Zhejiang Xinao Textiles (603889) 东吴证券·2024-04-25 03:30Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative price increase of over 15% compared to the benchmark in the next six months [8]. Core Insights - The company reported a revenue of 4.438 billion yuan in 2023, a year-on-year increase of 12.37%, with a net profit attributable to shareholders of 404 million yuan, up 3.7% year-on-year. The growth in net profit was lower than revenue growth due to a decrease in non-current asset disposal gains and government subsidies [2]. - For Q1 2024, the company achieved a revenue of 1.1 billion yuan, reflecting a year-on-year increase of 12.48%, and a net profit of 96.05 million yuan, up 6.59% year-on-year. The growth in revenue was primarily driven by volume increases, while profit growth lagged due to impacts from the cashmere business [2]. - The company has seen robust revenue growth driven by both wool and cashmere segments, with significant increases in sales volume for wool products, although cashmere prices have declined [2]. Summary by Sections Financial Performance - In 2023, the company’s revenue from wool and cashmere segments grew, with specific increases of 11.3% for wool yarn, 14.11% for cashmere, and 12.76% for wool tops. Each segment contributed to double-digit revenue growth [2]. - For Q1 2024, the revenue from wool yarn increased by 11.9%, driven by a 17.6% increase in sales volume, although the average price decreased due to raw material price fluctuations [2]. Profitability Metrics - The gross margin for Q1 2024 was 19.91%, an increase of 0.64 percentage points year-on-year. However, the net profit margin slightly decreased to 8.73% due to rising financial costs associated with long-term debt [2]. - The report forecasts a recovery in profitability for the full year 2024, assuming stabilization and potential recovery in wool prices [2]. Earnings Forecast - The company is projected to achieve a net profit of 464 million yuan in 2024, reflecting a growth rate of 14.89%, with further increases expected in subsequent years [8]. - The report adjusts the net profit forecasts for 2024 and 2025 slightly downward to 464 million yuan and 529 million yuan, respectively, while introducing a new forecast for 2026 at 608 million yuan [2][8]. Market Position - The company is recognized as a leading producer of fine wool yarn in China, with a strategic focus on expanding its cashmere yarn business and enhancing its market presence [2].