Huafeng Group Has Raised Cloth Processing Fee 8% At The Beginning Of The Year To Offset The Rising Cost.

Li Maoming, secretary and chief financial officer of Huafeng Group (00364), said that the price of raw materials increased due to the rise in oil prices, which lowered the gross profit margin in the medium term by 2 percentage points while gross profit fell 3% to 94 million 500 thousand yuan, but the company increased its overall profit by reducing operating costs.

He explained that, in the raw material, chemical fiber was a by-product of oil, so the price of oil rose about 10-15% from last year. As to the artificial aspect, he said that the labor law had a great impact on the companies in Guangdong Province, but the company's factory building was in Fujian and Jiangxi and so on, so the company also had to offset the rising pressure of cost through the price adjustment. He pointed out that the company raised about 8% of the material processing price at the beginning of this year.

In terms of land price rise, Li pointed out that the company had purchased land for development purposes earlier, so land appreciation is actually beneficial to the company.

When asked about the higher profit margins of the Philippines market than other markets, he explained that the reason for this was that Philippines had less competition in the market, and that there was a lack of cloth processing plants in the local market. Therefore, the company could make the price of cloth processing in the local market higher than that in the domestic market, thereby bringing more profits.