We believe that Weixing's performance is relatively desensitized to the economy and inventory removal cycle. The core may be clear and unequivocal changes in the pattern and verification of capabilities, gradually getting rid of the imprint of the traditional sunset weaving industry.

The company and YKK have different business choices, and each has its own strengths. YKK's strengths are mainly brand awareness and international operation capabilities, and the company has a “product+service” business philosophy, focusing on providing “one-stop” services while supplying customers with high-quality products. In addition, the company's zippers have formed a strong competitive advantage in terms of product variety, fashion, innovation ability, and product support capabilities. The company's competitive advantages are in line with current industry trends.

Currently, competition among the apparel accessories industry not only targets a single factor of price, but also includes comprehensive competition in various aspects such as product quality, R&D innovation, quick response, and marketing services. Overall, the company maintained a good growth trend in cumulative orders in the first half of the year.

The Vietnam Industrial Park opened, serving customers with localized delivery, and is expected to receive more orders. The company's Vietnam Industrial Park opened on March 20, 2024, and is currently receiving orders, producing, and delivering normally. Currently, the Vietnam Industrial Park is focusing on improving internal management of the park and doing a good job in matters such as process optimization and employee training; on the other hand, it is actively promoting Vietnamese market development and customer factory inspection; judging from market feedback, brand customers are very concerned about the company's Vietnam factory.

Vietnam Industrial Park faces a certain amount of depreciation pressure in the short term, and customer development takes a certain amount of time, so it is expected to face a certain loss pressure in 2024; however, in the long run, Vietnam Industrial Park is of great strategic importance to the company, and the company is optimistic about the development prospects of overseas parks such as Vietnam Industrial Park.

Over the past five years, the company has actively carried out all-round transformation and upgrading, focusing on the following areas of work:

1. Promoting a global strategic layout is mainly reflected in the layout of international production bases, the cultivation of international brands, the expansion of international marketing networks, the formation and expansion of an international workforce, and the formation and development of an international business philosophy.

2. Vigorously promote intelligent manufacturing and continuously improve on-site production efficiency and manufacturing level. Fashion accessories products are typical non-standard products. There are many categories, and individualization is obvious. Orders also show the characteristics of “multiple categories, multiple batches, and small batches”. The company earlier recognized the trend of continuing high labor costs and the importance of automated production in improving product quality and competitiveness; over the years, it has achieved good results through continuous investment.

The main aspects are as follows: First, in terms of production, the use of AI intelligent inspection systems to effectively improve production efficiency and product quality stability; second, in terms of process, the use of information-based management tools has greatly facilitated the transmission of information between “customers and factories”; third, in terms of cost, through improvements in intelligent manufacturing, the company has achieved the effect of saving production costs.

Maintain profit forecasts and maintain “buy” ratings

Through five to ten years of hard work, the company hopes to develop into a “global and innovative fashion accessories kingdom” to provide high-quality products and services to domestic and foreign brand customers. We expect the company's 24-26 EPS to be 0.55/0.61/0.74 yuan/share, respectively, and the corresponding PE is 23/20/17X, respectively.

Risk warning: increased competition risk in the industry; risks arising from changes in the macroeconomic situation; risk of losing key personnel