Jiansheng Group (603558): Significant improvement in cotton socks business
19Q1-Q3 Company income / net profit attributable to mother increased by 14.
6% / 31%.
19Q1-Q3 company revenue 13.
100 million, an increase of 14 in ten years.
6%, net profit attributable to mother 2.
3 ‰, a year-on-year increase of 31%, deducting non-net profit2.
10,000 yuan, an increase of 39 in ten years.
9%, gross profit margin 29.
4%, rising by 1 every year.
1pct, net interest rate 17.
3%, up 2 every year.
One point, the net cash of operating activities is 300 million yuan, with a multi-year appreciation of 34.
Third quarter 19 revenue 4.
800 million, an increase of 25% in ten years, net profit attributed to mother 0.
800 million, an increase of 32 in ten years.
7%, deducting non-net profit of 0.
9 trillion, an increase of 51 in ten years.
6%, gross profit margin 30.
5%, rising by 0 every year.
6pct, net interest rate 17.
2%, rising by 0 every year.
95 points, net cash from operating activities1.
800 million, an increase of 9 in ten years.
19Q3 revenue growth significantly increased earlier than 19Q2.
We believe that the reason for the significant improvement in the company’s revenue growth in 19Q3 was that ① the relocation of Hangzhou Smart Factory in 19H1 had a certain impact on crops, and production capacity gradually recovered in the second half of the year.
On September 19th, the company’s Jiangshan Industrial Park was officially opened, and the factory annually produces mid-to-high-end cotton socks.
3 billion pairs, with more than 2,000 knitting equipment, accumulated excessive foundation; ② Judging from the zero data of downstream agencies, we believe that domestic demand has picked up from the first half of the year; ③ underwear business continues to maintain competitive advantages and maintain rapid growth.
The decline in the expense ratio during the period led to an increase in net interest rate.
We believe that the company’s cotton socks production capacity is picking up. After the sales are expanded, the cost rate brought about by the scale effect will decrease, and the production efficiency of the newly opened factories will be further improved after gradual running-in.
We expect the business in Vietnam to develop smoothly and continue to contribute to net profit.
19Q1-Q3 company sales expense ratio 2.
8%, a decline of 0 per year.
4pct, management expense ratio 9.
5%, a decline of 0 per year.
4pct, financial expense ratio -0.2%, 0 per year.
The impact of exchange rate changes on the elasticity of net profit has weakened, and gross profit margin has maintained steady growth.
In 19Q3, the company’s gross profit margin increased by 0 in ten years.
6pct, keep stable, we think the increase is higher than Q2 (3.
3pct) The increase was mainly due to the positive impact of the depreciation of the renminbi (19Q3 average exchange rate of Renminbi against the US dollar: 7.
0, 18Q3: 6.
8), we judge that the proportion of high-margin underwear remains stable.
The rebound in sales promoted the improvement of inventory indicators.
2019Q1-Q3 company inventory 4.
1 trillion, 0 per year.
5%, inventory turnover days 121.
9 days, reduced by 0 every year.
In 8 days, the first year to date has shown a positive trend. We believe that with the recovery of cotton socks business and improved production efficiency, the company’s inventory indicators will be further optimized.
Turnover days of the company’s accounts receivable during the same period were 58.
5 days, increase by 1 every year.
Keep stable for 5 days.
Profit forecast and estimation.
At present, the company’s Vietnam Haiphong factory and Vietnam Xing’an factory have begun effective operations. The seamless underwear factory and Qinghua factory in Xing’an, Vietnam are also under construction, and strive to complete an annual output in 20191.
Crop target of 5 billion pairs of cotton socks.
We expect the company to achieve net profit in 2019 and 20202.
13 ppm, given the company’s 2019PE estimated range of 18-20X, corresponding to a reasonable value range of 10.
00 yuan, maintaining the “permanent market” rating.
The risk of order loss, capacity expansion is not up to expectations, and exchange rate changes affect profit.