Zhejiang Sunrise Garment (SH:605138) HUAXI Securities·2024-10-21 04:03Investment Rating - The report assigns a "Buy" rating to the company with a target price set at 8.45, reflecting a potential upside from the current closing price of 5.28 [1]. Core Insights - The company has introduced an employee stock ownership plan, which is expected to boost market confidence. The plan involves granting 12.0856 million shares to up to 134 middle management and key personnel, representing 2.18% of the current share capital, with a grant price of 2.63 yuan per share [1]. - The performance targets set for the plan include revenue growth rates of no less than 10%, 21%, and 33% for the years 2025, 2026, and 2027, respectively, with a net profit target of at least 300 million yuan by 2027 [1]. - The company has successfully transitioned from woven to knitted products, with potential for market share growth in brands like Uniqlo, LACOSTE, and FILA, alongside new customer acquisition opportunities [2]. Financial Summary - The company reported a revenue of 4.651 billion yuan in 2023, a decline of 22% year-on-year, with projections of 4.324 billion yuan for 2024, followed by recoveries to 4.913 billion yuan in 2025 and 5.522 billion yuan in 2026 [5][7]. - The net profit for 2023 was 104 million yuan, down 72.2% year-on-year, with forecasts of 153 million yuan, 247 million yuan, and 333 million yuan for 2024, 2025, and 2026, respectively [5][7]. - The report anticipates a decrease in management expenses by 11 million yuan in 2024, while financial expenses are expected to stabilize due to the delayed impact of U.S. interest rate cuts [3]. Earnings Per Share (EPS) and Valuation - The projected EPS for the years 2024, 2025, and 2026 are 0.28 yuan, 0.45 yuan, and 0.60 yuan, respectively, with corresponding price-to-earnings (PE) ratios of 19, 12, and 9 times based on the current closing price [3][5].