奥特佳(002239.CN)

CITICS-Kingfield Garments

时间:08-12-26 00:00    来源:中信证券

Investment Highlights Unique business model ensures customer’s loyalty. The Company alwayssticks to “one-stop” service philosophy. Its ODM business model enables itto be deeply engaged in fabric designing, while the LDP trade modelimproves the customers’ loyalty and the Company’s pricing power. Theacquisition of USA Lanco marks an extension towards high end of thebusiness line, and builds a bridge for the Company to get orders directlyfrom the market. As of Nov. 08, Kingfield Garments reported an increase of22% in the value of orders. Cutting edges on scale and capital help the Company seize opportunitiesin a precarious environment. The year 2008 may be the hardest time forthe industry. In NanTong where the Company is located, nearly 20% of theapparel makers collapsed in the year. Owing to the large business scale andaffluent capitals, the Company gets extra orders originally placed to smallfactories that have just gone bankrupt. Besides, the decrease in orders forOEM factories gives the Company ample options, and eases the pressure onits own capacity. Meanwhile, the Company has also begun to selectimporters meticulously. As of mid. 2008, the top-10 customers contributeabout 50% to the Company’s sales. We expect the customer concentration ofthe Company further improve in the future. Sectoral policies tend to improve. Companies in the sector are highlysensitive to export, and the export tax rebate rate of 2009 is expected toincrease to 17%. The Company has certain safety margin for the movementsin exchange rate. Earnings of 2009 have guarantee and growth potential. The Company’ssales and gross margin are expected to keep stable. Besides, it may exploitthe huge growth potential by increasing the ratio of direct orders andchoosing suitable M&A projects. Potential risks. If the export tax rebate rate fails to reach 17% in 09, theearnings will fall short of the 12% as we have expected. The 09H1 earningsmay increase negatively in view of the large base created in 08H1. Tradeprotectionism is likely to rear its head. Earnings forecast and investment rating: we forecast EPS of KingfieldGarments will be RMB0.46/0.52/0.58 in 08/09/10, representing a PE ratio of14/13/12X. Taking into account the good guarantee and increase potential ofcompany earnings, we assign a PE ratio of 13X for 2009, higher as comparedwith LuTai (10-12X 09PE), and grant it a “Hold” rating with target price ofRMB6.76.