Analysis of the "spider boss" profits surged 202.66% behind

According to the 2011 annual results report released by the Bank of China on February 27, the company achieved operating income of 1.809 billion yuan, up 53.74% year-on-year; operating profit of 113.7 million yuan, up 202.66% year-on-year; net profit of 166.3058 million yuan, up 123.13 over the same period %; The net profit attributable to the parent company was RMB 167.983 million, an increase of 117.66% year-on-year. At the end of the reporting period, the company’s total assets were 3.637 trillion yuan, up 63.63% from the end of the previous year; basic earnings per share were 0.31 yuan/share, up 106.67% from the previous year.

Layout global cashmere industry chain

Middle and lower reaches of growth

Many people are unfamiliar with the name "China's cashmere industry". In fact, it is the former St. In June 2000, Ningxia St. Feather Co., Ltd. was listed on the Shenzhen Stock Exchange with an issue price of RMB 8.60 per share. The stock was referred to as “St. In December 2006, the former controlling shareholder of the company, Shengxuerong Group, and Lingwu City, Ningxia Zhongyin Cashmere Industry Co., Ltd. (later renamed “Ningxia China Silver Cashmere Industry International Group Co., Ltd.”) signed the “Equity Transfer Agreement” and “Assets Replacement Agreement. In December 2007, Zhongrong Group agreed to receive 80 million shares of the company held by Shengxue Group, and Zhongrong Group became the controlling shareholder of the company. In December 2007, the company's name was changed to "Ningxia Zhongyin Cashmere Industry Co., Ltd.". The actual controller of the company is Ma Shengguo.

At present, the company is mainly engaged in the production and sale of plush, cashmere, cashmere yarn and cashmere products. The main products are washed velvet, white plush, blue plush, purple plush, white velvet, velvet, Purple Velvet; cashmere yarn, cashmere sweater, cashmere coat, scarves and other products, are export-oriented enterprises, accounting for more than 50% of export revenue.

It is worth mentioning that in 2009, with its capital advantages, it acquired the 140-year-old British Duncan yarn factory, which possesses world-class high-end spinning dyeing technology, as well as a well-known yarn brand and European sales network. In the next two years, the company will use the mature sales channels of Duncan in the United Kingdom to focus on the expansion of the Italian-based European market. At present, the European market occupies about 50% of the world's high-end production capacity, the company is expected to gradually accept the transfer of global high-end production capacity by virtue of its raw materials and technological advantages.

On the other hand, in the past few years, the company has also begun to accelerate the expansion of the domestic market and strengthened its brand building. The company currently owns an independent cashmere brand “philosofie Filo Sophie” and continues to invest in expanding the sales of cashmere products in the domestic market.

During the reporting period, the China Silver Cashmere Industry continued to open up the sales market for deep-processed products of cashmere products. The sales revenue of deep-processed products with higher added value, such as yarns and products, continued to grow. Among them, sales of cashmere yarns increased by 17,958.20 million over the previous year. The sales of cashmere products increased by 194,202,600 yuan over the previous year, and the increase in the above two revenues was 373,748,600 yuan, accounting for 59.10% of the increase in the current period, and the scale effect further showed.

At the same time, according to the market demand, the company increased the sales of upstream products such as water-washing velvet. During the reporting period, the company sold 68174.57 million yuan worth of water-washed, lint-free cash, an increase of 226,221,600 yuan over the previous year, with an increase rate of 49.66%, accounting for 35.77% of the increase in revenue for the current period. While actively expanding its sales business, the Bank of China also strictly controlled expenses during the period in 2011, which led to a 2.17% decrease in revenue-to-income ratio as compared to the previous year.

The company pointed out that the main reason for the sharp increase in profit in 2011 was that with the extension of the company's industrial chain, the product structure was further optimized and sales revenue continued to grow.

Huachuang Securities Researcher, Zone Zhihang, pointed out that in 2011, the Bank of China Cashmere Industry had higher-than-expected earnings, net profit basically met, slightly exceeded expectations, and 21.1% of gross profit margin was also in full compliance with expectations. Its good performance is mainly the combination of quantity and price. The middle segment is one of the driving forces for the growth of the company's performance. In 2011, sales of cashmere yarns of the company increased by 64.49% year-on-year, sales of water-washed cashmere and dehaired cashmere increased by 49.66% year-on-year. More importantly, the overall gross profit margin increased slightly by 0.16 percentage points. The yarn gross profit rate in 2011 was 25.75%, an increase of 5.11 percentage points year-on-year. The downstream has also become the driving force for growth. In 2011, apparel and product revenue increased by 58.45% year-on-year, and gross profit margin increased by 8.32% to 26.06%. Assuming that cashmere prices have continued to rise slightly in 2012-2013, the Company's cashmere yarn volume has brought continuous performance growth, and its 2012-2013 results have been raised to RMB 0.47 and RMB 0.65, maintaining “strong recommendation”.

