Core Insights - The new energy vehicle (NEV) market in China is experiencing rapid growth, with a projected retail sales increase of 5.5% in 2024, reaching 22.89 million units, and NEV retail sales expected to grow by 40.7% to 10.89 million units, achieving a penetration rate of 47.61% [1][4] Group 1: Market Dynamics - The growth in the NEV market is driven by policies such as trade-in and scrappage incentives, which stimulate sales [1] - Domestic brands like Li Auto, NIO, and Hongmeng Zhixing dominate the mid-to-high-end NEV market, leveraging the demand for natural leather materials in vehicle interiors [1][2] Group 2: Company Performance - Hongxing Automotive Leather has successfully gained supplier qualifications from major brands like Li Auto and NIO, enabling bulk supply of automotive interior leather [2] - The company reported a 20.22% revenue increase in its automotive interior leather business for 2024, reaching 720 million, with a gross margin improvement of 4.43 percentage points to 34.34% [4] - The subsidiary Hongxing Automotive Leather achieved a net profit of 149 million, a 50.98% increase year-on-year, driven by sales growth and improved gross margins [4] Group 3: Competitive Advantages - The company possesses a full-process leather manufacturing capability, allowing for effective resource integration and strong bargaining power in raw material procurement [3] - Hongxing Automotive Leather's involvement in the early design stages of new vehicle models enhances its ability to meet customer demands for high-quality leather materials [3] Group 4: Future Outlook - The company is well-positioned to benefit from the high-end automotive interior trend, with expectations for rapid growth in production and sales [2][4] - The acquisition of Hongxing Automotive Leather allows the company to capitalize on the burgeoning NEV sector, potentially establishing a second growth curve [5]

Investment Rating - The investment rating for the company is "Accumulate" with a downward adjustment [5][4]. Core Views - The company continues to advance its automotive interior leather business, with a focus on expanding production capacity in Indonesia and Vietnam [2][4]. - The financial performance for Q1 2025 shows a revenue of 600 million, a year-on-year increase of 5%, but a significant decline in net profit attributable to shareholders, down 45% year-on-year [1][4]. - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares, with an expected payout of 40 million, resulting in a payout ratio of 31% [1]. Financial Performance Summary - For the full year 2024, the company reported a revenue of 3 billion, a year-on-year increase of 9%, and a net profit attributable to shareholders of 140 million, down 24% year-on-year [1][4]. - The revenue breakdown for 2024 shows that leather for shoes and bags generated 2 billion, accounting for 68% of total revenue, while automotive interior leather contributed 700 million, representing 24% of total revenue [2]. - The gross margin for automotive interior leather improved by 4 percentage points year-on-year to 34% [2]. Profit Forecast Adjustments - The profit forecast for 2025-2027 has been adjusted, with expected net profits of 150 million, 180 million, and 230 million respectively [4]. - The earnings per share (EPS) estimates have been revised to 0.5, 0.6, and 0.8 yuan for 2025-2027 [4]. Market Position and Growth Potential - The company has successfully entered the supply chains of international sports brands such as Adidas and COLEHAAN, indicating strong market positioning [2]. - The overseas revenue increased by 97% year-on-year, highlighting the potential for growth in international markets due to the investment in production capacity in Southeast Asia [2].

Core Viewpoint - The report by Tianfeng Securities on Xingye Technology highlights the company's ongoing development in the automotive interior leather business, maintaining a "buy" rating for the stock [1]. Financial Performance - For Q1 2025, the company reported revenue of 600 million, a year-on-year increase of 5%, while net profit attributable to shareholders was 20 million, down 45% year-on-year [1]. - In Q4 2024, revenue was 900 million, up 24% year-on-year, with net profit attributable to shareholders at 30 million, a significant increase of 150% year-on-year [1]. - The full year 2024 saw revenue of 3 billion, a 9% increase year-on-year, but net profit attributable to shareholders decreased by 24% to 140 million [1]. Dividend and Management Changes - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares, amounting to an expected payout of 40 million, with a dividend payout ratio of 31% [2]. - Wu Meili resigned as the board secretary but continues as the vice president, while Zhang Liang has been appointed as the new board secretary [2]. Product Segmentation and Market Expansion - Revenue from leather for shoes and bags in 2024 was 2 billion, an 8% increase, accounting for 68% of total revenue, with a gross margin of 18% [3]. - Revenue from automotive interior leather reached 700 million, a 20% increase, representing 24% of total revenue, with a gross margin of 34% [3]. - The company has successfully entered the supply chains of international brands such as Adidas and COLEHAAN [3]. Regional Performance - Revenue from East China was 1.9 billion, an 8% increase, accounting for 65% of total revenue, with a gross margin of 22% [3]. - Revenue from South China was 600 million, down 1%, representing 21% of total revenue, with a gross margin of 22% [3]. - International revenue surged by 97% to 300 million, accounting for 10% of total revenue, with a gross margin of 21% [3]. Subsidiary Performance - The subsidiary Hongxing Automotive Leather reported a net profit of 150 million, up 51% year-on-year, driven by increased sales and improved gross margins [4]. - Lianhua Leather reported a net loss of 10 million, down 62% year-on-year, primarily due to increased financial expenses [4]. Profit Forecast Adjustments - The profit forecast for 2025-2027 has been adjusted, with expected net profits of 150 million, 180 million, and 230 million respectively [5]. - Earnings per share (EPS) are projected to be 0.5, 0.6, and 0.8 yuan for 2025, 2026, and 2027 respectively [5]. - Price-to-earnings (PE) ratios are expected to be 20x, 16x, and 12x for the respective years [5].

