Jiansheng Group (603558) 2018 Annual Report & 2019 First Quarterly Report Review: Consolidation to Boost Performance and Vietnam’s Layout Welcomes Harvest

In 18 years, Qiao Tingting’s degree consolidation has promoted a large increase in performance. The 18Q4-19Q1 consolidation has eliminated the return to double-digit growth in revenue. In 2018, the company achieved 15 revenue.

7.7 billion, an increase of 38.

62%, net profit attributable to mother 2.

0.6 billion, an increase of 56.

98%, deducting non-net profit 1.

8.1 billion, an increase of 95.

30%, EPS is 0.

50 yuan, the performance is slightly lower than expected mainly due to the impact of relocation affected cotton socks revenue growth.

10 shares are distributed 0.

5 yuan (including tax).

The growth rate of net profit higher than its income was mainly due to the decrease in management expense ratio, financial expense ratio and other income. Subsequently, the non-net profit deduction was mainly reduced by government subsidies included in the current profit and loss.

In terms of quarters, 17Q3-18Q4 revenue increased by 66.

13%, 104.

20%, 72.

97%, 58.

07%, 28.

87%, 14.

86%, net profit attributable to mother increased by 42.

38%, turning losses into profits, 32.

62%, 108.

32%, 53.

77%, 29.


The impact of the consolidation in 18Q4 was eliminated (Qiaoer Tingting was acquired at the end of August 17th), and the revenue growth rate improved month-on-month. The growth rate of net profit was higher than the revenue mainly due to management, and the financial expense ratio decreased.

In the past 18 years, Tingting and his consolidation have promoted a substantial increase in performance. If this effect is eliminated (17 years, 18 years are excluded), the revenue of the reorganized business in 2018 will increase by about 8%, and the net profit will increase by about 2%.

In terms of quarters, 18Q1-Q4 revenue increased by 15%, 12

%, 16%, -6%, and net profit increased by -10%, 34%, 20%, which narrowed sharply.

2019Q1 company achieved revenue4.

3.0 billion, with an increase of 17.

95%, net profit attributable to mother 6889.

460,000 yuan, an increase of 57.

20%, deducting non-profit 4747.

400,000 yuan, an increase of 40.

88%, EPS is 0.

17 yuan.

The higher profit growth is mainly due to the increase in other income, and the forward exchange settlement income drives the increase in fair value changes.

In 18 years, the main business of cotton socks increased by 10%, and Vietnam has grown rapidly. In terms of domestic products affected by the movement of production capacity, the company’s cotton socks, seamless underwear, home clothing and other three categories of products achieved revenue of 10 in 2018.

1.6 billion, 5.

48 ppm, 938.470,000 yuan, an increase of 9.

90%, 191.

77%, -56.


Cotton socks production capacity in Vietnam was put in place, and the transfer of customer orders drove cotton socks revenue appreciation9.

9%, but the impact of domestic production capacity relocation has led to a relative increase in revenue growth, and the gross profit margin has been affected. From the perspective of volume and price, it is mainly contributed by sales. The sales of cotton socks increased by 8 in 2018.

19% to 2.

7.5 billion pairs, the average price increased by 1.

59% to 3.

69 yuan / pair; 19Q1 Vietnam ‘s cotton socks production capacity was further expanded, and the domestic Hangzhou Smart Factory was put into production in November 2018. The construction of Jiansheng Industrial Park was completed and used, which led to the growth of 19Q1 cotton socks revenue by about 12%, which accelerated.

As the average level and table in 2018 contributed to a 191% increase in seamless underwear revenue, which was mainly contributed by sales volume, the sales volume increased by 173.

40% to 2338.

720,000 pieces, the average price increased by 6.

72% to 23.

75 yuan / piece mainly benefited from the optimization of product structure; the elimination of consolidation factors in 19Q1; capacity expansion led to an increase in seamless underwear revenue by about 30%.

In terms of subregions, in 2018, the company’s territory and overseas revenues were respectively 2.

3.3 billion, 13.

4.1 billion yuan, an increase of 14.

91%, 43.

93%, the fastest growth in overseas revenue and mainly by the Vietnamese factory capacity of more than 100 million pairs, the same increase of about 40%, domestic revenue growth is mainly driven by seamless underwear.

The company’s main export destinations are Europe, Japan, Central Asia, America, and Australia.

6.8 billion, 3.

2.8 billion, 1.

8 billion yuan, 1.

5.5 billion, 1.

01 trillion, with the same increase of 17.

20%, 53.

87%, 130.

35%, 47.

46%, 105.

11%, all achieved rapid growth.

