Blum East (601339): Sustained release or reduction of overseas production capacity is expected to resume rapid growth in 19 years
Investment points: Sino-U.S. Trade friction affects domestic order demand and expectations of cotton hedging, etc., which dragged down the company’s performance. Net profit fell by 10% in 18 years, slightly lower than expected.1) 18 years of operating income of 60 trillion, an annual increase of 0.8%, achieving a net profit of 4.4 ‰, a year-on-year decrease of 10%, and a deduction of non-net profit4.200 million, down slightly by 2%.2) 18Q4 achieved operating income of 14.40,000 yuan, an increase of 3 in ten years.8%, net profit decreased by 27.67 million yuan, a profit of 100 million yuan in the same period last year.Mainly due to the impact of Sino-U.S. Trade frictions, domestic textile companies’ orders fell short of expectations in the fourth quarter. At the same time, the company’s cotton hedging floating loss of about 70 million yuan and the improvement in investment income in the fourth quarter significantly dragged down performance. Gross margin decreased slightly, expenses were well controlled during the period, net interest rate fell, and asset quality needed to be improved.1) Gross profit margin in 2018 decreased by 0 compared with the same period last year.6 points to 19.5%, mainly due to the increase in the proportion of the company ‘s low-margin white yarn sales in Vietnam; the 18-year management expense ratio rose by 0.2 points to 4.8%, the sales expense ratio fell to 0.4 points to 2.3%, mainly due to the company’s effective reduction of land freight costs by optimizing transportation routes, as well as the decrease in internal shipping and export volume, resulting in reduced freight rates; Q4 investment income and cotton hedging losses drove the company’s net interest rate down by 0.9 points to 7.3%.2) Inventories in 18 increased by 15 trillion to 45 trillion over the previous year, mainly due to the nearly 32 trillion reserves of raw materials such as cotton, and sales in 18Q4 fell short of expectations. Inventories of goods increased by 2 trillion to 1.1 billion from the beginning of the year.At the same time, a large number of cotton inventories caused the company’s 18-year operating cash flow to decline9.300 million to -5.600 million. Overseas production capacity is advancing steadily, and core competitive advantages remain unchanged.1) Vietnam ‘s production capacity has expanded rapidly, continuing to maintain double-digit growth. The company currently has a total production capacity of 140 spindles, and the domestic and Vietnamese production capacity ratio is 1: 1.The new 200,000 ingot production capacity of Zone B in 19 is being put into operation as planned, and it is expected to be basically completed in the first half of 19 or so.2) The production capacity is methodical, and overseas capacity will account for 60%.It is estimated that by the first half of 20 years, the total capacity of 500,000 ingots in Zone B will be completed and put into operation. By then, the company’s total production capacity will reach 1.7 million ingots (700,000 ingots + 1 million ingots in Vietnam), and the overseas capacity will account for 60%.3) The net profit margin of Vietnam’s factories is high, and the increase in production capacity is expected to drive the overall net profit margin.In 18 years, Vietnam’s Blum achieved revenue of 25 million US dollars, a year-on-year increase of 19% and net profit2.7 ‰, an increase of 8% in ten years, and a net interest rate of 11%.Vietnam’s favorable trade environment, budget concessions and cost advantages, and the overall net profit margin of Vietnamese factories have increased by approximately 5 percentage points domestically.4) The company ‘s production capacity in Vietnam has continued to rise, effectively reducing the uncertainty of the trade war. Cotton hedging and floating losses affected 18-year profits, and the 19-year-old cotton price recovered, and the impact 四川耍耍网 has been eliminated.At present, the state reserve cotton reserve is only 275 tons, which has weakened the suppression of cotton prices. The long-term supply and demand gap for cotton will gradually appear. It is expected that cotton prices will gradually pick up in 1919.As of March 21, 19, Zheng Mian’s main contract was 15,320 yuan / ton, which had increased by about 3% at the end of the earlier 18 years. The company is the leader in domestic color spinning. Vietnam ‘s production capacity has been steadily released, driving steady growth in performance.The 19-year cotton supply-demand gap has gradually decreased. It is expected that the cotton price will continue to pick up in the future, and the company ‘s raw cotton reserves will increase. It is expected to benefit from the increase in yarn prices brought by the rising 杭州桑拿网 cotton price. At the same time, Vietnam ‘s production capacity continues to expand, leading to a steady increase in output.Taking into account the uncertainty of Sino-US trade frictions and the poor demand for downstream orders, we lowered our profit forecast for 19-20 years and increased our profit forecast for 21 years. We expect to achieve net profit attributable to mothers in 19-21.1/6.9/7.900 million (was 6 in 19-20).7/7.700 million), EPS is 0.40/0.46/0.53 yuan, corresponding to PE is 15/13/11 times, maintaining the “overweight” level.