FCDW(SH:605189) HUAXI Securities·2025-04-08 11:08Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company's revenue, net profit attributable to the parent, and cash flow from operating activities for 2024 are projected to be CNY 3.047 billion, CNY 126 million, and -CNY 1.098 billion respectively, with year-on-year growth of 21.4%, 20.8%, and a significant decline in cash flow [2] - The decline in performance is attributed to a decrease in gross margin due to falling cotton prices, increased inventory costs, and a rise in financial expenses [2] - The company plans to distribute CNY 1.8 per 10 shares and increase its share capital by 3 shares, resulting in a dividend payout ratio of 21.2% and a dividend yield of 1.5% [2] Summary by Sections Revenue and Profitability - The company’s revenue from color yarn, trade yarn, processing fees, and other businesses for 2024 is expected to be CNY 2.590 billion, CNY 230 million, CNY 125 million, and CNY 78 million respectively, with year-on-year growth rates of 16.85%, 29.80%, 41.90%, and not applicable [3] - The gross margin for 2024 is projected to be 12.26%, an increase of 0.77 percentage points year-on-year, driven by improved capacity utilization [4] - The net profit margin and the net profit margin excluding non-recurring items are expected to be 4.14% and 3.68% respectively, with slight year-on-year changes [4] Financial Performance - The company’s total revenue for 2024 is projected at CNY 3.047 billion, with a year-on-year growth of 21.4% [9] - The net profit attributable to the parent for 2024 is expected to be CNY 126 million, reflecting a year-on-year increase of 20.8% [9] - The company’s earnings per share (EPS) for 2025 is forecasted to be CNY 1.07, with a price-to-earnings (PE) ratio of 11 times based on the closing price of CNY 11.99 on April 7, 2025 [7][9] Cash Flow and Inventory - The company’s cash flow from operating activities is projected to be negative at -CNY 1.098 billion for 2024, primarily due to increases in inventory and accounts receivable [2][5] - The inventory at the end of 2024 is expected to be CNY 1.456 billion, a 127% increase year-on-year, largely due to the production ramp-up of subsidiaries [5][6] Future Outlook - The company is expected to benefit from new product lines and expansion projects, with a forecasted revenue of CNY 4.074 billion in 2026 and CNY 4.357 billion in 2027 [9] - The anticipated stabilization of domestic cotton prices and potential increases in imported cotton prices may positively impact future profitability [7]