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Jiansheng Group (603558): Relocation of production capacity drags down revenue growth, accelerates gross margin improvement, drives profit growth

Jiansheng Group (603558): Relocation of production capacity drags down revenue growth, accelerates gross margin improvement, drives profit growth

19H1 revenue increased by 9%, net profit increased by 30%, 19Q2 revenue growth rate ranked the first half of 2019 the company achieved revenue 8.

2.7 billion, an increase of 9.

31%, net profit attributable to mother 1.

4.4 billion, an increase of 30.

12%, deducting non-net profit 1.

1.9 billion, an increase of 32.

54%, EPS is 0.

36 yuan.

The growth rate of net profit higher than its income is mainly caused by the increase in gross profit margin, the depreciation of financial expense ratios and the loss of bad debts of receivables. Except for the non-net profit, the increase is mainly due to the government subsidy growth expense included in the current profit and loss.

In terms of quarters, 18Q1-19Q2 company revenue increased by 72.

97%, 58.

07%, 28.

87%, 14.

86%, 17.

95%, 2.

20%, net profit attributable to mother increased by 32.

62%, 108.

32%, 53.

77%, 29.

07%, 57.

20%, 12.


In 19Q2, due to the adjustment of domestic cotton socks production capacity and the optimization of customer structure, the revenue growth rate increased month-on-month, and the growth rate of net profit was higher than that of revenue.

26PCT, the bad debt losses of receivables are written back.

Cotton socks domestic revenue growth rate, Vietnam’s income increased, seamless underwear revenue maintained rapid growth. In terms of products, 2019H1 company’s cotton socks, seamless underwear, and other three categories of business achieved revenue5.

2.5 billion, 2.

94 ppm, 811.

320,000 yuan, an increase of 0.

77%, 25.

40%, 628.


The company ‘s cotton socks production capacity in Vietnam has been released, and orders from major customers have continued to increase. However, due to the domestic capacity relocation of Hangzhou Jiansheng Factory and the optimization of customer structure, revenue growth rate has been replaced.Expansion, and the price rises after the product structure is optimized.

By region, the domestic and foreign companies in 2019H1 achieved revenue1.

1.9 billion, 7.

08,000 yuan, the same increase -0.

83%, 11.


The company ‘s domestic seamless underwear revenue has continued to increase. Due to the relocation of cotton socks factories and the decline in revenue, domestic revenue has continued to tilt slightly; Vietnam ‘s cotton socks capacity expansion has driven foreign revenue to maintain rapid growth. The gross profit margin increased due to the impact of exchange rate and income structure, and the expense ratio decreased.

31PCT to 28.

72%, mainly due to the depreciation of the RMB exchange rate in 19Q2, and the higher gross profit margin of the seamless underwear business, which increased its revenue share.

18Q1-19Q2 gross profit margins were 26.

75% (-4.

00PCT), 27.

96% (-1.

82PCT), 29.

91% (+2.

46PCT), 27.

12% (+1.

00PCT), 26.

10% (-0.

65PCT), 31.

22% (+3.

26PCT). In 19Q1, the gross profit margin affected by the appreciation of the RMB exchange rate declined. In 19Q2, the RMB exchange rate depreciated against the US dollar, and the gross profit margin resumed growth.

During the first half of 2019, the company’s period expense ratio (considering research and development expenses) also fell to 0.

67PCT to 12.

80%, of which the sales expense ratio decreased by 0.

33PCT to 2.

80%, mainly because the company’s office costs, customs inspection and inspection costs, etc., the management expense ratio (considering research and development costs) increased by 0.

08PCT to 9.

70%, mainly due to the increase in R & D expenses of the company23.

71%, the financial expense ratio also decreased by 0.

42PCT to 0.

30%, mainly due to the increase in the company’s exchange gains and losses.

Revenue growth is expected to pick up in the second half of the year, and share repurchases have been completed. We believe that: 1) The main business of cotton socks: the company’s internal capacity relocation has been completed. The construction of Jiangshan Jiansheng Industrial Park was completed at the end of May 19, and domestic cotton socks production capacity was restored.; Construction of Vietnam ‘s Qinghua 90 million pairs of cotton socks project started, and Vietnam ‘s production capacity will continue to be put into operation; the company ‘s new customer orders are expected to increase in the second half of the year, driving the revenue growth rate to pick up.

2) In the field of seamless underwear, Qiaoer Tingting began to expand production capacity in Vietnam. Xing’an Vietnam added 18 million seamless underwear factories. Civil construction has been completed in 2019H1. Currently, it is carrying out indoor supporting projects, equipment procurement and personnel training to increase Vietnam’s production capacity and promote strengthening.The stickiness of the company’s customers drives steady revenue growth.

3) In terms of profitability, the currency exchange rate continued to depreciate from April to May 19, and has remained basically stable since then. The company continued to control the impact of exchange rate changes on gross profit margins through partial hedging. In the future, the company ‘s capacity in Vietnam will continue to be released, and the benefits of the benefits will be reflected.It is expected to drive continued improvement in profitability.

4) On November 13, 2018, the company announced the repurchase of shares, and the repurchase amount was 1.

50-30,000 yuan, the repurchase price does not exceed 13 yuan / share, as of May 24, 2019, gradually repurchase 1486.

320,000 shares, accounting for 3 total shares.

57%, repurchase amount 1.

600,000 yuan, the average transaction price of 10.

76 yuan / share. The repurchase has ended. The repurchased shares will be used for the equity incentive plan, reflecting the confidence in the company’s development.

We are optimistic that the company’s revenue growth will pick up in the second half of the year after the completion of the company’s domestic production capacity relocation. At the same time, the continued release of Vietnam’s production capacity will drive performance growth and maintain 2019 EPS at 0.



00 yuan, is currently expected to correspond to the level of “December 2019”.

南京桑拿网 Risk warning: capacity release is not up to expectations, customer orders are lost, RMB exchange rate changes, and Sino-US trade frictions are intensifying.