Jack Co. (603337): High-speed growth of automated sewing performance in line with expectations

Events: ① Issued the 2018 annual report, which reflected the realization of revenue 41.

520,000 yuan, a year-on-year increase of 49%; net profit attributable to mothers4.

54 ppm, a year-on-year increase of + 40%; in the fourth quarter, it achieved revenue of 9 in a single quarter.

250,000 yuan, + 38% year-on-year, net profit attributable to mother 0.

8.3 billion, -7% from the 北京夜网 same period last year.

② Profit distribution plan: Cash dividends will be distributed for every 10 shares5.

2 yuan (35% dividend payout), the capital reserve will be transferred to all shareholders by 4 for every 10 shares.

5 shares.

Performance was in line with expectations, and financial debt dragged down net profit.

The high revenue growth is due to the industry’s maintaining a medium-speed growth momentum in the past 18 years. From January to November of 2018, 100 companies had revenues of yoy + 16%. The company’s revenue growth continued to lead the industry.

The growth rate of net profit is lower than the growth rate of revenue due to the decline in gross profit margin2.

65pct, and the loss of forward foreign exchange products caused by the depreciation of the yuan against the dollar.

The growth rate of gross profit margin is the growth of raw materials in different exchange rates, and labor costs continue to rise.

The 38% annual increase in inventory is due to the stocking demand for Q1 in 19 years.

Germany ‘s Benma breakthrough is the decline of the European economy. Customized development has dragged down profit margins. After 19 years of strategic adjustment, it has gradually turned losses.

The margin of the industry is passively reducing production capacity, and Jack is ushering in a new round of market share increase.

2017-2018 H1 equipment cycle update + capacity transfer + inventory replenishment drive high industry growth.

In 2018H2, the prosperity of the domestic textile and apparel industry declined, and at the same time, some emerging markets overseas suffered from weak exchange rates and weakened demand, the industry’s margins fell, and the differentiation of sewing enterprises intensified.

Japan Heavy Machinery (6440.

T) 18 year Q4 revenue growth3.

16%, the company released 19-year forecast data, revenue yoy +1.

7%, net profit is -24.

7%.

Industry chain research shows that by the standard, the market share of manufacturers of sewing enterprises such as Zhongjie in 2019Q1 continues to decline.

The industry entered the “machine replacement” stage, and the company’s automated sewing increased rapidly.

The “quick digestion” of clothing and the “deskilling” of foundries have driven the demand for automation equipment. Intelligent sewing is more than 30 times the space of traditional equipment.

The export of domestic computer machines increased from 31% in 2008 to 73% in 2017. The company’s automated sewing increased by more than 200% in ten years, confirming that the industry has begun “machine substitution”.

The company is the only global equipment manufacturer with sewing front-end and middle-end layout. It is expected to open up the industrial chain in the future and become a clothing intelligent manufacturing solution supplier.

Investment rating and estimation: Estimated net profit attributable to mothers in 19-21 6.
.

04, 8.

12, 10.

9.7 billion yuan, corresponding to EPS 1.

96, 2.

64, 3.

57 yuan.

Maintain the “Highly Recommended” rating.

Risk reminder: the prosperity of the textile and apparel industry is down; industry competition is intensifying.