Investment Rating - The report initiates coverage with a "Buy" rating for the company, setting a target price of HKD 65.17 based on a PE of 14 times for 2025, which is considered the lowest level in the past decade [5]. Core Views - The company is recognized as one of the largest vertically integrated knitwear manufacturers globally, with a strong client base including Nike, Uniqlo, and Adidas. Its high profitability is attributed to several advantages, including strong R&D capabilities, integrated production efficiency, and diversified overseas factory locations [2][15]. - The company is expected to benefit from the recovery of major clients, leading to improved order conditions. The long-term market share is anticipated to grow as major clients focus on core suppliers, reducing the number of suppliers [4][11]. Summary by Sections Company Highlights - The company has established itself as a leading vertically integrated knitwear manufacturer, with a significant portion of its production in China, Vietnam, and Cambodia, accounting for 47%, 27%, and 26% of capacity respectively [2][55]. - The company achieved a revenue of RMB 28.66 billion in 2024, reflecting a year-on-year growth of 14.79%, and a net profit of RMB 6.24 billion, up 36.94% [15][25]. Investment Logic - The company has a manageable risk profile compared to its peers, with only 16% of its exports going to the U.S. The potential impact of tariffs is estimated to be less than 3% on overall orders [3][63]. - The recent tariff situation is expected to accelerate the exit of smaller competitors, allowing the company to capture additional market share due to its stronger financial and operational resilience [3][64]. Short-term Orders - The company is optimistic about order improvements from its four major clients, with Uniqlo and Adidas showing positive trends. Adidas is expected to recover its brand strength, which will benefit the company [4][11]. - The long-term market share is projected to increase as major clients reduce their supplier base, enhancing operational efficiency [4][11]. Profit Forecast, Valuation, and Rating - The company’s EPS is forecasted to be RMB 4.39, RMB 4.91, and RMB 5.48 for 2025, 2026, and 2027 respectively, with a PE of 11 times for 2025, indicating a significant valuation opportunity [5][9]. - The report suggests that the recent stock price decline presents a buying opportunity, with a target price set at HKD 65.17 [5].
申洲国际（02313）：全球针织成衣龙头,关税不改核心优势