Huatai Joint Researchers Cheng Yuan, Zhang Lei, and Feng Wei pointed out that the China Silver Cashmere Industry has become a world-renowned company by virtue of its control of raw materials (the company purchases about 35% of China's cashmere per year), product quality control and continuous improvement of technical equipment. The stable suppliers of cashmere brand merchants have so far been ranked first in the country for seven consecutive years for exporting cashmere and cashmere.

Since the establishment of branch offices in Shenzhen to open up the Hong Kong market in 2010, the company's yarn business has grown rapidly, and the yarn business has grown explosively. After occupying the Hong Kong market, it will enter the European market and is determined to become a professional yarn supplier. Within two years, it ranked second among cashmere yarn companies exporting to Hong Kong nationwide. This was mainly attributed to the company's ability to control raw materials, product quality and sales. In the long term, on the basis of gradually increasing the market share of raw materials, the China Yinrong Industry will gradually undertake the transfer of production capacity in Italy and other European countries by expanding international yarn sales channels. In the short term, the higher gross profit ratio of yarns and cashmere sweaters, the gradual increase in the yarn market position, the increase in bargaining power, the increase in cashmere prices, and the gradual increase in the production capacity of the external parties will become the key to the company’s profitability improvement. . The company's 2011-2013 EPS was adjusted to 0.30 yuan, 0.44 yuan, and 0.62 yuan, and the "overweight" rating was maintained.

Capitalizing on the Capital Market and Implementing the "Catch Two" Strategy

During the reporting period, faced with the complicated situation of rising raw material prices, rising labor costs, appreciation of inflation, and inflationary pressures, the China Silver Cashmere Industry relied on the advantages of a complete industrial chain of raw cashmere procurement and cashmere business, and continued to adhere to specialization and refinement. Development strategy, through the subdivision of procurement management of cashmere production areas, to enhance the right to speak in the original cashmere market, and vigorously expand product sales channels. At the same time, through the improvement of the performance appraisal mechanism and the establishment of an internal control system, the company will improve its business management.

The company implements the strategy of “grasping two ends” in the cashmere industry, namely, “advancement” of raw material resources, single-handedly deep processing and brand “out”. During the period, the company invested in the construction of 5000 tons of cashmere procurement and primary processing projects and cashmere products domestic marketing system construction projects, strengthened the acquisition of raw material purchase information trading platform, warehouse logistics platform and primary processing base, and provided strong power for the company to produce high-quality cashmere products. The support will expand the domestic sales network platform, opening brand stores and mall stores in key domestic target cities, and extend the domestic sales of end products.

At the same time, it started the project to build a technical transformation project that will produce 720 tons of multi-component specialty fiber wool spun yarn and 260 tons of worsted yarn annually. After the completion of the technical reform project, the company will have 5,000 tons of primary cashmere raw materials, 1,100 tons of combed cashmere, 300 tons of cashmere, 1,420 tons of cashmere yarn (including Duncan, UK), 260 tons of worsted, and 150 cashmere sweaters. The scale of the 10,000-piece industry will further increase the added value of the company's cashmere products, and increase the market share and competitiveness of the company's worsted high-end products.

For the project, Huachuang Securities Researcher, Zone Zhihang, predicted that according to the price of 900,000 yuan and 1.2 million yuan per ton for worsted yarn worst spinning, the project will add about 960 million yuan in income for the company. According to the company's estimated post-production contribution of 1.0324 billion yuan in net profit, the net profit rate is as high as 10.75%. After the establishment of the Shenzhen branch in 2010, the marketing efforts of the company were relatively large. After the 360 ​​tons of yarn itself was put into production, the market acceptance was relatively high, so nearly 20 foreign banks in Hong Kong had established a good cooperative relationship. In 2011, the yarn surface order was sufficient and full, and it faced the problem of capacity bottleneck. The cashmere industry has the advantage of controlling raw materials, so the expansion of the yarn is beneficial to the future cooperation with high-end customers overseas. Therefore, we believe that the first project can break the capacity bottleneck and further optimize the industrial chain. The downstream of the worsted fabric is a suit fabric, which will require a higher level of craftsmanship and can also increase the profitability of the yarn.

The cashmere industry is a capital-intensive industry and the application of various new technologies has higher capital requirements. The Bank of China cashmere industry also through the effective combination of industry and capital, excellent and strong cashmere industry, extending the cashmere industry chain, improve the marketing platform.

The non-public issuance projects in 2010 raised a total of 290 million yuan of funds, and each invested 5,000 tons of cashmere procurement and primary processing projects, and cashmere products and domestic marketing system construction projects, resulting in large-scale, refined, informatized, and specialized raw cashmere receipts. Storage, washing, and sales industry chain.