In 18 years, the gross profit margin decreased due to the impact of exchange rates and relocation, and the expense ratio fell. In 2018, the company’s gross profit margin fell by 0.

17PCT to 27.

95%, mainly due to the semi-annual appreciation of the renminbi in 2018 (the appreciation of the average exchange rate of the renminbi against the US dollar in 2018 increased).

99%) and affected by relocation, the gross profit margin of cotton socks has dropped.

By product, cotton socks, seamless underwear, home wear and other gross margins were 26.

06% (-2.

25PCT), 32.

00% (+3.

66PCT), 9.40% (-13.


17Q3-19Q1 gross profit margins were 27.

45% (-1.

05PCT), 26.

12% (+10.

38PCT), 26.

75% (-4.

00PCT), 27.

96% (-1.

82PCT), 29.

91% (+2.

47PCT), 27.

12% (-2.

79PCT), 26.

10% (-1.

02PCT), 18Q4-19Q1 The gross profit margin declined due to the appreciation of the RMB exchange rate.

In 2018, the company’s period expense ratio (considering research and development expenses) also decreased by 3.

19PCT to 14.

08%, of which the sales expense ratio decreased by 0.

57PCT to 4.

04%, mainly due to the company’s strengthening of employee compensation and other expense control, management expense ratio (considering research and development expenses) also decreased by 1.

07PCT to 9.

76%, mainly due to the company’s strengthening of travel and other expenses control and income growth brought about scale effects, the financial expense ratio also decreased by 1.

55PCT to 0.

28%, mainly due to exchange loss losses from 14.37 million yuan in 17 years to 18 million -900,000 yuan.

During Q1 2019, the company’s expense ratio also decreased by 2.

83PCT to 13.

62%, of which sales, management (considering R & D expenses), and financial expense ratios decreased by 0.

49PCT, 0.

68PCT, 1.

66PCT to 2.

81%, 9.

55%, -1.


The layout of Vietnam ushers in the harvest period, and the impact of the relocation of domestic factories is expected to gradually eliminate the export of Chinese cotton socks in 2018 to 138.

300 million pairs, down by 1.

78%, the export value is 48.

500 million US dollars, down by 0.

4%, export unit price is 0.35 USD / pair, increase by 1.

16%, mainly due to the increase in costs of raw materials and labor.

In the end, due to the uncertainty of Sino-US trade frictions and the continuous increase in costs of Chinese labor and environmental protection, the competitiveness of China’s textile and apparel industry has weakened, production capacity has shifted to Southeast Asia where costs have shifted, and cotton socks exports have also been affected.

The company laid out the Vietnamese market earlier and ushered in the “harvest period”.

In 2013, the company started construction of a factory in Vietnam. It has planned three major production bases with a total investment of 1.

500 million US dollars, plans to build an annual output of 2.

500 million pairs of cotton socks, 18 million pieces of seamless knitted sportswear and supporting projects in the industrial chain.

At present, the Haiphong factory in Vietnam and the Xing’an factory in Vietnam have begun operation. The seamless underwear factory and the Qinghua cotton socks factory in Xing’an, Vietnam are under construction.

In 2018, the company’s Vietnam cotton socks production capacity was 1.

100 million pairs, the output is 1.

0.5 billion pairs, with an annual increase of about 40%. Brands have high recognition of Vietnamese factories, and the production and sales rate continues to be high.

The company is constructing the fourth plant in Vietnam ‘s Haiphong cotton socks, a 90 million cotton socks plant with annual production capacity in Xing’an, expanding its dyeing plant in Xing’an, Vietnam, and continuing to expand production capacity in Vietnam. It plans to achieve 1 in 2019.

The production capacity of 500 million pairs of cotton socks increased by 36%.

Domestically, the company’s cotton socks production factories include Hangzhou Jiansheng, Hangzhou Qiaodeng, Jiangshan Sijin, Jiangshan Knitting, Jiangshan Yideng, etc.

1) The Hangzhou Smart Factory was put into production in November 2018, and the first 200 socks machines were officially launched. In 2019, the production lines of Hangzhou Jiansheng and Hangzhou Qiaodeng will be moved into the Smart Factory and other bases one after another;The park has been put into use, Jiangshan Sijin, Jiangshan Yideng’s production capacity has been fully transferred, and in June 2019, Jiangshan Knitting will be fully realized.

Affected by the relocation of domestic factories in 2018, domestic sales of cotton socks also fell by about 5% to 1.

700 million pairs, the impact of relocation in 2019 is expected to gradually weaken, and domestic production and sales will remain stable.

The competition pattern of the domestic cotton socks industry is scattered, and the company’s market share as a leader in domestic cotton socks is still at a deviating level, expanding space transmission.

