Lu Tai: Cost Pressures Show Investment Income Pull Net Profit Growth

In the first quarter, the volume of price increase continued to rise, and the revenue continued to grow at a high level.

The first quarter of 11, the company achieved operating income of 1 billion 413 million yuan, an increase of 40.15% over the same period, operating profit and

As a global leader in dyeing and weaving industry, Lu Tai has high quality and stable customer resources, and steadily boosted its orders in the first quarter. At the same time, it was accompanied by the release of the effect of the phased price increase in February, which directly promoted the sustained high income growth.

The net profit exceeding expected growth is mainly benefited from substantial increase in investment income and operational efficiency of trading financial assets, and the cost is well controlled.

Substantial increase in investment income and cost.

The cost pressure has shown that the gross profit margin has declined.

In the first quarter, the consolidated gross profit margin of the company was 31.81%, which decreased by 0.73 and 2.09 percentage points respectively.

This is mainly due to the digestion of low price cotton inventory last year, and now it has started to start high price cotton production in the 10 quarter and the three quarter, and the company's orders are mainly based on the long list in March, and the increase in the cost of pmission is delayed (the lag period is 3 months or so).

Judging from the current situation, although the recent reduction of cotton prices has caused some pressure on the company's product prices, the company has sufficient orders (and has been discharged until June), and the cotton reserves are relatively adequate (basically can maintain production for 3-5 months). With the further release of the phased price increase, the gross margin will remain relatively stable in the short run. In the long run, the correlation between gross margin and the trend of cotton prices in the later period is relatively high. If the overall adjustment of cotton prices falls, it will have a negative impact on the gross margin level. At the same time, the launch of high-end products will help to enhance the company's earnings.

Increase Lufeng textile dyeing, strengthen the management strength.

The company intends to increase its investment by distributing profit of 165 million yuan of printing and dyeing of Lufeng, a controlling subsidiary. After its conversion, the registered capital of Lufeng printing and dyeing is changed from 486 million yuan to 706 million yuan, and the stock ownership institution has not changed, and Lutai holding 75%.

We believe that Lufeng printing and dyeing assets are of high quality and profitability. The average annual compound growth rate of revenue and net profit in 08-10 reached 22% and 395.70% respectively. This increase will help to further strengthen Lufeng's business strength and enhance its contribution to the performance of listed companies.

Earnings forecasts and

Risk factors: cotton prices continue to fall, the pressure on product prices increases; in the short term, the RMB continues to appreciate, and the risk of profit loss; the weak domestic demand in the European and Japanese markets affects the risk of sales.