Event: the company's 2023H1 realized income of 1.107 billion yuan, an increase of 6.18%, a net profit of 43.1431 million yuan, a decrease of 63.89%, a deduction of non-net profit of 34.3317 million yuan, and a decrease of 57.41%. 2023Q2 realized income of 634 million yuan, an increase of 11.54%, a net profit of 20.4493 million yuan, an increase of-78.10%, and a deduction of non-net profit of 15.2592 million yuan, an increase of-68.14%. 23H1 achieved steady revenue growth and profits were under pressure.
Comments:
Sales growth boosted income, dyeing fees were reduced, and impairment of bad debts narrowed profit margins. 1) on the revenue side, 2023H1 actively expands new categories such as home textiles, towels and yarn-dyed fabrics on the basis of the original cotton socks and relies on price advantages, and the sales volume of colored yarn is growing rapidly. 2) on the profit side, on the one hand, the market demand was relatively weak in the first half of the year, and the price of the company's processing fees decreased; on the other hand, the company made a single provision for bad debts on Xinye Textile advance, which amounted to 27.8601 million yuan, and the operating performance of 2023H1 declined compared with the same period.
The decrease of dyeing fee dragged down the gross profit margin, and the expense rate remained stable during the period. 1) 2023H1's gross profit margin also dropped to 12.13%, mainly due to the influence of factors such as macroeconomic and weak downstream market demand. The price of dyeing fees for the main products of the superimposed company decreased greatly compared with the same period last year, and the profit space narrowed. 2) the rates of sales, management, R & D and financial expenses of 2023H1 Company are 0.57%, 2.32%, 3.44% and-0.02%, with the same increase of 0.09PCT, 0.16PCT,-0.17PCT and 0.42PCT, and the expense rate remains basically stable. Among them, the changes in sales expenses and management expenses are due to the increase in sales volume of 23H1 and the increase in employee compensation and other expenses compared with the same period last year. The change in financial expenses is due to the interest payment of convertible bonds, and the change in R & D expenses is due to the company's continued efforts to increase R & D innovation, resulting in a corresponding increase in R & D investment. 3) the net operating cash flow of 2023H1 Company was 150.071 million yuan, an increase of 251.22% over the same period last year, and a significant improvement over the same period last year.
Cost advantage helps to increase the share, and capacity expansion accelerates sales growth. The company adopts the business model of "warehouse production mainly, order production as a supplement" to ensure that major customers purchase and deliver goods at any time. In terms of research and development, the company continues to invest and launch new products to meet market demand. The company will strengthen the improvement and upgrading of old products to improve product quality and competitiveness. In terms of cost control, the company promotes the reduction of production costs by optimizing production processes and strengthening technical transformation; in addition, the company ploughs the color yarn industry, accumulates cost advantages such as water consumption, energy consumption and environmental protection, and continues to seize market share with the help of low prices. The company extends downstream application areas and continues to expand production in Wuhu and Jingzhou. We believe that new production capacity is expected to be gradually released after 2023H1, which will accelerate sales growth.
Profit forecast and investment advice: affected by the decline in dyeing fees, we have lowered the company's 2023-2025 homing net profit forecast to 1.44pm 244pm (the original value is 24700,000 RMB), and the current stock price corresponds to 16.74x PE in 23 years. We are optimistic that the printing and dyeing industry high barriers, concentration is expected to improve, the company continues to expand new categories, new customers, the main business growth space, maintain the "buy" rating.
Risk factors: lower than expected capacity expansion, increased competition in the industry, raw material price fluctuations and other risks.