The company publishes annual reports and quarterly reports
24Q1 revenue of 500 million, up 14% from the same source, up 30%, deducted not from $23 million, and increased 21%; 23A revenue of 2.5 billion, up 14%, mainly due to increased sales volume; 100 million, down 36%, and not 80 million, down 30%; 23Q4 revenue of 700 million, up 18% to mother of 0.3 billion, up 43%, less than $0.3 billion.
By product, revenue from colored yarn was 2.2 billion yuan (accounting for about 90%), with a gross profit margin of 11.8%, and an increase of -0.2 pct; trade yarn revenue of 200 million, an increase of 8%, gross profit margin of 4%, and a decrease of 0.6 pct; processing fee revenue of 90 million, with a gross profit margin of 19%, and an increase of 1 pct;
The global economy has declined since 2023, consumption has shrunk, and market demand is sluggish. After the company's processing fee price was adjusted in the second half of 2022, processing fee prices have not recovered, so gross profit for the first half of '23 decreased compared to the same period.
By region, domestic 2.5 billion increased 13%, gross profit margin 11%, same decrease 0.1 pct; foreign 100 million, same increase of 23%, gross profit margin 15%, same decrease of 7 pct.
In 24Q1, the company's gross profit margin was 12%, up 0.1 pct; net profit margin was 5.5%, up 0.7 pct.
In 2023, the company's sales volume of colored yarn was 7.5 wt, an increase of 11%; processed yarn was 1 wt, an increase of 57%.
Industry concentration will surely be further concentrated on leading companies
The textile industry is a traditional Chinese manufacturing industry. As an important part of the textile industry, the printing and dyeing industry is affected by both environmental protection policies and cost control, raising the entry threshold for the industry. Furthermore, domestic labor costs and energy consumption costs have risen in recent years, and a number of small, scattered, and messy printing and dyeing enterprises have gradually withdrawn from the market. At the same time, large leading enterprises have increased their market share by optimizing production processes, enhancing R&D capabilities, and expanding production scale.
Fuchun standard color cards have the advantage of “warehouse-type production”
The company independently developed Fuchun standard color cards with completely independent intellectual property rights, established a standard color database, and transformed the original sample customization model into a warehouse-style production model, leading customer consumption habits; the company has now begun to develop a standard color database for color spinning, standard color cards for towels, and standard color cards for sweaters to prepare in advance for new markets and color spinning projects; customers can intuitively experience the color and quality of the company's products through color cards, so they can make choices quickly and accurately. At the same time, the company carries out standardized production through a standard color card database to ensure stable product quality, and to prepare goods on a certain scale based on historical orders and future market demand, etc., to achieve full cylinder production and mass production, effectively saving factor resources, reducing production costs, and speeding up delivery speed.
Adjust profit forecasts to maintain “buy” ratings
As one of the leading domestic manufacturers of colored yarn, the company's main business is R&D, production and sales of colored yarn. The company's products are mainly colored yarn. After dyeing and finishing, the embryo yarn is converted into cylindrical yarn suitable for use in textile machinery such as hosiery machines, round weft machines, horizontal machines, and weaving machines. It is widely used in the hosiery industry, towels, sweaters, round machines, shuttle machines, home textiles, etc. Considering the company's 23 and 24Q1 performance, sales growth and operational efficiency improvements, and performance growth exceeded our previous expectations, we adjusted our profit forecast. We estimated that the company's net profit for 24-26 would be $2.23/2.80/325 million yuan ($181/208 million before 24-25, respectively), EPS was 1.49/1.87/2.17 yuan/share, respectively, and the corresponding PE was 9/7/6X, respectively.
Risk warning: risk of insufficient liquidity; risk of market competition; risk of fluctuations in raw material prices, etc.