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On August 21, 2024, the company released its 2024 semi-annual report. The company achieved revenue of 2.556 billion yuan (YoY +10.14%), net profit attributable to mother 0.266 billion yuan (+4.51% YoY), and net profit not attributable to mother 0.26 billion yuan (YoY +5.77%). Among them, 2024Q2 achieved revenue of 1.457 billion yuan (YoY +8.44%), net profit attributable to mother of 0.17 billion yuan (YoY +3.38%), and net profit not attributable to mother of 0.166 billion yuan (+5.43% YoY).
Investment highlights:
The company's performance continued to grow, but the net profit growth rate decreased compared to the same period last year: as one of the leading enterprises in the wool textile sector, the company achieved an increase in net revenue and profit. In the first half of 2024, the company achieved revenue of 2.556 billion yuan (+10.14% year over year), up from the same period last year (+9.51%); net profit to mother was 0.266 billion yuan (+4.51% year over year), the growth rate decreased slightly from the same period last year (+5.08%); net profit after deducting non-parent net profit of 0.26 billion yuan (+5.77% year over year). The growth rate decreased significantly from the same period last year (+20.78%). Among them, the company's revenue in the 2024Q2 single quarter was +8.44% to 1.457 billion yuan, the growth rate declined from the same period last year (+9.56%), and the growth rate decreased from 2024Q1 (+12.48%); net profit to mother was +3.38% to 0.17 billion yuan, the growth rate increased from the same period last year (-2.07%), and the growth rate decreased month-on-month (+ 6.59%) compared to 2024Q1 (+ 6.59%); net profit not attributable to mother compared with the previous year There was a marked decline in the same period (+20.87%), and the growth rate also declined slightly from 2024Q1 (+6.37%).
The company's gross margin increased slightly, and the company's profitability declined slightly: the company's gross margin for the first half year of 2024 was 20.84%, an increase of 0.50 pcts compared to the same period last year. The 2024 semi-annual sales expense ratio decreased by 0.06 pcts to 1.68% year on year, the management expense ratio increased 0.04 pcts to 2.69% year on year, the R&D expense ratio decreased by 0.02 pcts to 2.33%, and the financial expense ratio increased by 1.68 pcts to 0.97% year on year. The increase in financial expenses was mainly due to increased interest on bank loans and increased exchange losses due to exchange rate changes during the reporting period. Overall, the increase in the company's financial expenses ratio reduced its profitability slightly, and the company's net profit margin fell 0.68pcts to 10.88%.
Wool worsted yarn and cashmere products achieved revenue growth, and wool wool yarn revenue declined: by product, the company achieved revenue of 1.479/0.677/0.361 billion yuan in 2024, respectively, +10.01%/+19.65%/-5.32%, accounting for 57.87%/26.49%/14.11% of revenue, respectively; among the main product categories, the operating income of wool-worsted yarn and cashmere showed an increase of more than 10%, and wool wool yarn revenue declined by more than 10%; among the main product categories, wool yarn revenue declined., The revenue growth rate of worsted yarn/cashmere increased significantly from +5.90%/+7.70% in the same period last year, and the revenue growth rate of wool wool yarn decreased significantly from +27.33% last year. In terms of sales volume, the company's worsted yarn business achieved sales volume of 9285 tons in the first half of 2024, a significant increase over the same period last year (+3.20%); cashmere achieved sales of 1,029 tons, +39.05% year-on-year, and the growth rate was also significantly higher than the same period last year (+22.92%).
The domestic and foreign consumption environment is weak, but the company's wool exports have risen: in terms of domestic demand, the domestic consumer market for clothing and textile products was weak in the first half of 2024. According to data from the National Bureau of Statistics, retail sales of clothing, shoes, hats, and knitted textiles from January to June 2024 were 709.8 billion yuan, an increase of 1.30% over the previous year. In terms of external demand, the export value of textile raw materials and products also increased slightly. From January to June 2024, the export value of textile raw materials was 1.904 billion US dollars, up 0.7% year on year, while the export value of textile yarn, fabric and its products was 69.351 billion US dollars, up 3.3% year on year. The company's domestic and overseas market performance from January to June 2024 was better than the overall market environment. The domestic/overseas markets achieved revenue of 16.72/0.884 billion yuan respectively, +9.45%/+11.48% over the same period last year. Among them, the growth rate of export revenue increased significantly compared to the same period last year (-2.41%).
Profit forecast and investment suggestions: In the medium to long term, the company has been deeply involved in wool spinning for more than 30 years and has developed into one of the leading global industry segments, breaking through the growth ceiling with capacity expansion and diversified broadband, and then starting a new speed curve. In the short term, the domestic and foreign consumption environment is weak, and the company's performance is better than the overall market environment. According to the latest data, we reduce the company's profit forecast and expect net profit to be 0.426/0.468/0.534 billion yuan for 2024-2026 (0.461/0.492/0.542 billion yuan before adjustment), and earnings per share are 0.58/0.64/0.73 yuan/share, respectively. The PE corresponding to the closing price on August 21, 2024 is 11.66/10.61/9.30 times, maintaining the “gain” rating.
Risk factors: macroeconomic, industry and market fluctuation risk, raw material price fluctuation risk, exchange rate fluctuation risk