Zhejiang Xinao Textiles (SH:603889) Tianfeng Securities·2025-10-29 07:12Investment Rating - The investment rating for the company is "Buy" with a target price not specified [6][5]. Core Views - The company is expected to benefit from the recent increase in wool prices, which is projected to enhance gross margins and order intake [2][5]. - The company is steadily advancing its capacity planning and optimizing its domestic and international production layout [3]. - The company is deepening its global market presence to meet diverse customer needs through participation in various international textile exhibitions [4]. Financial Performance - In Q3 2025, the company reported revenue of 1.3 billion with a year-on-year growth of 2%, and a net profit attributable to shareholders of 110 million, up 3% [1]. - For the first three quarters of 2025, the company achieved a total revenue of 3.9 billion, reflecting a 1% increase, and a net profit of 380 million, which is a 2% increase [1]. - The company has adjusted its profit forecast, expecting net profits for 2025, 2026, and 2027 to be 470 million, 550 million, and 630 million respectively, with corresponding P/E ratios of 12, 10, and 9 times [5]. Market Dynamics - Wool prices have been on the rise, with the Australian wool trading index showing a price of approximately 1001 USD/KG as of October 9, 2025, marking a 22% increase from the end of August [2]. - The increase in wool prices is anticipated to stimulate customer ordering behavior, as downstream clients may increase their purchases of fine wool yarn to better control costs [2]. Capacity Expansion - The company is progressing with its capacity expansion plans, including a 50,000 spindle high-end fine wool yarn project in Vietnam, with the first phase of 20,000 spindles gradually coming into production [3]. - The company’s subsidiary in Yinchuan has completed the installation of a 20,000 spindle high-quality fine wool yarn project, which is expected to release capacity in the second half of the year [3]. Strategic Initiatives - The company has initiated a "key customer strategy" to systematically categorize high-value clients, deeply understand their needs, and provide customized solutions to establish long-term stable partnerships [4].