Internal and external demand pressure led to less-than-expected sales growth, cotton prices down led to a decline in the unit price of colored yarn, while the company's high-priced cotton inventory eroded profits led to 22 years of performance pressure. However, as the leader of color yarn, the company has the advantages of low energy consumption and environmental protection. Under the background of accelerating the elimination of backward production capacity in the domestic printing and dyeing industry, the company can gain more market share and improve its medium-and long-term performance. The current market capitalization is 2.8 billion, 23E12X/24E10X, maintaining a "highly recommended" rating.
2022Q4's performance is under pressure. In 2022, operating income, operating profit, return net profit, deduction of non-return net profit 2.208 billion yuan, 139 million yuan, 163 million yuan, 119 million yuan, + 1.49%,-47.95%,-30.01%,-47.30%, earnings per share 1.31 yuan. 22Q4 realized operating income, operating profit and homing net profit of 590 million yuan, 21 million yuan, 23 million yuan and 18 million yuan, year-on-year-11.13%,-73.32%,-67.40%,-73.60%.
In 2022, the growth rate of color yarn sales slowed down, and the average sales price declined.
In terms of products, the company's revenue from color yarn, trade yarn and processing business reached 1.972 billion yuan, 164 million yuan and 61 million yuan in 2022, up from + 1.03%, + 0.69% and + 19.38% over the same period last year. According to the split weight price, the sales volume of color yarn is 67300 tons, + 3.86% compared with the same period last year, and the average sales price is 29,000 yuan / ton, which is-2.73% compared with the same period last year.
From a regional point of view, revenue in domestic / foreign regions is 2.189 billion yuan / 8 million yuan, which is 9.93% compared with the same period last year.
The decline in cotton prices leads to a decline in sales unit prices & high cotton inventory leads to high costs and a decline in corporate profitability.
In 2022, the company's gross profit margin decreased by 11.79% compared with the same period last year; among them, the gross profit margin of the color yarn / trade yarn / processing business was 11.98%, 4.14%, 17.63%, respectively, compared with the same period last year-6.74pct/-3.52pct/-17.37pct. During the period, the expense rate decreased by 0.30pct to 5.26%, and the net interest rate decreased by 3.32pct to 7.38%.
22Q4 gross profit margin decreased by 7.59% compared with the same period last year; during the period, the expense rate decreased by 1.17pct to 3.59%, and the net profit rate decreased by 6.71pct to 3.89%.
The cash flow is healthy and the operating capacity is steadily increasing. 1) the net cash flow of business activities in 2022 was 163 million yuan, an increase of 150.96% over the same period last year. The net cash flow of 22Q4's operating activities was 128 million yuan, an increase of 259.07% over the same period last year. 2) the turnover days of accounts receivable of the company in 2022 were unchanged at 4 days compared with the same period last year. 3) the number of inventory turnover days in 2022 decreased by 1 day to 71 days compared with the same period last year.
Expand the advantage of strengthening the scale of 110000 tons of bobbin dyeing capacity. Hubei Fuchun, a subsidiary of the company, plans to invest 700 million yuan (self-raised) to build a high-quality bobbin dyeing project with an annual output of 110000 tons. The construction period is 3 years, and it can form an annual production capacity of 110000 tons of high-quality bobbin yarn after it is put into production. China's printing and dyeing industry is in the stage of accelerating the elimination of backward production capacity. In the process of rapidly expanding production capacity, Fuchun dyeing and weaving will take advantage of strong product quality, environmental protection and scale to obtain more market share of dyed yarn.
Profit forecast and investment rating. As a leading enterprise of color yarn, the company is currently in the stage of expanding the new market of color yarn, relying on the advantages of low energy consumption and environmental protection, under the background of accelerating the elimination of backward production capacity in the domestic printing and dyeing industry, can obtain more market share, medium-and long-term performance is good. The company's net profit from 2023 to 2025 is expected to be 226 million yuan, 290 million yuan and 361 million yuan respectively, corresponding to 23E12X/24E10X, maintaining a "highly recommended" rating.
Risk hints: the risk of cotton price fluctuation, the risk of insufficient downstream demand orders, the risk of unsmooth development of new market for colored yarn, and the risk that production capacity construction is less than expected.