Jiansheng Group (603558): Accelerated release of production capacity + new customer development + Qiaoer Tingting gradually promote growth and high flexibility

The event company announced its 2018 annual report and 2019 quarterly report.

Realized operating income of 15 in 2018.

770,000 yuan, an increase of 38 in ten years.

62%; net profit attributable to mother 2.

0.6 million yuan, an increase of 56 in ten years.

98%; deduct non-attributed net profit1.

810,000 yuan, an increase of 95 in ten years.

3%.

1Q1 single-quarter operating income4.

30,000 yuan, an increase of 17 years.

95%; net profit attributable to mother 0.

690,000 yuan, an annual increase of 57.

2%.

The company decided to pay 0 for every 10 shares.

50 yuan for a total distribution of 0.

800,000 yuan, accounting for 38 net profit attributable to mothers in 2018.

63%.

Brief comment on the accelerated release of production capacity + Qiaoer Tingting merger table + new customers, driving the growth of the company’s revenue in 2018 increased by 38.

62%, mainly driving the release of production capacity of socks bases in major industries in Vietnam, the consolidation of Qiaoer Tingting ‘s length and the release of production capacity of its seamless underwear base in Guizhou, the development of premium new customers such as Nike, Adidas, GAP, etc.Strong, strong sales growth.

2018Q1-Q4 revenue growth was 72.

97%, 58.

07%, 28.

87%, 14.

86%, the slower growth rate in the second half of the year than in the first half was mainly due to Qiaoer Tingting’s consolidation in August 2017, the base increased.

Although the impact and uncertainty of the Sino-U.S. Trade war on foreign trade prospects started in the second half of the year, the company ‘s socks and seamless underwear are not included in the US tax increase list as the final apparel product.The half year and the future are expected to be less affected by the trade war risks.

19Q1 revenue continued to increase by 18.

0%, the growth rate increased by 3.

1 pct.

The company has gradually formed four stable markets in Japan, Europe, Oceania and the United States.

Revenue from foreign trade orders in 2018 totaled 13.

400 million, an increase of 43.

9%, accounting for about 85% of total revenue, of which the United States income has increased significantly by 107.

8%, Europe, Japan, and Australia each increased 17%.

2%, 53.

9%, 105.

1%.

Domestic sales revenue increased by 14.

9% to 2.3.2 billion.

The expansion of production capacity has accelerated. In terms of the amount of overseas target output this year, in terms of main socks, the domestic Hangzhou Smart Factory was put into production in November 2018. The first 200 socks machines were officially 杭州夜网论坛 launched. Hangzhou Jiansheng and Hangzhou Qiaodeng production lines will be launched.Will be moved to smart factories and other bases one after another this year; Jiangshan Jiansheng Industrial Park was finally put into use, the original Jiangshan Sijin, Yideng factory capacity has been fully transferred, Jiangshan Knitting Hecun capacity has also been merged into the industrial park in June this year;In addition, the construction of the fourth plant and the fifth plant of Jiangshan Base has been basically completed.

Overall funding needs for hosiery productivity in Vietnam. In 2018, the second and third factories in Haiphong were fully put into production and the fourth factory was completed.

Last year, Vietnam ‘s socks crop exceeded 100 million pairs, an increase of about 40%, and it is expected to reach 1 this year.

500 million pairs.

At the same time, Vietnam ‘s Qinghua has an annual output of 90 million pairs of mid-to-high-end cotton socks production lines under construction. It is targeted to start production by the end of this year. It is expected that the output of Vietnam socks will be increased to about 200 million pairs by 2020.

Driven by the acceleration of the release of new capacity in Vietnam last year, overall cotton socks revenue10.

16 ppm, an increase of 9 in ten years.

9%.

On seamless underwear, Qiaoer Tingting consolidated the table, and finally added 75 knitting machine equipment. Guizhou’s new production capacity contributed significantly and achieved a profit of 5.

4.8 billion yuan, an increase of 191.

77%; contribution deducts non-attributed net profit1.

10,000 yuan, more than 80 million yuan promised 26.

1%.

During the year, the seamless underwear throughput was also running at full capacity. While optimizing the proportion of large customers’ orders, it gradually developed new domestic customers.

At present, the throughput of Vietnam’s Xing’an with an annual output of 18 million pieces of seamless knitted sportswear and ancillary dyeing factories are actively under construction. The same target as the throughput of Qinghua cotton socks is put into production by the end of this year.

The consolidated gross profit margin for 2018 was 27.

95%, down by 0.

17 pct, the gross profit margin of hosiery products decreased by 2.

25 pct, mainly due to the increase in raw material costs, while the seamless underwear gross profit margin increased by 3.

66 pct, last year’s playful Tingting promoted Amoeba’s business model, strengthened energy conservation and consumption reduction, and applied Total Cost Reduction (TCD) to improve and promote cost reduction and efficiency enhancement. At the same time, the gross profit margin of seamless underwear increased, effectively reducingImpact of socks gross margin.

Expense rate during the year 14.

08%, down by 3.

19 pct, mainly benefit from playful Tingting’s effective cost control, and consolidated the low level of overall expenses, of which the sales expense rate also decreased by 0.

57 to 4.

04%, the management + R & D expense ratio decreased by 1.

07 to 9.

76%.

Benefiting from the depreciation of RMB in the second half of the year, financial expenses also decreased by 78.

6% to 0.

04 billion.

At the same time, the effective tax rate continued to fall to 3.

9 to 11.

97%, the overseas CO2 concentration bonus continued to be realized, revenue growth, and decline in expense ratio / tax rate jointly driven high growth in 2018 performance.

19Q1 gross profit margin decreased by 0.

65 pct, but during the same period, the rate continued to drop to 2.

83 pct, effective tax rate decreased by 2.

79 pct, performance growth remains highly resilient.

Investment suggestion: The company has the leading strength in manufacturing socks and seamless underwear, strong orders from new and old customers, and continuous cooperation with more international leaders. The development space is still large, especially the seamless underwear sports field can be used as a new growth point.

The company’s move to Vietnam has a clear direction, high capacity utilization, low labor costs and index dividends gradually realized, profitability is higher than domestic, and the ability to avoid trade war risks is strong.We expect the company to achieve net profit2 from 2019 to 2020 respectively.

6.5 billion, 3.

26 trillion, EPS is 0.

64 yuan / share, 0.

78 yuan / share, corresponding to PE and 16 times, respectively, maintain “Buy” rating.

Risk factors: the risk of exchange rate fluctuations, the risk of a tax increase in the trade war, the expected reduction in throughput, etc.