2021-10-16 Tianfeng Securities Co., Ltd. Fan Zhangxiang and Sun Haiyang conducted research on Huali Group and issued a research report "the advantage of stable supply chain is highlighted, and Q3 is expected to continue its growth momentum and increase its market share in the medium and long term." this report gives a buy rating to Huali Group, and the current share price is 93.99 yuan.

Huali Group (300979)
With forward-looking location layout and positive production expansion rhythm, the company has demonstrated the ability to stabilize the supply chain in many rounds of outbreaks, and we expect to continue to increase the order share of head customers to ensure performance growth. Specifically:
In the first half of the year, Huali was not affected by the epidemic, and the production capacity of existing factories was fully released. In the first half of the year, Cambodia and southern Vietnam were disturbed by the epidemic, resulting in the suspension and reduction of most brand orders, while the normal production of the Huali Vietnam plant was basically not affected by the epidemic, and the production capacity of the existing factory was fully released. It is mainly due to factory location and attention to protection and management, and the vaccination situation is optimistic.
(2) the company is actively expanding production against the trend, increasing production capacity by means of new construction, leasing, reconstruction and expansion, purchase and so on. Three factories in Vietnam have been put into production this year, and factories in Indonesia and Myanmar are under construction, showing a strong momentum of expansion compared with their counterparts, laying the foundation for the improvement of scale and market share in the future.
The company delivers goods on time, shows excellent stability, and becomes a reliable partner of customers when the supply chain fluctuates systematically.
Professional ability leads the global footwear supply chain, and the share is expected to rise actively. The company entered Nike Inc's supply chain in 2012, and in the past two years after becoming Converse Brand one supply, with excellent performance and strategic coordination, Nike brand orders expand rapidly, go deep into brand development, and have broad prospects for orders; with the help of their own proofing, quality, delivery and other professional ability to lead the global footwear supply chain, the share is expected to rise actively. While ensuring the rapid growth of orders, verify their ability to dig deep into customer value, and establish the status of the global footwear supply chain.
In addition, Deckers customers have great potential, has become the company's second largest customer, its Hoka, UGG brand terminals to maintain more than 40% growth; running shoes upstart On Onrun has begun to place orders, a hundred flowers blossom.
Maintain earnings forecasts and buy ratings. We believe that Q3, as a traditional off-season, the beneficiary company will stabilize the production supply chain and optimize the customer structure, and it is expected that the off-season will not be weak. At the same time, the future industrial advantage dividend will gradually release Matthew effect. In recent years, the company is in the growth stage of share improvement. It is estimated that the company's 21-22 year profit will be 26max 3.3 billion and PE will be 41x/33x respectively.
Risk tips: repeated overseas epidemics led to lower-than-expected order growth, increased labor costs, production base and customer concentration and other risks.