Zhejiang Xinao Textiles (SH:603889) Shenwan Hongyuan Securities·2025-08-24 11:42Investment Rating - The report maintains a "Buy" rating for Xin'ao Co., Ltd. (603889) [2] Core Views - The company reported stable revenue and net profit in the face of weak domestic demand and U.S. tariff impacts, demonstrating strong operational resilience [7] - The gross margin for the main business, fine wool yarn, has increased significantly, contributing to an overall improvement in gross profit margin [7] - The company is expanding its global production capacity to mitigate uncertainties in the global trade environment [7] - The rebound in Australian wool prices is expected to provide additional profit elasticity for the company [7] - The company is positioned as a global professional supplier of wool yarn, with a strategy to replicate its competitive advantages globally [7] Financial Data and Profit Forecast - Total revenue for 2025H1 was 2,554 million yuan, showing a year-on-year decrease of 0.1%, while net profit attributable to the parent company was 271 million yuan, up 1.7% year-on-year [6][11] - The gross margin for 2025H1 was 21.6%, an increase of 0.8 percentage points year-on-year [7][10] - The company forecasts total revenue of 5,046 million yuan for 2025, with a year-on-year growth rate of 4.2% [6] - The projected net profit for 2025 is 442 million yuan, reflecting a year-on-year growth of 3.2% [6] - The earnings per share (EPS) for 2025 is estimated at 0.61 yuan [6] Business Performance - The main business segments include: 1. Fine wool yarn: 2025H1 revenue of 1,430 million yuan, down 3.1% year-on-year, with a gross margin of 28.8%, up 1.7 percentage points [7] 2. Cashmere yarn: 2025H1 revenue of 790 million yuan, up 16.0% year-on-year, with a gross margin of 13.5% [7] 3. Wool tops: 2025H1 revenue of 300 million yuan, down 16.0% year-on-year, with a gross margin of 6.2% [7] Global Production Capacity - The company has established production bases in Vietnam and Yinchuan, with plans for further expansion to enhance production capacity [7] - The Vietnam base is expected to ramp up production quickly, with a total capacity of 50,000 spindles planned [7] - The Yinchuan base has completed installation and is expected to gradually release capacity in the second half of 2025 [7] Market Conditions - The Australian wool price has rebounded, which is favorable for the company's profitability [7] - The current price of Australian wool is reported at 804 cents per kilogram, with a year-to-date increase of 10% [7]