Core Insights - The report from Zheshang Securities indicates that Jian Sheng Group's Q3 revenue is under pressure due to a high base, while asset disposal gains have bolstered net profit [1] - The revenue for cotton socks and seamless apparel is expected to decline in low single digits and low double digits respectively, with a significant increase in cotton sock shipment volume on a quarter-on-quarter basis, aligning with previous annual shipment expectations [1] - The one-time gain from the asset disposal at the Jiangshan base has led to an upward revision of the profit forecast for 2025 [1] - In the medium to long term, the company is expected to see steady growth in cotton sock orders, sufficient production capacity, and significant improvements in the customer structure for seamless products, with profit margins likely to recover as production utilization in Vietnam increases and order structures improve [1] - The company maintains a "buy" rating due to the robust growth in cotton socks, significant elasticity in seamless products, and outstanding shareholder returns [1]

Investment Rating - The investment rating for the company is "Buy" [5] Core Insights - The company reported a revenue of 715 million yuan in Q3 2025, a year-on-year decrease of 5.2%, while the net profit attributable to shareholders increased by 71.2% to 167 million yuan, primarily due to asset disposal gains [1][2] - The gross margin improved to 31.8% in Q3 2025, up 3.3 percentage points year-on-year, reflecting the effectiveness of cost reduction and efficiency enhancement efforts [2] - The company plans to establish a new project in Vietnam with an investment of 180 million yuan, expected to start construction by March 31, 2026, which will enhance production capacity and meet long-term order demands [3] Summary by Sections Financial Performance - In the first three quarters of 2025, the company achieved a total revenue of 1.886 billion yuan, down 1.9% year-on-year, while the net profit attributable to shareholders rose by 17.3% to 309 million yuan [1] - The company’s non-recurring net profit for Q3 2025 was 102 million yuan, a year-on-year increase of 7.3% [1] Margin and Cost Analysis - The company’s non-recurring net profit margin was 14.3% in Q3 2025, an increase of 1.7 percentage points year-on-year, with management expenses rising due to employee salary adjustments [2] Future Outlook - The company expects stable growth in cotton sock orders and sufficient production capacity, with revenue projections for 2025-2027 at 2.613 billion, 2.898 billion, and 3.197 billion yuan, respectively [4] - The forecasted net profit for 2025-2027 is 384 million, 368 million, and 414 million yuan, respectively, with corresponding P/E ratios of 10.5, 10.9, and 9.7 [4]

Investment Rating - The report maintains a "Buy" rating for the company, with an adjusted profit forecast for 2025-2027 [5][7]. Core Insights - The company experienced a slight decline in cotton sock revenue in Q3 2025, but the quality of seamless operations improved significantly. Revenue for Q1-Q3 2025 was CNY 1.89 billion, down 2% year-on-year, while net profit attributable to shareholders increased by 17% to CNY 310 million [1][3]. - In Q3 2025, the company reported a revenue of CNY 720 million, a decrease of 5% year-on-year, but net profit attributable to shareholders surged by 71% to CNY 170 million, driven by cost reduction and efficiency improvements [2][3]. - The company is focusing on expanding its integrated production capacity overseas, which is expected to enhance its competitive strength in the medium to long term [4]. Financial Performance Summary - For Q1-Q3 2025, the gross profit margin improved by 0.8 percentage points to 29.5%, while the net profit margin decreased by 0.7 percentage points to 12.7% [1]. - In Q3 2025, the gross profit margin increased by 3.3 percentage points to 31.8%, and the net profit margin rose by 1.7 percentage points to 14.3% [2]. - The company is actively managing its cash flow and inventory, with inventory at CNY 640 million, down 0.7% year-on-year, and a net operating cash flow of CNY 390 million, approximately 1.3 times the net profit for the same period [4]. Business Outlook - The company collaborates with key brand clients such as UNIQLO, PUMA, and Decathlon, indicating a stable order flow and ongoing efforts to develop new clients [3]. - The company is advancing its smart manufacturing capabilities and is set to complete a production line for 9 million pairs of mid-to-high-end cotton socks by the end of 2024 [4].

