Upgrade Intertek'S Target Price (1382. HK) To HK $5.1 Neutral Rating

? ? ? Mutual textile (1382. HK) will announce its first half of fiscal year results on November 19. The bank estimates that the company's profit will fall by 27%, while its revenue will fall by 20%. This is mainly due to the low capacity utilization rate affected by the epidemic. The capacity utilization rate is only about 60% in April July, but it is improved to 80-85% in August September. The related factors are partly offset by the growth in target, Walmart, Costco and Nike. The bank estimates that the company's net profit margin will fall by 1.2 percentage points, mainly due to the low utilization rate of plant capacity in China and Vietnam, which drag down the gross profit rate by about 1.4 percentage points on a year-on-year basis. In addition, there are additional expenses affected by the epidemic, but the relevant factors are partly offset by the support measures launched by the mainland government.

The bank estimates that the company's profit in the second half of the fiscal year will increase by 34% year-on-year, but the relevant visibility remains low. In addition, the bank also increased the company's profit forecast for 2021-23 fiscal year by 12-14% to reflect the better than expected improvement in capacity utilization in August September, and raised its target price from HK $4.3 to HK $5.1, maintaining a neutral rating and maintaining a cautious view on capacity expansion. The company has completed land acquisition in Vietnam, and It is estimated that it will take two years to carry out the project within the planned year. The company will face capacity constraints in 2022-23.