Crystal International 4000-word in-depth research report

$Qiming Information(002232.SZ)$SHENZHOU INTL(02313.HK) $PACIFICTEXTILES(01382.HK) researched Crystal International Group, with the focus on the coexistence of cost moat and cash flow risks in garment OEM.

🎯 Core logic: Global garment OEMs rely on low costs and economies of scale. The industry is discretionary consumption, demand is cyclical, concentration is low (CR5 <30%), growth depends on emerging markets (Southeast Asia grows 5-10% annually). The company has a presence in Vietnam and Cambodia (70%+ of capacity), labor costs are 20-30% lower than the industry, annual capacity is hundreds of millions of pieces, one-stop service reduces customer costs by 10-15%, forming switching cost barriers. The profit model is high volume with thin margins, 100% revenue from OEM, casual wear accounts for 40%, sportswear grows fastest (12% annual growth), gross margin 15-20%, profits rely on high turnover (asset turnover 1.5x).

📈 Financial highlights: 2024 gross margin 19.7% (stable 19.1-19.7% over five years), ROE 13.5% (above manufacturing benchmark of 8-15%). Safe financial structure, debt-to-asset ratio 31.9% (below 40% threshold), current ratio 2.05, no long-term debt. But cash flow pressure: 2024 free cash flow turned negative for the first time (-3 million), net profit cash ratio 0.53 (below 0.5 warning line), accounts receivable 501 million (+102% YoY), turnover days increased to 55 days. Revenue growth slowed, 5-year CAGR 5.6%, 2024 revenue 2.47 billion (+13.5%), net profit 200 million (+22.7%), but asset turnover fell to 1.17x, capacity utilization to be observed.