Jinwu Financial News | According to Shanxi Securities Research, Yuyuan Group (00551) is the world's largest manufacturer of branded sneakers and casual shoes. By integrating upstream shoe raw materials in the industry chain and leading product development capabilities, it maintains the number one footwear shipment volume in the industry. According to the bank's estimates, the company's share of shoe purchases in Nike and Adidas is 11% and 14%, respectively, and is the core supplier for the two major brands. Furthermore, customer concentration is at a moderate level in the industry, and dependence on a single customer is limited. Industry orders will resume in 2024, and the annual footwear shipment volume is expected to reach 0.25 billion pairs, with a year-on-year increase of more than double digits. The number of employees has rebounded for three consecutive quarters since bottoming out at the end of 2023. Footwear shipments are expected to achieve steady double-digit growth along with strong order demand and the commissioning of new production capacity. With continuous refinement of production technology and optimization of production efficiency, there is room for further improvement in the company's profit margin compared to friends and merchants.
The bank said it expects the company's revenue for 2024-2026 to be 8.129, 8.815 and 9.564 billion US dollars, up 3.0%/8.4%/8.5% year on year; net profit to mother is 0.45, 0.517, 0.575 billion US dollars, up 63.6%/14.8%/11.2% year on year. Referring to Hong Kong's leading sportswear manufacturer Shenzhou International and sporting goods retailer Taobo, the company's manufacturing business was valued 12 times and the retail business was valued 7 times, with a reasonable market value of HK$41.8 billion. Compared with December 3, there is room for 48% increase. The company also lays out upstream manufacturing and downstream retail links in the sports footwear industry chain. It is optimistic that the new production capacity of the company's manufacturing business will continue to expand, orders will resume steady growth, and profit margins will be further restored. We expect the company's retail business to have flexible profit margins after the offline customer flow recovers. Covered for the first time, giving a “Buy-B” rating.