Financial Performance - In Q1 2025, the company reported revenue of 600 million, a year-on-year increase of 5%, with a net profit attributable to shareholders of 20 million, down 45% year-on-year, and a non-recurring net profit of 20 million, down 49% year-on-year [1] - For Q4 2024, the company achieved revenue of 900 million, a year-on-year increase of 24%, with a net profit attributable to shareholders of 30 million, up 150% year-on-year, and a non-recurring net profit of 30 million, up 21% year-on-year [1] - The total revenue for 2024 was 3 billion, a year-on-year increase of 9%, with a net profit attributable to shareholders of 140 million, down 24%, and a non-recurring net profit of 130 million, down 26% [1] Dividend and Management Changes - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares (including tax), expecting a total payout of 40 million, resulting in a payout ratio of 31% [2] - Wu Meili resigned as the secretary of the board but continues to serve as the vice president, while Zhang Liang has been appointed as the new secretary of the board [2] Product Performance - Revenue from leather for shoes and bags in 2024 was 2 billion, a year-on-year increase of 8%, accounting for 68% of total revenue, with a gross margin of 18%, down 2 percentage points [3] - Revenue from automotive interior leather was 700 million, a year-on-year increase of 20%, accounting for 24% of total revenue, with a gross margin of 34%, up 4 percentage points [3] - Revenue from second-layer leather collagen products was 100 million, down 1% year-on-year, with a gross margin of 10%, down 2 percentage points [4] Regional Performance - Revenue from East China was 1.9 billion, a year-on-year increase of 8%, accounting for 65% of total revenue, with a gross margin of 22%, up 1 percentage point [5] - Revenue from South China was 600 million, down 1% year-on-year, accounting for 21% of total revenue, with a gross margin of 22%, down 2 percentage points [5] - Revenue from overseas markets was 300 million, a year-on-year increase of 97%, accounting for 10% of total revenue, with a gross margin of 21%, up 5 percentage points [5] Subsidiary Performance - The subsidiary Hongxing Automotive Leather reported a net profit of 150 million, up 51% year-on-year, attributed to increased sales and improved gross margin [6] - Lianhua Leather reported a net loss of 10 million, down 62% year-on-year, primarily due to increased financial expenses and exchange losses [6] Profit Forecast Adjustment - Based on the performance in 2024 and Q1 2025, the company has adjusted its profit forecast for 2025-2027, expecting net profits attributable to shareholders of 150 million, 180 million, and 230 million respectively [7] - The earnings per share (EPS) are projected to be 0.5, 0.6, and 0.8 yuan for 2025-2027 [7]

Investment Rating - The investment rating for the company is "Accumulate" with a downward adjustment [5] Core Views - The company continues to advance its automotive interior leather business, with a focus on expanding production capacity in Indonesia and Vietnam [2][4] - The company reported a revenue of 600 million in Q1 2025, a year-on-year increase of 5%, while the net profit attributable to shareholders decreased by 45% to 20 million [1] - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares, with an expected payout of 40 million and a payout ratio of 31% [1] Financial Performance Summary - For the full year 2024, the company achieved a revenue of 3 billion, a year-on-year increase of 9%, with a net profit of 140 million, down 24% [1] - The revenue from leather for shoes and bags was 2 billion, up 8%, accounting for 68% of total revenue, while automotive interior leather revenue was 700 million, up 20%, accounting for 24% [2] - The gross margin for automotive interior leather improved by 4 percentage points to 34% [2] Subsidiary Performance - The subsidiary Hongxing Automotive Leather reported a net profit of 150 million, up 51%, attributed to increased sales and improved gross margin [3] - The subsidiary Lianhua Leather reported a net loss of 10 million, down 62%, due to increased financial expenses and exchange losses [3] Earnings Forecast - The earnings forecast for 2025-2027 has been adjusted, with expected net profits of 150 million, 180 million, and 230 million respectively [4] - The EPS for 2025-2027 is projected to be 0.5, 0.6, and 0.8 yuan respectively [4]