Investment Rating - The report assigns an "A" rating for investment in the textile manufacturing industry, with specific buy recommendations for Shenzhou International (02313.HK), Yuanyuan Group (00551.HK), and Huali Group (300979.SZ) [1]. Core Insights - The global textile and apparel export value is approximately $900 billion, with an expected compound annual growth rate (CAGR) of 3.2% from 2020 to 2024. The export value is projected to reach $882.7 billion by 2024 [2][16]. - The apparel manufacturing industry is experiencing a trend of vertical integration, with some mid-to-large companies extending upstream into weaving and dyeing processes, while the footwear industry remains more concentrated in competition [3][4]. - The report highlights that the sportswear manufacturing sector has a low concentration level, with vertical integration becoming a trend. Shenzhou International is identified as the largest sports knitwear manufacturer globally, with a production capacity of 550 million garments and revenue of 28.7 billion yuan in 2024 [4][9]. Summary by Sections Textile Manufacturing Overview - The global textile and apparel export value is around $900 billion, with the EU, the US, and Japan being the top three importers. The CAGR from 1989 to 2000 was 5.6%, while from 2014 to 2020, it slowed to -0.3% due to inventory destocking and pandemic impacts [16][19]. - The report notes that the textile manufacturing industry is shifting globally, with China's export share declining to 34% in 2023 [19][20]. Apparel Manufacturing Industry - The apparel manufacturing supply chain includes six main areas: fiber, spinning, weaving, dyeing, garment making, and retail. The trend is towards vertical integration, enhancing product development capabilities [36]. - Major apparel manufacturers have high customer concentration, with the largest customer accounting for about 30% of revenue for many companies [50][52]. - The report indicates that overseas production capacity is expanding, with Vietnam, Cambodia, and Indonesia being the primary locations for apparel manufacturing [55]. Footwear Manufacturing Industry - The footwear manufacturing industry has a higher concentration level, with leading companies like Yuanyuan Group dominating the market. In 2024, Yuanyuan Group is expected to produce 255 million pairs of shoes, generating revenue of $5.621 billion [4][9]. - The report emphasizes that the competition in the footwear sector is more concentrated compared to apparel, with fewer suppliers for footwear than for apparel [3][43]. Investment Recommendations - The report recommends Shenzhou International due to its lower exposure to the US market and strong overseas fabric production capacity, which exceeds 50% [9]. - Yuanyuan Group is recommended for its strong upstream material control and potential for profit recovery as production capacity increases [9]. - Huali Group is noted for its average exposure to the US market and optimistic sales outlook due to new client acquisitions [9].

Core Viewpoint - Jian Sheng Group is actively repurchasing shares, indicating confidence in its future prospects despite its stock price remaining in a low trading range since 2018 [1][3][6] Share Repurchase Details - Jian Sheng Group plans to repurchase shares worth up to RMB 3 billion, with a maximum price of RMB 14.69 per share, potentially acquiring up to 20,422,056 shares, which is approximately 5.96% of its total share capital [4] - The company has previously repurchased a total of 77,956,009 shares since 2018, with a total expenditure of RMB 740 million [8] Management Confidence - In the first half of 2025, company executives collectively increased their holdings, demonstrating their confidence in the company's future [5][6] - Executives and major shareholders have committed to not selling their shares in the short term, reinforcing their belief in the company's stability [5] Financial Performance - Jian Sheng Group's revenue has grown from RMB 1.577 billion in 2018 to RMB 2.574 billion in 2024, with net profit reaching RMB 325 million in 2024 after recovering from a significant loss in 2020 [7][8] - The company has maintained a high dividend payout, distributing over RMB 500 million from 2022 to 2024, with a current dividend yield of 5.27% [8] Stock Price Trends - Despite solid financial performance and dividend distribution, Jian Sheng Group's stock price has fluctuated between RMB 5 and RMB 12 since 2018, significantly lower than its peak of RMB 30.53 in 2017 [3][8] - As of October 16, 2025, the stock closed at RMB 10.49, which is below the maximum repurchase price [4] Debt Situation - The company has a high level of short-term debt, amounting to RMB 977 million, which raises questions about its financial management strategy [8]

