Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [12]. Core Insights - The company has established a strong vertical integration model, enhancing production efficiency through overseas capacity, specialized factories, and rapid response to large orders. This has resulted in a solid binding with top clients and a leading fabric R&D capability, indicating that the current valuation is low and expected to gradually recover [4][10]. - Revenue is anticipated to grow by double digits this year, driven by increased market share from existing clients like Adidas and Uniqlo, alongside a recovery in Nike's performance and an overall improvement in industry conditions [4][10]. - Profitability is expected to accelerate in the second half of the year, with stable labor costs and tax rates, and a better profit elasticity anticipated next year as Nike recovers [4][10]. Company Overview - The company is recognized as the largest vertically integrated knitwear manufacturer in China, with long-term partnerships with premium brands such as Nike, Adidas, PUMA, and Uniqlo. Its strategic foresight and close collaboration with upstream enterprises have facilitated a comprehensive vertical integration of its business [7][19]. - The company has maintained steady revenue growth over the years, achieving a gross margin of 25-30% due to its product selection and vertical integration, although profit margins have fluctuated recently due to factory shutdowns and rising labor costs [7][33]. Industry Dynamics - In the short term, the apparel industry is transitioning from a destocking phase to a potential recovery, with expectations of improved order volumes as major brands like Nike reach operational turning points [8][40]. - Long-term trends indicate steady growth in downstream apparel consumption, diversification of brands, and an increase in outsourcing by brand owners, which will drive expansion for upstream suppliers [8][40]. - The company has shifted its focus towards the higher-growth and more certain sportswear segment, benefiting from a higher proportion of sports apparel and greater client concentration, which helps mitigate revenue volatility [9][30]. Financial Projections - The company's projected net profits for 2025, 2026, and 2027 are estimated at 6.78 billion, 7.72 billion, and 8.76 billion respectively, reflecting year-on-year growth rates of 9%, 14%, and 13% [10]. - The price-to-earnings ratio (PE) is expected to decrease to 13x by September 2025, indicating a low valuation compared to historical levels [10].
申洲国际（02313）：“织”道系列7：格局增势，或跃在渊