Zhejiang Xinao Textiles (603889) 广发证券·2024-12-19 02:37Investment Rating - The report maintains a "Buy" rating for the company [5]. Core Views - The introduction of external investor BARRIE into the wholly-owned subsidiary Duncan Company is expected to enhance the competitiveness of the company's cashmere business. The investment involves a cash increase of £9.562255 million, with BARRIE acquiring 40% equity in Duncan Company at a valuation of approximately £47.115948 million [2][3]. - Duncan Company, a renowned cashmere yarn manufacturer, has shown a total revenue of 218.532 million yuan in the first three quarters of the year, despite a net loss of 0.0623 million yuan. The partnership with BARRIE, a key client and supplier to luxury brands like Chanel, is anticipated to strengthen long-term ties with high-end customers and improve financial strength [3]. - The company is expected to achieve steady growth in performance, focusing on expanding its wool and cashmere business while enhancing production capacity in Ningxia and Vietnam. The high gross margin of self-produced and self-sold cashmere products is on the rise [3]. - Earnings per share (EPS) forecasts for 2024-2026 are projected at 0.60 yuan, 0.67 yuan, and 0.76 yuan, respectively. Based on a 14x price-to-earnings ratio, the reasonable value is estimated at 8.37 yuan per share [3]. Financial Summary - Revenue (in million yuan) is projected to grow from 3,950 in 2022 to 5,984 in 2026, with growth rates of 14.6%, 12.4%, 10.7%, 10.9%, and 9.8% respectively [4]. - Net profit (in million yuan) is expected to increase from 390 in 2022 to 558 in 2026, with growth rates of 30.7%, 3.7%, 8.1%, 11.6%, and 14.4% respectively [4]. - EPS is forecasted to rise from 0.54 in 2022 to 0.76 in 2026, with a corresponding price-to-earnings ratio decreasing from 13.30 to 10.15 [4].