20131007-巴黎银行证券-The_bigger_gets_bigger_22页_819kb
报告摘要
SHENZHOU INTERNATIONAL (2313 HK) Summary
Core Content
Shenzhen International is a leading integrated apparel ODM/OEM company in Asia and the largest knitwear exporter in China. The company is initiated with a BUY rating and a target price of HKD31.6, based on a DCF model that assumes a WACC of 12.2% and a terminal growth rate of 3%. At this target price, the stock would trade at 18.8x 2013E P/E and 15.9x 2014E P/E.
Key Advantages
- Integrated business model: Shenzhen offers a full range of services from fabric development to garment manufacturing, including custom fabrics, dyeing, printing, cutting, sewing, and logistics. This integration allows for faster response to client needs, better cost control, and higher margins.
- Strong R&D capability: The company has developed multi-functional fabrics by mixing different types of yarns. This R&D focus helps in creating value-added products, such as heat-tech and AIism clothing, which are popular among global brands.
- Capacity expansion: Shenzhen is expanding its production capacity in Anqing (China), Cambodia, and Vietnam. This expansion is expected to support volume growth and improve cost competitiveness.
- Diversified market exposure: The company's sales are spread across multiple regions, with Japan being the largest market (33.6% in 1H13), followed by China (19.5%), Europe (17.0%), and the US (8.1%). This diversification helps reduce dependence on domestic brands and mitigates single account risk.
- High margins and strong balance sheet: Despite higher labor and cotton costs compared to non-Chinese manufacturers, Shenzhen maintains impressive gross and operating margins. It also has a healthy balance sheet with strong cash flow and net cash position.
Financial Highlights
| Metric | 2012A (RMB m) | 2013E (RMB m) | 2014E (RMB m) | 2015E (RMB m) |
|---|---|---|---|---|
| Revenue | 8,938 | 9,968 | 11,688 | 13,706 |
| Rec. Net Profit | 1,620 | 1,829 | 2,191 | 2,539 |
| Recurring EPS (RMB) | 1.24 | 1.32 | 1.57 | 1.81 |
| EPS Growth (%) | (9.1) | 6.4 | 18.3 | 15.9 |
| Recurring P/E (x) | 17.2 | 16.2 | 13.7 | 11.8 |
| Net Debt/Equity (%) | (18.3) | (30.0) | (31.2) | (32.8) |
| ROE (%) | 22.9 | 19.8 | 19.7 | 20.0 |
Key Catalysts
- Capacity expansion in Anqing, Cambodia, and Vietnam
- Rising shipments and increasing ASP (average selling price)
- Stabilizing raw material prices
- Operating leverage from scale and efficiency improvements
- Potential changes in China's cotton subsidy program to enhance cost competitiveness
Risks
- Slower-than-expected order inflow
- Higher-than-assumed costs related to raw materials and labor
- Weakening global economic growth and reduced apparel spending
Peer Comparison
| Peer | P/E (2013E) | P/E (2014E) | P/BV (2013E) | P/BV (2014E) | ROE (2013E) | ROE (2014E) | EPS Growth (2013E) | EPS Growth (2014E) | Mkt Cap (USD m) |
|---|---|---|---|---|---|---|---|---|---|
| Makalot Industrial Co Ltd | 19.5 | 15.3 | 5.4 | 4.9 | 36.3 | 40.1 | 30.8 | 17.6 | 917 |
| Eclat Textile Co Ltd | 25.9 | 19.3 | 8.5 | 6.9 | 36.3 | 40.1 | 30.8 | 17.6 | 2,373 |
| Nien Hsing Textile Co Ltd | 13.6 | 13.0 | 1.1 | na | 7.4 | na | 25.6 | na | 412 |
| Tainan Enterprises Co Ltd | 10.8 | na | 1.0 | na | 9.5 | na | 170.6 | na | 174 |
| Luen Thai Holdings | 59.6 | 50.7 | 8.2 | 7.2 | 14.4 | 15.0 | 30.8 | 17.6 | 405 |
| Shenzhen International | 16.2 | 13.7 | 2.9 | 2.5 | 19.8 | 19.7 | 6.4 | 18.3 | 4,889 |
| Pacific Textiles Holdings | 13.5 | 12.0 | 3.3 | 3.0 | 26.4 | 28.0 | 16.1 | 13.1 | 1,876 |
| Youngone Corp | 12.7 | 10.8 | 1.8 | 1.5 | 15.6 | 15.4 | (13.3) | 18.2 | 1,326 |
| Hansae Co Ltd | 16.5 | 12.2 | 2.3 | 1.9 | 15.4 | 17.9 | (26.3) | 35.2 | 599 |
| Average (Peers) | 20.9 | 18.4 | 3.8 | 4.0 | 19.3 | 24.3 | 29.8 | 21.1 | - |
Investment Thesis
Shenzhen International is a solid investment due to its:
- Integrated supply chain and strong R&D capabilities
- Capacity expansion in key markets, supporting volume growth
- Diversification into ASEAN for cost competitiveness
- Growing sales to US and Japan reducing domestic brand reliance
- High margins and a strong balance sheet
Key Assumptions
| Year | Sales Growth (%) | Gross Margin (%) | Operating Margin (%) |
|---|---|---|---|
| 2013E | 11.5 | 28.8 | 20.6 |
| 2014E | 17.3 | 29.2 | 21.1 |
| 2015E | 17.3 | 29.5 | 21.5 |
Earnings Sensitivity
| Metric | Bear Case (2013E) | Bear Case (2014E) | Base Case (2013E) | Base Case (2014E) | Bull Case (2013E) | Bull Case (2014E) |
|---|---|---|---|---|---|---|
| Sales (m) | 9,968 | 11,688 | 9,968 | 11,688 | 9,968 | 11,688 |
| Gross Margin (%) | 27.8 | 28.2 | 28.8 | 29.2 | 29.8 | 30.2 |
| Gross Profit (RMB m) | 2,771 | 3,296 | 2,871 | 3,413 | 2,971 | 3,530 |
| Net Profit (RMB m) | 1,750 | 2,097 | 1,829 | 2,191 | 1,909 | 2,284 |
Conclusion
Shenzhen International is well-positioned in the global apparel manufacturing sector, with a strong value proposition through its integrated supply chain, R&D capabilities, and geographic diversification. The company is expected to benefit from continued capacity expansion, improved cost competitiveness, and a growing client base. Despite some risks, the DCF-based target price of HKD31.6 reflects the company's strong fundamentals and long-term growth potential.
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