Event
The company released 21-year and 1Q22 results on April 27, with a total revenue of 16.71 billion yuan (+ 17.4%) and a net profit of 570 million yuan (+ 228.25%), which is located in the center of the forecast. Among them, the income of 4Q21 Company reached 3.99 billion yuan, which decreased by 28% due to the impact of the epidemic; the net profit of returning home was 124 million yuan (+ 162%). 1Q22 achieved an income of 4.147 billion yuan (+ 7.9%), a net profit of 150 million yuan (+ 14.36%), and a non-net profit of 132 million yuan (+ 126.44%), in line with previous expectations.
Brief comment on performance
Yarn main business: the repair is remarkable, and the effect of digital intelligence reform is beginning to show. In terms of yarn business, the company actively expanded the domestic market, and the capacity utilization rate rebounded sharply to 93% (+ 22pct), leading to a 16% increase in revenue to 6.63 billion yuan. And by the end of 21, the company has completed the transformation of the industrial Internet in its factories with a capacity of 1 million ingots, which is expected to be fully completed in 22 years, driving the overall net interest rate to increase 2pct, and export the digital scheme to the industry, helping the company to achieve light asset expansion and open the ceiling of scale growth.
Network chain business: the front-end trade volume increases rapidly, and the back-end hosiery industry expands the boundary. In terms of front-end cotton trade, the company fully grasped the market situation, and its revenue increased by 16% to 9.655 billion yuan; in terms of back-end network chain, the company merged its interconnection business at the end of the third quarter, with a thickening income of about 270 million yuan (+ 79.88%). And because the gross profit margin of the hosiery industry is 37.41%, which is significantly higher than that of yarn (15.6%) and front-end network chain (3.63%), it is expected to improve the overall profitability of the company.
Profitability has improved significantly, and 1Q22 has accelerated on a month-on-month basis. Over the past 21 years, the company has benefited from the rebound in capacity utilization, business development, digital cost reduction and efficiency, and rising cotton prices, etc., the gross profit margin has increased significantly to 9.64% compared with the same period last year, and the net profit margin has increased by 1.08pct to 3.67% compared with 19 years. 1Q22's gross / net interest rate continues to rise to 10.28% / 3.80% month-on-month, and is expected to maintain an upward trend throughout the year.
Cotton inventory increases inventory turnover weakens, the overall operation to maintain health. In 21 years, the company's overall inventory turnover days increased by 2.87 days to 139.5 days, of which raw materials (174days) was slower than yarn business (135days), and the balance of raw materials inventory increased by 53.9% compared with the same period last year, mainly due to the increase in cotton stocks.
Investment advice and risk tips
The company's color spinning main business customer structure continues to optimize, superimposed digital reform to improve efficiency, outstanding leading edge, at the same time, it is expected that the back-end network chain business will maintain rapid growth and promote overall performance. Maintain the profit forecast for 22-23 years and increase the profit forecast for 24 years, and the company's net profit for 22-24 years is expected to be 7.64 yuan / 820 million yuan, corresponding to the PE of 9-8-7, and maintain the "buy" rating.
Risk tips: terminal demand is not up to expectations, RMB exchange rate fluctuations, the lifting of restricted shares, and so on.