Huafeng Superfiber: New Products Start To Increase In Gross Profit Margin

　　 Huafeng Superfiber Co., Ltd In the first half of the year, the operating revenue was 466 million yuan, up 29% year on year, the operating profit was 75.3898 million yuan, up 62.87% year on year, and the net profit attributable to shareholders of the listed company was 57.3955 million yuan, up 38.06% year on year. The growth of the company's revenue and operating profit was in line with our expectations. The main reason for the low growth of the net profit attributable to the parent company was that the income tax policy for high-tech enterprises had expired this year, and the company's income tax rate had been raised from 15% to 25%. However, we believe that this year's high-tech enterprise restructuring is expected to pass, and the likely rate of overpaid income tax can be fully refunded.

Since this year, company A large amount of manpower and material resources were invested in the development and promotion of new products. High gross profit products such as imitation leather, shoe lining leather and automotive interior leather continued to be in high volume, which offset the decline of sales of sports shoe leather and improved the overall gross profit margin of the company. By product, the revenue of superfine fiber synthetic leather increased by 12% year on year, the gross profit margin increased by 2.3 percentage points, the revenue of base cloth increased by 18% year on year, and the gross profit margin increased by 4.3 percentage points. The income of suede leather products with high gross profit increased by 98% year on year, and the gross profit margin increased by 5 percentage points from 37.4% to 42.4%.

Huafeng Ultra Fiber vigorously expanded its overseas business, and the effect was very obvious. In the first half of this year, it achieved an operating income of 117 million yuan, up 65% year on year, a gross profit of 51.58 million yuan, up 96% year on year, and a gross profit margin of 7 points to 44% year on year. The company's overseas products are mainly sold to Europe, South America and other regions. The export tax rebate makes the gross profit margin of overseas business generally higher than that of domestic business.

　　 in summary We maintain our earnings forecasts of 0.98 yuan, 1.24 yuan and 1.31 yuan per share respectively from 2014 to 2016, maintain 18 times of 2014 P/E according to the valuation of comparable companies, target price of 18.61 yuan, and maintain the "buy" rating of the company.