Zhejiang Xinao Textiles (SH:603889) Orient Securities·2024-10-22 08:03Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 9.28 yuan based on a 16x PE valuation for 2024 [2][6][3]. Core Insights - The company reported a revenue of 3.87 billion yuan for the first three quarters of 2024, a year-on-year increase of 10.3%, and a net profit attributable to shareholders of 370 million yuan, up 5.4% year-on-year [1]. - In Q3 alone, revenue and net profit attributable to shareholders grew by 10.5% and 7.8% year-on-year, respectively, aligning with expectations [1]. - The gross profit margin in Q3 decreased by 1.1 percentage points to 16.5%, primarily due to rapid growth in lower-margin cashmere business sales [1]. - The company’s operating cash flow remains strong, with a net cash from operating activities of 203 million yuan in Q3, significantly exceeding the quarterly profit of 104 million yuan [1]. - Future capacity expansion is expected to continue steadily, with several projects underway, including the second phase of a high-end spinning project and a new textile project in Vietnam [1]. - Looking ahead to Q4 2024, the company anticipates stable orders for high-end yarns, while cashmere yarn sales are expected to continue their rapid growth trend [1]. Financial Forecasts - The earnings per share (EPS) estimates for 2024, 2025, and 2026 are adjusted to 0.58 yuan, 0.67 yuan, and 0.77 yuan, respectively [2][6]. - The company’s revenue projections for 2024, 2025, and 2026 are 4.91 billion yuan, 5.51 billion yuan, and 6.12 billion yuan, reflecting year-on-year growth rates of 10.6%, 12.2%, and 11.1% [2][8]. - The net profit attributable to shareholders is forecasted to be 421 million yuan, 486 million yuan, and 561 million yuan for the years 2024, 2025, and 2026, respectively [2][8].