and 1.72 million spindles respectively. In 2022, the company will accelerate investment and production expansion by restructuring and increasing yarn production equipment to about 4.5 million spindles and increasing fabric production capacity. In addition, the company's 22-year sales target is 880000 tons of yarn, 180 million meters of woven fabric, 28000 tons of knitted fabric, compared with the 21-year sales growth rate of + 7.5%, + 31.2%, + 57.8% respectively.
In 2021, the company had strong orders for textile products and achieved ideal growth in both revenue and profit. The main raw material of the company is cotton, and the cost of raw materials accounts for about 74% of the total cost in 21 years. In the past 21 years, domestic and foreign cotton prices have increased significantly. For the whole year, the domestic cotton 328 index and the foreign cotton CotlookA index rose 48% and 50% respectively. The unit price of the company's main products, elastic core-spun yarn, rose by 22%. In addition, the company has low-cost raw material inventory reserves, so the unit price and gross profit margin have increased significantly.
Looking forward to 2022, the global textile market is in strong demand, and the supply chain is still tight. We believe that the company, as the leader of textile enterprises, is expected to maintain relatively prosperous orders and prices, but the rising trend of cotton prices has weakened. From the beginning of the year to March 22, domestic and foreign cotton prices rose by 2% and 17% respectively. In the future, we need to pay attention to the negative factors such as the gradual digestion of the company's low-cost cotton inventory, high cotton prices and exchange rate appreciation. It is expected that there will be pressure on the gross margin in 22 years. From 2019 to 2021, the average dividend yield of the company in the past three years was 5.06%. In 21 years, cash and cash equivalents totaled 2.505 billion yuan, and the anti-risk ability is relatively strong.
Profit forecast and investment advice: considering that the company's 21-year performance is better than expected, we have raised the company's profit forecast and net profit for the year 22 to 23 by + 8% and + 5% respectively, corresponding to the EPS of RMB 2.10 and RMB 2.22 for the year 22 and 23, respectively. The 24-year profit forecast and 24-year EPS is 2.46 yuan, and the PE for 22 and 23 is 4 and 4 times respectively, maintaining the "overweight" rating.
Risk hints: the impact of the epidemic at home and abroad exceeded expectations, resulting in weak terminal demand and lower-than-expected orders; increased trade frictions between China and the United States; large fluctuations in cotton prices; and lower-than-expected business development and integration.