At the end of 2011, the company launched a share allotment project and plans to raise funds of RMB 650 million through the allotment, which will be used for the multi-component special fiber spinning technology transformation project and repayment of short-term bank loans. After the share allotment is completed, the company's financial structure will be improved and operating costs will be reduced. At the same time, new yarn production capacity will be added to basically meet the production needs of woollen yarns, increase product categories, increase product added value, and open up the market for high-end cashmere products and development for the company. High-end cashmere brand.

On this basis, the company also relies on scientific and technological innovation to establish standardized management processes. During the reporting period, the China Silver Cashmere Industry obtained intellectual property rights such as invention patents, initiated technical standardization work, formulated corporate standards, and will form raw material standards, production process technology standards, equipment technology process standards, operational technology standards, product standards, inspection procedures, and procurement verification. Procedures, sample standards, outsourced outsourcing standards, creating a series of own technology and technical standards, provide standard management support for the company's development.

China's raw cashmere production accounts for 75% of the world

Cashmere is a rare animal fiber, which is a high-grade textile raw material, subject to geographical and production constraints, known as "soft gold" and "fiber diamond." The cashmere textile industry is characterized by periodicity, seasonality, regionality and capital intensiveness. It is both labor-intensive and technology-intensive, and it is a resource-based industry. Globally, cashmere goats are mainly distributed in the high-cold and semi-desert regions at 35-55 degrees north latitude and 5-120 degrees east longitude.

China is the country with the highest yield and highest quality goat cashmere. In the past 10 years, the world production of raw cashmere was about 16,000 tons, of which China's average annual cashmere output was about 12,000 tons, accounting for about 75% of the world's total production. More than 90% of the world's cashmere raw materials are processed in China. The volume, production capacity, and export volume of Chinese cashmere and products rank first in the world.

The domestic cashmere textile industry started late and developed rapidly. After the 1980s, it gradually entered the field of intensive processing, but there are also a large number of "big and full, small and all" phenomenon, the advantages of resources and product processing outstanding, but the lack of brand advantages, industrial upgrading and business models need to be improved. After China joined the WTO, the elimination of the textile quota system has accelerated the pace of industry consolidation, cashmere products export growth, cashmere industry development into industrialization, clustering, industrial technology upgrades continue to strengthen, with industrial restructuring as the focus of the industry consolidation The trend is obvious and the degree of concentration has increased.

At present, with the continuous improvement of cashmere products technology, cashmere products show a variety of trends. From lint-free development to cashmere yarns, cashmere sweaters, from knitwear development to woven products and circular one-time garments; product structure extending from roving, pure spinning to worsted and multi-blend blending, upgrading of industry and technology to downstream products The diversification provides raw material support. The cashmere industry is gradually turning into a product advantage relying on its advantages in resources and processing advantages. The share of China's cashmere products in the international market will further increase.

Most of China's cashmere production areas are located in the central and western regions, such as the cashmere industry from Ningxia. At present, the cashmere industry is one of the key and advantageous industries in Ningxia, and it is a key development industry. In November 2010, Ningxia Lingwu Cashmere Industrial Park was upgraded to a national high-tech industrial development zone.

For the Zhongyin cashmere industry, which is rooted in Ningxia, it has many advantages. It is currently the only listed company in China that focuses on the production and sales of cashmere textiles and products, and realizes the entire industrial chain coverage from raw cashmere procurement to cashmere products production. It is also the largest cashmere procurement and processing company in China. A complete industrial chain and a full product line enable it to enjoy the added value of different links in the industry chain, which can control and reduce costs better than a single product manufacturer, and can better adjust the production and sales of different products according to market demand. The proportion, quickly adapting to market changes and maximizing profits.

Huatai Joint Researchers Cheng Yuan, Zhang Lei, and Feng Wei pointed out that from January to November of 2011, the domestic cashmere prices rose by 24% and 28%, respectively, mainly because the cashmere market supply remained tight. In the short term, the factors that cause tight cashmere supply still exist, so it is expected that the cash price will fluctuate upward in 2012. As of the end of the third quarter of 2011, the inventory size of the BOC cashmere industry increased by 71% from the beginning of the year. On the one hand, there was a price increase factor. On the other hand, the company strategically increased cashmere reserves to cope with the expansion of the downstream market and cashmere prices are also an important reason. . Under the background of rising cashmere prices, the increase in the size of the cash inventories in the BOC cashmere industry is conducive to stable operations and profitability in the future.

In addition, based on the company's plans, in 2012 China's cashmere industry will focus on building four international marketing teams, namely the formation of a global professional team of plush, cashmere yarn, cashmere wool products and brand sales network, which will further extend the sales reach. To end-users, to increase the company's cashmere products in the domestic and foreign market share.