Xingye Technology: Shoe Upper Leather Supplier With Leading Brand In Domestic Footwear Industry

The main business of the company is the development, production and sale of middle and top grade cow top shoe upper leather. The main products include the Napa series, the natural throw series and the special effect leather series. The products are widely used in the manufacture of leather shoes, bags, leather goods, etc. the main customers include the leading brands of the domestic footwear industry, such as birds of fortune, BELLE, Teenmix, Daphne, AOKANG, wood forest and so on. At the same time, the company was confirmed by high-tech enterprises in 2008, and passed the review in 2011, and ranked first in the market share for three consecutive years.

In 2011, the main business revenue was 1 billion 281 million yuan and the net profit was 123 million yuan.

Xingye technology is the leading industry in China's cattle head shoe upper leather industry.

The company will benefit from policy regulation and industry concentration.

1) tannery industry is one of the thirteen polluting industries that are monitored by the state. The environmental protection requirements are high. The objective restriction of the investment scale of enterprises will form barriers to enter the industry.

2) the national policy actively promotes the elimination of small tannery production capacity, such as the nationwide closure of the tannery under 30 thousand sheets of annual production fold of cattle, and the land restriction on 100 thousand tannery items below the annual processing of leather will promote the promotion of the industry concentration.

The demand for the downstream industry is booming, and the annual growth of the industry will remain above 7%.

1) in 2008, China became the largest footwear consumer in the world, the total consumption of leather shoes reached 2 billion 580 million pairs, and the market capacity was huge.

2) in 2009, the per capita consumption of footwear in China was less than 1.9 pairs. With the improvement of urbanization and the increase of residents' consumption ability, the market capacity of footwear consumption still had room for growth.

3) the downstream demand is strong. It is expected that the demand for cattle hide leather will continue to grow well in the next few years, reaching 340 million square meters in 2012, with an average annual growth rate of more than 7%.

Recruitment Project: the company's recruitment project is "1 million 500 thousand high-grade leather finishing finishing new technology processing projects" and "rason leather processing 1 million 200 thousand cattle raw skin and 300 thousand blue wet skin items". The construction period is 2 years. After the project is put into operation, the total capacity of the company will reach 200 million 200 thousand SF leather upper leather and 10 million 800 thousand SF high-grade bag leather, compared with the current 67 million SF production capacity, which will greatly enhance the company's future performance.

Earnings forecast and Valuation: we expect the company's earnings per share for 2012-2014 years to be 0.70 yuan, 0.82 yuan and 1.08 yuan, giving the company 19-21 times the PE valuation level in 2012, and the corresponding reasonable value interval is 13.21-14.60 yuan.

Risk warning.

Investment and construction were not as good as expected; environmental policy changes; raw material prices fluctuated sharply; industry boom declined.