In 2018, the company’s stable core customers, and the use of the advantages of Vietnam’s production base to expand quality brands such as NIKE, ADIDAS, GAP, will increase the number of quality customers in the future.

In terms of soft power, the company took the lead in upgrading the ERP system at Jiangshan Base in 2018 to improve production efficiency and management level, and will be promoted to various factories in the future.

In 2019, the company will establish a research and development center to develop high-quality products in collaboration with the upstream and downstream of the industry chain. At the beginning of 2019, a design and development company has been established in Tokyo, Japan. In the future, design and development companies will be established in Europe and the United States to increase the proportion of ODM and OBM orders.Improve the value-added level of the industrial chain.

Qiaoting Tingting has completed its performance pledge and plans to double its production capacity in three years. Qiaoting Tingting has completed its pledge to double its production capacity in three years.

Playful men and women in 2018, and explored to increase production efficiency and enhance competitiveness in information and automation.

In 2018, Qiaoer Tingting added 75 knitting machines, increased research and development and automation to improve equipment, and its capacity and output expanded steadily.

The company plans to increase the production of seamless underwear in Vietnam. In 2019, it will build an 18 million seamless underwear project in Xing’an, Vietnam, and start production at the end of 19th. The company plans to change the production capacity advantage in Vietnam and double the seamless underwear production capacity in 2020-22.To promote rapid growth in performance.

In 2018, Qiaoer Tingting realized a net profit after deduction for non-returning mothers1.

10,000 yuan, 126 of the performance commitment.

06%. In 2019, Qiaoer Tingting promised to deduct non-attribution net profit of 95 million yuan. It is expected to achieve performance promises and increase profitability.

The two main businesses have grown steadily, share repurchases, and employee share ownership have shown significant confidence. We believe that: 1) In the main business of cotton socks, the company ‘s production capacity in Vietnam will expand rapidly in the future. The impact of the relocation of domestic production capacity will gradually come to an end, and customers will be expanded through the advantages of the Vietnamese factory.Expected volume of customer orders.

The company optimized its product structure and steadily increased sales unit prices, driving revenue growth.

2) In terms of seamless underwear, Qiaoer Tingting expands production capacity in Vietnam, strengthens the industry’s leading advantages, and steadily increases revenue.

3) In terms of profitability, the RMB exchange rate continued to appreciate from November-18 to February-18, and has remained slightly changed since then. The company controlled the impact of exchange rate changes through partial hedging. In the future, the company ‘s capacity in Vietnam will expand, and the benefits of the benefits will be reflected. The company ‘s profitabilityIt is expected to further improve.

4) On November 1南京桑拿网3, 2018, the company announced the repurchase of shares, and the repurchase amount was 1.

5 ppm-300 million US dollars, the repurchase price does not exceed 13 yuan / share, and is used for employee stock ownership plans, distribution incentives or replacements, etc.

Based on the repurchase amount and price ceiling, the number of shares repurchased this time was 2,307.

70,000 shares, accounting for 5 of the total share capital.


Deadline 19.


9 Gradual Repurchase 914.250,000 shares, accounting for 2 total shares.

20%, the repurchase amount is 9999.

870,000 yuan, the average repurchase price of 10.

94 yuan / share, the repurchase period is 19.


5) On June 23, 2018, the company announced that it plans to launch an employee shareholding plan. The total number of shares held by the employee shareholding plan does not exceed 10% of the total share capital. The holders include Dong Jiangao, subsidiary executives, core and backboneEmployees, etc., as of the end of 2018, the employee stock plan bought 557 shares.

820,000 shares, accounting for 1 share capital.

34%, the transaction amount is 50 million yuan, and the lock-up period is 18.



6) In September 2018, the company announced that it had signed a cooperation framework agreement with City Beauty. The two parties cooperated in cotton socks production and channels. The cooperation has not yet been further advanced.

We are optimistic that the company ‘s cotton socks and seamless underwear production capacity will continue to be released, and the Vietnamese factory will bring performance gains. As domestic cotton socks production capacity is no longer expanding, the EPS for 2019-20 is reduced to 0.


79 yuan (previous average 0.


80 yuan), EPS is predicted to be 1 in 2021.

00 yuan, the current expected number of years is 16 times in 2019. The company will benefit from the continuous expansion of production capacity and shift production layout, and explore to promote design and development levels and product value-added, enhance profitability, and maintain a “buy” rating.

Risk warning: capacity release is not up to expectations, customer orders are lost, RMB exchange rate fluctuates, Sino-U.S. Trade frictions intensify, and restricted stocks are lifted.Share capital 16.

93%) and so on.