Core Viewpoint - Recently, Jian Sheng Group announced a share buyback plan, indicating strong confidence from executives and major shareholders despite the stock price remaining in a fluctuating range between 5 and 12 yuan since 2018 [1][10]. Buyback Plan - Jian Sheng Group plans to repurchase shares with a total fund of up to 300 million yuan, with a minimum of 150 million yuan, and a maximum repurchase price of 14.69 yuan per share [2]. - The proposed repurchase will reduce the registered capital, with the number of shares to be repurchased estimated between 10,211,028 and 20,422,056, accounting for approximately 2.98% to 5.96% of the total share capital [3][2]. - The funding for the buyback will come from the company's own funds and a loan from CITIC Bank amounting to 270 million yuan [2]. Executive Confidence - In the first half of this year, senior management and supervisors of Jian Sheng Group collectively increased their holdings, acquiring a total of 127,500 shares for 1.0575 million yuan [5]. - Executives and major shareholders have committed to not selling their shares in the short term, indicating confidence in the company's future [5][6]. Financial Performance - Jian Sheng Group's revenue has shown consistent growth, increasing from 1.577 billion yuan in 2018 to 2.574 billion yuan in 2024 [7]. - The company experienced a significant loss of 528 million yuan in 2020 due to goodwill impairment, but net profit has been on the rise, reaching 325 million yuan in 2024 [7]. Dividend Policy - Jian Sheng Group has been a high dividend payer, distributing over 500 million yuan in total dividends from 2022 to 2024, with an average annual dividend exceeding 160 million yuan [8]. - The company's dividend yield over the last 12 months stands at 5.27%, with a mid-year cash dividend of 86.8467 million yuan already distributed in 2025 [8]. Stock Price Performance - Despite the company's solid financial performance and shareholder returns, the stock price has remained in a low range, fluctuating between 5 and 12 yuan since 2018, with a peak of 30.53 yuan in 2017 [10]. - As of October 15, 2025, the closing price was 10.35 yuan, significantly below the maximum buyback price of 14.69 yuan [2].

Core Viewpoint - The company, Jian Sheng Group, plans to invest in a new project in Vietnam to enhance production capacity and profitability, responding to future customer demand and improving competitiveness in the international market [1][2]. Investment Details - Jian Sheng Group announced an investment of 180 million yuan (approximately 25.18 million USD) to establish a project in the Qinghua Industrial Park, aiming for an annual production of 60 million pairs of mid-to-high-end cotton socks and 30 million pieces of clothing [1][2]. - The project will require the installation of 1,000 sock machines, 1,000 sewing machines, and 20 fully automatic rotary shaping machines to enhance product quality and brand value [2]. Production Capacity and Challenges - The company has been expanding its overseas production bases since 2013, currently operating four major production bases in Vietnam: Haiphong, Xingan, Qinghua, and Nanding [4]. - The existing production capacity in Vietnam is insufficient to meet long-term customer demands, and labor shortages in the sewing segment at the Xingan base are hindering expansion [4]. Financial Performance - In 2024, Jian Sheng Group achieved a record revenue of 2.574 billion yuan, a year-on-year increase of 12.81%, and a net profit of 325 million yuan, up 20.15% [6]. - For the first half of 2025, the company reported revenue of 1.171 billion yuan, a slight increase of 0.19%, but a net profit decline of 14.46% [6]. Market Context - The textile and apparel industry showed resilience in the first half of 2025, with textile exports increasing by 1.77% and apparel exports slightly declining by 0.2% [6]. - The global textile supply chain faces challenges due to fluctuating currency policies, rising logistics and energy costs, and increasing trade protectionism, necessitating upgrades in smart manufacturing and market diversification [6].

