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Weixing Shares: Strong Demand For Downstream, Sustained High Growth In Performance

2011/4/27 15:05:00 37

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Rising Labor Costs Weixing Shares Downstream Demand

In 1-9 2010,

Weixing

The company achieved operating income of 1 billion 323 million yuan, an increase of 36.32% over the same period last year, operating profit of 243 million yuan, an increase of 48.61% over the same period last year, net profit of its parent company was 181 million yuan, an increase of 45.09% over the same period last year, and its earnings per diluted share were 0.88 yuan.

In the three quarter of 2010, the company achieved operating income of 540 million yuan, an increase of 31.08% over the same period last year, operating profit of 118 million yuan, an increase of 27.28% over the same period last year, and net profit attributable to parent company 84 million yuan, an increase of 21.34% over the same period last year, and a diluted earnings per share of 0.40 yuan.

Downstream demand is booming.

To enhance performance.

The company mainly produces and sells buttons and zippers, of which nearly 86% of its revenue comes from downstream textile and garment enterprises.

Benefiting from the steady growth of the textile and garment industry, coupled with the release of some of the new capacity of the company's early recruitment and investment projects, the production and sale scale of the company has increased to a certain extent during the reporting period.

Taking into account the demand for downstream industries in the four quarter will continue to be strong, it is expected that the main business revenue of the company is expected to grow by about 34%.

The cost pressure is rising, and the gross profit margin has declined in the single quarter.

In the first three quarters, the consolidated gross profit margin of the company was relatively stable, a slight increase of 0.32 percentage points from the same period last year to 36.30%, while the three quarter single quarter gross profit fell 1.84 percentage points to 36.76%.

We believe that the price of raw materials and labour costs required for production during the reporting period are substantially higher than those of the same period last year.

However, the cost control was relatively good during the first three quarters (the cost rate was 16.59% in the first quarter of the year, 1.58 percentage points lower than the previous year), and the 0.87 quarter percentage point decrease in the three quarter to 14.57% over the same quarter.

The gradual release of production capacity will be a driving factor for the growth of post performance.

With the release of the new capacity of the investment projects, the pressure of tight production capacity will be effectively alleviated, and at the same time, it will provide a strong support for the stable growth of the company's later performance.

In addition, with the introduction of new products, the company's gross margin level will also be improved.

Risk warning: 1)

Exchange rate risk

(2) upstream raw material prices and

Rising labor costs

To curb the risk of gross margin.

Earnings forecast and rating: the EPS of the company is expected to be 1.14 yuan, 1.40 yuan and 1.69 yuan respectively in the 2010-2012 years, and the corresponding dynamic price earnings ratio is 24 times, 19 times and 16 times respectively, with the closing price of 27.04 yuan in October 22nd.