Group 1: Market Trends - Consumer preferences have shifted towards comfort, functionality, and fashion, leading to a decline in demand for traditional business leather shoes [2] - The demand for natural leather products has decreased domestically, while the overseas market shows signs of recovery, particularly in Europe and the U.S. [2] Group 2: Financial Performance - In 2024, the company achieved a revenue of CNY 2.95 billion, a year-on-year increase of 9.32%, but net profit decreased by 23.97% to CNY 142 million [3] - In Q1 2025, revenue reached CNY 627 million, a 5.04% increase year-on-year, while net profit fell by 45.31% to CNY 18.94 million [3] Group 3: Production and Supply Chain - The company acquired full ownership of a Vietnamese company to enhance production capabilities and meet local supply chain demands [4] - The leather business for shoes and bags is seasonal, with higher revenues expected in the second half of the year; however, domestic demand has weakened [4] Group 4: Automotive Leather Business - The automotive leather segment is expected to grow in 2025, with new customer acquisitions and increased model specifications compared to the previous year [5] - Natural leather remains preferred for mid-to-high-end vehicles due to its luxury attributes, despite the presence of alternative materials like PU and microfiber [6] Group 5: Trade and Tariff Impact - The U.S. has temporarily paused additional tariffs on products exported from Vietnam, which currently does not directly impact the company's operations [6]

Group 1: Market Trends and Consumer Preferences - Recent changes in consumer preferences emphasize comfort, functionality, and fashion, leading to a decline in traditional business shoe demand and a decrease in the demand for natural leather products in China [2] - The overseas market, particularly in Europe and the U.S., shows stable demand, with a recovery in orders from foreign brands boosting export market demand [2] Group 2: Financial Performance - In 2024, the company achieved a revenue of CNY 2.95 billion, a year-on-year increase of 9.32%, while net profit attributable to shareholders was CNY 142 million, a decrease of 23.97% compared to the previous year [3] - In Q1 2025, the company reported a revenue of CNY 627 million, a year-on-year increase of 5.04%, with net profit of CNY 18.94 million, down 45.31% from the same period last year [3] Group 3: Automotive Leather Demand - The demand for automotive interior leather is growing due to the increasing use of natural leather in mid-to-high-end domestic electric vehicles, with the company’s subsidiary, Hongxing Automotive Leather, supplying major brands like Li Auto and NIO [2][4] - Despite being in the off-season for automotive consumption, Hongxing Automotive Leather's sales are expected to maintain stable growth due to new model deliveries in the second half of 2025 [3] Group 4: Competitive Advantages - Hongxing Automotive Leather holds a leading position among domestic automotive interior leather suppliers, benefiting from stable supply, production flexibility, and responsive service [4] - The company has established partnerships with several well-known automotive brands, focusing on high-end models that demand superior leather quality [4] Group 5: Capacity and Procurement Strategy - Hongxing Automotive Leather has significant room for capacity expansion to meet increasing sales, with plans for gradual production increases based on customer sales forecasts [5] - The company is managing the impact of increased import tariffs on U.S. raw hides by diversifying procurement channels from South America, Europe, Australia, and domestic markets [5] Group 6: Brand Collaborations - The company successfully entered the international supply chain of Adidas, indicating its capability to meet international standards in product development, quality, and customer service [6] - The contribution from overseas brands, particularly Adidas, is expected to significantly boost overall revenue in 2025 [5] Group 7: Other Business Performance - Baotai Leather reported a revenue increase of 1.31% in Q1 2025, with notable profit growth driven by the rising demand and prices for second-layer leather due to market trends [7]

Industry Overview - The leather industry in China has experienced a declining trend in operating revenue, dropping from 14,735.8 billion yuan in 2017 to 10,129.1 billion yuan in 2020. Although there was a recovery in 2021-2022, revenue fell again to 7,986.1 billion yuan in 2023. A slight increase of 3.70% is expected in 2024, reaching 8,533.2 billion yuan, with a further 0.8% increase in early 2025 [1][10][12]. Market Participants - Key listed companies in the leather industry include Anli Co., Ltd. (300218), Haining Leather City (002344), Xingye Technology (002674), Shuangxiang Co., Ltd. (002395), and others. Notable non-listed companies include Wudi Xingyi Leather Co., Ltd. and Shijiazhuang Jinniu Leather Co., Ltd. [1][10]. Leather Classification - Leather can be categorized into genuine leather, regenerated leather, synthetic leather, and composite leather. Genuine leather is derived from animal hides and is characterized by its strength and texture, while synthetic leather is made from PVC and PU materials, offering a variety of designs and lower costs [2][3]. Industry Chain - The leather industry chain consists of upstream raw material supply (animal hides, chemical materials), midstream production (core manufacturing processes), and downstream applications (shoes, clothing, bags, automotive interiors) [4]. Production and Consumption Trends - China is the largest shoe manufacturing base and consumer market globally. However, the production and demand for leather shoes have been declining, with a projected production of 3.4 billion pairs and demand of 2.8 billion pairs by 2024 [8][10]. Competitive Landscape - The leather industry features a diverse range of participants, including large listed companies and numerous small workshops. Larger firms like Xingye Technology and Juxing Agriculture have advantages in capital and technology, while smaller firms are more flexible and can quickly adapt to market changes [14][15]. Industry Development Trends - The leather industry is witnessing a shift towards personalized and differentiated products, driven by consumer demand for quality and sustainability. Companies are increasing R&D investments to create unique and fashionable products [19]. - The integration of smart manufacturing and digital transformation is enhancing production efficiency and reducing costs, allowing companies to respond better to market demands [20]. - Environmental sustainability is becoming a priority, with companies adopting eco-friendly production methods and focusing on green supply chain management to comply with stricter regulations [21][22].