Investment Rating - The investment rating for the company is "Outperform the Market" [5][3][27] Core Views - The company experienced a 14.5% year-on-year decline in net profit for the first half of 2025, attributed to increased production capacity and personnel costs in Vietnam, leading to cost pressures and a decrease in gross margin by 0.72 percentage points to 28.17% [1][3] - The company plans to enhance shareholder returns through a dividend of 0.25 CNY per share, totaling 87 million CNY, with a dividend payout ratio of 61% [1][3] - The seamless apparel segment shows improvement in profitability, while the cotton sock business faces pressure due to lower prices and increased costs [2][3] Financial Performance Summary - For the first half of 2025, the company's revenue increased by 0.19% year-on-year to 1.171 billion CNY, while the net profit decreased by 14.46% to 142 million CNY [1][3] - The second quarter saw a revenue decline of 1.5% to 611 million CNY, with a net profit decrease of 2.2% to 82 million CNY [2][3] - The gross margin improved by 0.9 percentage points year-on-year and 2.5 percentage points quarter-on-quarter to 29.4%, mainly due to better performance in the seamless business [2][3] Future Earnings Forecast - The company expects net profits for 2025-2027 to be 330 million CNY, 350 million CNY, and 370 million CNY respectively, with growth rates of 0.2%, 8.2%, and 5.5% [3][27] - The target price has been adjusted to 10.1-11.1 CNY, corresponding to a 2025 PE ratio of 11-12x [3][27] Key Financial Metrics - Projected revenue for 2025 is 2.662 billion CNY, with a net profit of 326 million CNY [4][29] - The company maintains a strong competitive position in the cotton sock manufacturing sector, supported by a robust customer base and ongoing capacity expansion [27][3]

Core Viewpoint - The textile manufacturing industry in China is showing resilience despite external pressures, with companies like Jian Sheng Group reporting stable performance and positive growth in exports due to diversified international market strategies [2][4]. Group 1: Company Performance - Jian Sheng Group reported a sales revenue of 1.171 billion yuan in the first half of 2025, a year-on-year increase of 0.19%, and a net profit of 142 million yuan, down 14.46% [3]. - The company experienced a significant increase in net cash flow from operating activities, which rose by 146.96% to 252 million yuan due to improved receivables [3]. - Over 50% of listed companies in the textile sector that have disclosed performance forecasts expect positive profit growth [2][4]. Group 2: Market Dynamics - The textile industry faced challenges from U.S. trade policies, with a notable 20% year-on-year decline in textile and apparel exports to the U.S. from April to May 2025 [4]. - Despite these challenges, exports to developed markets like the EU, Japan, and emerging markets such as Bangladesh and Indonesia remained robust, indicating strong market resilience [4]. - The overall textile and apparel export value from January to June 2025 was 143.98 billion USD, reflecting a 0.8% year-on-year increase [4]. Group 3: Strategic Initiatives - Jian Sheng Group has been diversifying its production bases internationally, with significant operations established in Vietnam, which now accounts for a substantial portion of its production for the U.S. market [6]. - The company is also focusing on enhancing its operational efficiency through smart factory initiatives, which aim to reduce labor costs and improve production capabilities [8]. - The textile industry is increasingly prioritizing supply chain resilience and product value addition, adapting to the changing global trade environment [7][8]. Group 4: Industry Outlook - The industry is urged to focus on internal strengths and domestic market cycles to navigate external uncertainties, as emphasized by industry leaders [9]. - The Chinese textile industry is expected to continue investing in high-end, intelligent, and green technology upgrades, with fixed asset investments in the textile sector growing by 15.1% year-on-year in the first half of 2025 [8].

Core Viewpoint - Jian Sheng Group discovered errors in its 2024 annual report, where the unit "Yuan" was mistakenly written as "Ten Thousand Yuan" [1][4] Financial Data Summary - In 2024, Jian Sheng Group reported sales revenue of 2.574 billion Yuan, a year-on-year increase of 12.81% [4] - The net profit for 2024 was 325 million Yuan, reflecting a year-on-year growth of 20.15% [4] - The company operates primarily in the production of knitted sportswear, focusing on cotton socks and seamless clothing, utilizing ODM and OEM business models [4] Error Context and Industry Insights - The error in the annual report is part of a broader trend, with 308 correction announcements made by A-share listed companies in the current year, covering various types of reports and announcements [4][5] - Experts suggest that such errors often stem from weak risk control systems within listed companies and intermediary institutions, where the information disclosure departments may be understaffed and overwhelmed with tasks [7] - The lack of rigorous internal control mechanisms in intermediary institutions can lead to oversight in reviewing documents, resulting in mistakes that may not be caught during the approval process [7]