Core views:
The company reported significant growth in its quarterly performance in '24, and its profitability reached a record high. In 24Q1, the company's revenue was 549 million yuan, up 10.42% year on year, net profit to mother was 82 million yuan, up 112.06% year on year, net profit after deducting non-return to mother was 80 million yuan, up 164.71% year on year, and net profit margin after deducting non-return to mother was 14.60%, setting a new high net profit margin for Q1 after listing in 15 years.
The company's gross margin increased dramatically, and the cost ratio declined during the period. In 24Q1, the company's gross profit margin was 29.34%, up 6.96 percentage points from the previous year. The gross margin reached a new high in Q1 since '18. It is expected to mainly benefit from the company's increased capacity utilization rate and seamless business cost reduction and efficiency. In 24Q1, the company's expense ratio was 12.39%, down 4.59 percentage points from the previous year. The sales expense ratio, management expenses (including R&D expenses) rate, and financial expenses ratio were 3.33%, 9.70%, and -0.64%, compared to 4.90%, 10.66%, and 1.42% for the same period last year. The change in the financial expense ratio was mainly due to large exchange gains and losses.
The company's operating quality is excellent, and the number of inventory turnover days has declined. In 24Q1, the company's net operating cash flow was 150 million yuan, an increase of 69.85% over the previous year. In 24Q1, the company's inventory turnover days were 123 days, a year-on-year decrease of 25 days, and the number of accounts receivable turnover days was 75 days, an increase of 2 days over the previous year.
We are optimistic about the company's 24-year performance outlook. We are optimistic about the company's 24-year performance outlook. First, the base for the first three quarters of '23 was low, and downstream demand gradually picked up. Second, the company continues to stabilize existing customers and develop more high-quality customers. Third, the cotton socks business is steadily advancing capacity building, and the capacity utilization rate of the seamless apparel business is expected to pick up. Finally, the repurchase showed confidence in future development. The company announced the repurchase plan on February 7, '24. The total capital for the share repurchase was no more than RMB 200 million, not less than RMB 100 million. As of March 31, '24, the company had repurchased 2021,600 shares, and the total amount of capital paid was approximately RMB 19.4454 million.
Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 0.88/1.04/1.21 yuan/share, respectively. Referring to comparable company valuations, the company will maintain a PE 15 times that of 2024, with a reasonable value of 13.24 yuan/share, maintaining a “buy” rating.
Risk warning. Risks such as exchange rate fluctuations, declining sales to major customers, and production capacity expansion falling short of expectations.