Jack Co. (603337): Maintain high performance and comprehensively enhance competitive advantage
Event: The company released its annual report. In 2018, it realized operating income of 41.
5.2 billion, an annual increase of 48.
98%; net profit attributable to shareholders of listed companies4.
5.4 billion, an annual increase of 40.
Event comment: The company’s sales revenue growth rate is much higher than the industry growth rate, the market exchange rate effect is more significant, and the industry supply-demand relationship tends to oversupply.
1) From January to November 2018, one hundred complete machine enterprises in the industry counted by the China Sewing Machinery Association gradually completed the main business income of 196.
1.5 billion (fifteen + 15).
52%), a growth rate of 12 lower than in 2017.
85pp. Incremental sales of sewing machine products 655.
590,000 units (previously +12.
Among them, industrial sewing machines gradually sold 467.
01 million units (+18.
The company’s operating income grows by 48 per year.
98%, much higher than the growth rate of the industry, indicating that the “Eight and Eighth Differentiation” trend of the sewing equipment industry has strengthened and the market effect has become more prominent.
2) From the perspective of industry supply and demand, the market has returned to the normal state of production and sales balance from the pattern of supply and demand in 2017, and has tended to oversupply. The production and sales rate has increased from 126 in January 2018.
6% dropped monthly to November 79, 2018.
Affected by industry trends, the company’s industrial sewing machine production and sales rate declined slightly, and the inventory increased every 61.
We believe that under the background of the rapid growth of the industry and the tendency to oversupply, the company’s future growth will mainly be driven by the increase in market share, but the growth rate will improve. The quarterly data growth rate shows that the company’s sales revenue growth rate in the first quarter of 201860.
After a new high of 37%, 2018Q4 has been included to 37.
Production capacity has steadily expanded.
Since the establishment of the company, the production scale has been continuously expanded, and the production and sales capabilities have continued to increase. It has become one of the sewing equipment manufacturers with a breakthrough in the industry. In 2018, the production volume of industrial sewing machines reached 2.01 million units, an increase of 41.
The company has a number of advanced automated production equipment in the industry, and has formed automatic production of casting, machining, and coating. Among them, the automatic machining production line is the first in the sewing industry. Not only has the product quality steadily improved, but the production capacity has also been greatly improved.Guarantee, while releasing the Air Force, greatly improve production efficiency, reduce manufacturing costs, and gradually form the company’s core competitiveness of intelligent manufacturing.
In 2018, the company’s Jiaojiang plant was gradually put into use, and two precision automatic production lines were put into operation and mass production was achieved, and the scale effect of production capacity was prominent.
Empower all distributors to create new advantages in channels.
The company adheres to market-oriented and customer-centric, and provides comprehensive end-to-end intelligent manufacturing solutions to end-users through the coordinated operation of Jack, Bruce, Benma, Maika, and Webima.
The company continuously innovates in channel management, creates a good business environment, stabilizes the market structure, and enhances the confidence of dealers in promoting products. Through continuous improvement of the dealer selection system, the establishment of a strategic dealer team empowers all dealers and builds channelsNew advantages drive the expected development.
As of 2018, the company’s dealers and their distribution outlets in more than 130 countries around the world have reached more than 7,000, which provides a good guarantee for the market to quickly obtain company products and quickly serve customers.
In the overseas market, through the construction and operation of 14 overseas offices, dating localized employees, effectively promoting the construction and management of overseas sales channels, and helping sales growth in overseas markets.
Improve 南宁桑拿 the IPD process system, maintain high-intensity R & D investment, and speed up new product launches.
1) The company will make breakthroughs in research and development to drive the core power of enterprise development. In 2006, it introduced the advanced IPD (Integrated Product Development) product development model. In 2018, it and Huawei again optimized the IPD process system, reduced product development cycles, and reduced product development costs, More effectively converge the technical and commercial risks of the product, improve product competitiveness and market success rate.
2) The company maintains high-intensity R & D investment, and the R & D expense in 2018 was 2.0.5 billion, maintained at 4.
High intensity consumption of more than 5%.
3) The Sewing Machine Division initially launched a total of nearly 20 new products, which enriched product lines at different levels, and completed small-scale trial production and prototype design of multiple products at the same time.
The Bruce brand has completed the launch of Q5, R5, B5, X5 and other products. It has broken through various technologies such as short thread ends, thick performance, and switching between thin and thick sewing materials, and has been applied in many products.
The E80 cutting bed of the Tailoring Business Department continued to optimize and stabilize, and launched a variety of just needed spreaders and cutting beds.
A number of factors have led to a decline in the company’s comprehensive gross profit margin2.
In 2018, the company’s comprehensive gross profit margin was 28.
08%, a decrease of 2 from the previous year.
Of which: 1) Gross profit margin of industrial sewing machines decreased by 1.
97pp, the main factors are: a, the average exchange rate of the US dollar against the Renminbi in 2018 decreased compared to the previous year; b, the difference in regional sales growth, the growth rate of the international trade regional sales revenue with relatively high gross margins gradually increased in the domestic market; c, the price of raw materialsThe annual growth rate is different; 2) The gross profit margin of cutting bed is reduced by 4.
75pp, mainly: a. Product structure impact: Especially the new products just need to gradually increase the sales of tailor beds; b, the proportion of sales of tailor bed distribution channels gradually increased; 3) The gross profit margin of foreign markets decreased.
29pp, mainly due to: a, the average exchange rate of the US dollar to the Renminbi in 2018 decreased compared to the previous year; b, the product structure factors of tailor beds, especially the launch of new tailor-made beds; c, the proportion of channel sales of tailor beds increased.
For the first time, there was a net decrease in operating cash flow.
Net cash flow from operating activities changed from positive to negative to -2,082.
530,000 yuan (previous year was 6).
There are three main reasons for the US $ 2.5 billion: 1) Report on the adjustment of consolidated supplier payment policies: Guide suppliers to expand automation equipment transformation and expansion, expand component production capacity, improve component quality, and gradually build a first-class supply chain system.The payment policy of commercial parts and components replaced the acceptance payment method with the cash payment method, resulting in a total decrease in accounts payable and bills payable at the end of 2018 compared to the end of 2017 by 3.
3.2 billion US dollars, reducing operating cash flow; 2) Inventory increase: the relative supply and demand substitution in the market in 2017, relative supply and demand balance in 2018 and the replacement of sewing machine market sales, inventory measurement at the end of 2018 increased by 2 in 2017.
51 ppm; 3) Increase in accounts receivable: The increase in sales in 2018 brought about the increase in accounts receivable and the 2017 market supply and demand caused the balance of accounts receivable in 2017 to exceed the normal level, and the sales repayment in 2018 returned to normal.Caused by.
Investment suggestion: We expect the company’s net profit for 2019-2021 to be 5, respectively.
At 72 ppm, the EPS is 1.
84 yuan, corresponding P / E is 24/17/15 times.
Considering that the company is the largest production and sales company in the global sewing machinery industry, the market competition pattern has a significant headline effect. The strong one is Hengqiang. The relative error is estimated. We maintain its “Buy” rating.
Risk reminders: industry demand decreases, excess capacity risks; raw material prices rise, gross profit margins reduce risks; exchange rate fluctuation risks.