The Demand For Cashmere Drastically Declined And Raw Material Prices Fluctuated.

Cashmere resources are scarce, and the company has strong control over raw materials. Cashmere is a high-end, scarce natural fiber. China's cashmere and its products are ranked first in the world in terms of processing capacity, production capacity and export volume, and the output of the original cashmere is 75% of the world's total. The company purchases more than 25% of the world's original velvet output. It is the largest acquisition company of the original velvet, and has rich experience in the purchase of the original pile.

Expand to the downstream and other categories, enrich the category, revenue scale and profit margins are expected to double. Yarn and Clothes & Accessories The sales of other downstream products accounted for more than 50% and will continue to improve. Horizontal development of wool and linen Spin Business, make full use of existing customer resources, enrich product categories and expand sales sources.

Overseas expansion, reduce sales intermediate links, close to brand customers. The acquisition of Scotland Duncan cotton mill and Kampuchea Xin Wang knitting company set up subsidiaries in Hongkong, Japan and the United States, from products and channels to downstream customers. It is expected to enhance customer relationship and enhance profitability.

The slow turnover of inventory can not completely exclude the risk of impairment. Because of the high value of cashmere inventory, its production has obvious seasonality, and the company's strategy is to control raw materials, expand the scale and expand downstream, resulting in slow inventory turnover. The price of cashmere fluctuates and can not completely exclude the risk of impairment.

The cash flow pressure is high and the debt rate is high. The asset liability ratio exceeds 70%.

　　 Financial forecast

The development of the downstream industry chain and the reduction of intermediate sales links will help to buffer upstream product price fluctuations, enhance customer relationship, enhance revenue scale and profitability. Forecast Ltd's 2013~2014 growth rate was 55.6% and 29.1% respectively.

　　 Valuation and suggestion

The first concern is to give neutral ratings. We are optimistic about the company's control over raw materials and bargaining power and downstream strategy, but the pressure on inventory and cash flow can not be ignored. The current stock price corresponds to 2013/14's P / E ratio of 15.1 and 11.7, increasing by 21.1 and 16.4 times after the diluted price, and the valuation is not low.

The demand for cashmere has dropped sharply, the price of raw materials has fluctuated, and the rate of production delivery has not been as fast as expected.