Incident: The company released its 2023 annual report and 2024 quarterly report. The company achieved revenue of 4.3 billion yuan in 2023, a year-on-year decrease of 0.7%, and realized net profit of 220 million yuan to mother, a year-on-year decrease of 5.9%. In the first quarter of 2024, the company achieved revenue of 1.17 billion yuan, a year-on-year increase of 21.3%, and realized net profit of 48.49 million yuan, a year-on-year decrease of 7.6%, after deducting non-net profit of 43.15 million yuan, an increase of 20.5% over the previous year.
We are not afraid of fluctuations in overseas demand, and our performance has steadily regained growth. Overseas economic growth slowed in 2023, and international market demand was weak, but the company's operating performance in 2023 was generally stable during the reporting period, and its ability to withstand pressure was strong. By business, the main decline in revenue in 2023 was due to a contraction in overseas apparel demand, which achieved revenue of 1.89 billion yuan, down 6.2% year on year; hardware business achieved revenue of 530 million yuan, up 6.9% year on year; silk products achieved revenue of 1.12 billion, up 3.9% year on year; fabric products achieved revenue of 320 million, up 6.5% year on year. In the first quarter of 2024, the company achieved a 20% + year-on-year increase in revenue and net profit, regaining the growth trend.
The layout of the entire silk apparel industry chain has expanded the influence of independent brands. The company's main business is silk apparel, and lays out the entire silk industry chain, from silkworms, cocoons, and silk to garment processing and printing. The company is one of the few leading integrated silk clothing companies in China. In addition, the company's independent clothing brand “Golden Three Tower” continues to expand its influence in domestic online and offline channels. The company's Cocoon Silk Platform “Golden Silkworm Network” has become the most influential domestic cocoon silk trading platform. The company will fully enjoy industry data dividends and market trends to help the development of its own silk industry, thus further expanding its influence in the industry.
High dividends and high dividends are scarce targets. The company has historically placed emphasis on cash dividends. According to Wind statistics, the company has accumulated dividends of 1.28 billion yuan since its listing in 2010, with an average dividend rate of 71.1%. During the reporting period, the company's 2023 annual report revealed a proposed dividend of 0.3 yuan per share, with a dividend payment rate of over 77%, and a dividend rate of over 5% based on current stock prices. The company pays attention to shareholders' interests and returns, and is expected to continue to give shareholders higher dividends in the future.
Profit forecasting and investment advice. The company's revenue for 2024-2026 is estimated to be 5.11 billion yuan, 5.83 billion yuan and 6.46 billion yuan, respectively, net profit to mother of 260 million yuan, 310 million yuan and 340 million yuan respectively, and EPS of 0.45, 0.54, and 0.59 yuan, respectively, corresponding to PE 13, 11 and 10 times, respectively. Combined with comparable companies' static average PE in 2023 and average PE for the next three years, the valuation of Jiaxin Silk PE is lower than the industry average. Considering the company's performance growth rate of about 15% over the next three years and stable high dividend expectations, we think it is reasonable to give the company a 15 times valuation in 2025. The target price is 8.1 yuan, which covers the “buy” rating for the first time.
Risk warning: Risk of sharp macroeconomic decline, risk of weak overseas demand, risk of exchange rate fluctuations, risk of natural disasters affecting cocoon growth.