BOC Cashmere Industry Profits Surged 202.66%

In other export oriented listed companies, which are subject to the factors such as raw materials and labor costs, RMB exchange rate adjustment and other factors, the profits have declined sharply, and even the business income has declined. It is the stable supplier of the "leading enterprises" and the world famous cashmere brands in seven consecutive years. BOC cashmere industry (000982) in 2011, with the overall control of the industrial chain and the deep processing ability of the products, the excellent answer sheet was handed over.

The 2011 annual performance report released by the cashmere industry in February 27th showed that the company achieved operating income of 1 billion 809 million yuan, up 53.74% over the same period last year, operating profit of 113 million 700 thousand yuan, up 202.66% over the same period last year, net profit of 166 million 325 thousand and 800 yuan, an increase of 123.13% over the same period, and net profit attributable to the parent company 167 million 98 thousand and 300 yuan, up 117.66% over the same period last year. At the end of the reporting period, the total assets of the company amounted to 3 billion 639 million 700 thousand yuan, an increase of 63.63% over the end of last year. The basic earnings per share were 0.31 yuan / share, an increase of 106.67% over the previous year.

　　 Layout of the global cashmere industry chain, the middle and lower reaches into growth momentum

Many people are unfamiliar with the name of the "silver cashmere industry". Actually, it is the holy snow velvet before. In June 2000, Ningxia Saint snow cashmere Limited by Share Ltd At the Shenzhen Stock Exchange, the issue price is 8.60 yuan per share, and the stock is short. st-edenw " In December 2006, the company's original controlling shareholder, Saint snow Cashmere Group and Ningxia Lingwu cashmere industry Limited by Share Ltd (later renamed "Ningxia Zhong Yin Rong Ye International Group Co., Ltd.") signed the "equity transfer agreement" and "asset replacement agreement". In December 2007, the cashmere group agreement granted the company 80 million shares of the company, and the Cashmere Group became the controlling shareholder of the company. In December 2007, the name of the company was changed to "Ningxia Limited by Share Ltd". The company actually controls Ma Sheng Guo.

At present, the company mainly produces and sells no fluff, cashmere, cashmere yarn and cashmere products. The main products are washable wool, white plush, green plush, purple velvet, white cashmere, green velvet, purple velvet, cashmere yarn, cashmere sweater, cashmere coat, scarf and other products, which belong to export-oriented enterprises and account for over 50% of export revenue.

It is worth mentioning that in 2009, with the advantage of capital, it acquired over 140 years of Duncan cotton mill in the United Kingdom. It has the world's high-end spinning and dyeing technology, and has a well-known yarn brand and European sales network. In the next two years, the company will focus on expanding the Italy based European market with the help of Duncan's mature sales channels. At present, the European market accounts for about 50% of the world's middle and high-end production capacity. With the raw materials and technology advantages, the company is expected to gradually undertake the transfer of middle and high-end production capacity in the world.

On the other hand, in recent years, the company has begun to accelerate the expansion of the domestic market and strengthen brand building. The company currently owns the independent cashmere brand. Philosofie Philo Sophie "Continue to invest in expanding the domestic market of cashmere products.

During the reporting period, the cashmere industry continued to develop the sales market for the deep processing products of cashmere products, and the sales revenue of deep-processing products with high added value yarn and products continued to grow. Among them, the sales of cashmere yarn increased by 179 million 582 thousand yuan over the previous year, and the sales of cashmere products increased by 194 million 202 thousand and 600 yuan over the previous year. The increase of the above two incomes was 373 million 784 thousand and 600 yuan, accounting for 59.10% of the current income increase, and the scale effect was further apparent.

At the same time, according to the market demand, the company can timely increase the sales of upstream products such as washes. During the reporting period, the company sold 681 million 745 thousand and 700 yuan of water velvet and no plush, an increase of 226 million 221 thousand and 600 yuan over the previous year, the growth rate was 49.66%, accounting for 35.77% of the current revenue increase. While actively developing sales business, the cashmere industry in 2011 also strictly controlled the expenditure during the period, so that the company's revenue ratio decreased by 2.17% compared with the previous year.

The company pointed out that the main reason for the sharp increase in profits in the year 2011 is that with the extension of the company's industrial chain, the product structure is further optimized and sales revenue continues to grow.

Qu Zhihang, a researcher at Huachang securities, pointed out that the income of the Bank of China was higher than expected in 2011. Net profit basically met, slightly exceeded expectations, and gross margin of 21.1% was also in line with expectations. Its performance is good mainly in terms of quantity and price. The midstream link is one of the driving forces of the company's growth. In 2011, the sales of cashmere yarn increased by 64.49% compared with the same period last year, and the sales of washed velvet and plush increased by 49.66% over the same period last year. More importantly, the overall gross margin increased by 0.16 percentage points, and the yarn was a success. The gross profit margin of yarn in 2011 was 25.75%, up 5.11 percentage points over the same period last year. Downstream has also become a driving force for growth. In 2011, the income of clothing and articles increased by 58.45% compared with the same period last year, and the gross profit margin increased by 8.32 percentage points to 26.06%. Assuming that the cashmere price has remained stable for 2012-2013 years, the cashmere yarn volume of the company has brought about sustained growth in performance, raising its 2012-2013 year performance to 0.47 yuan and 0.65 yuan, and maintaining "strong recommendation".

Huatai joint researcher Cheng Yuan, Zhang Lei and Feng Jing pointed out that with the control of raw materials (cashmere purchasing volume is about 35% of China's output), the cashmere industry has become a stable supplier of world-renowned cashmere brands, and has been ranked No. 1 in the country for seven consecutive years without plush and cashmere exports.

Since the establishment of a branch in Shenzhen in 2010 to open up the Hongkong market, the yarn business of the company has developed rapidly, and the yarn business has explode. After the occupation of the Hongkong market, it will enter the European market and aspire to become a professional yarn supplier. In the past two years, second of cashmere yarn enterprises exported to Hongkong ranked the company's control over raw materials, product quality and sales strength. In the long run, on the basis of gradually strengthening the market share of raw materials, the cashmere industry gradually undertakes the transfer of capacity in Italy and other European countries by expanding the international yarn sales channels. In the short term, the higher proportion of gross yarn and cashmere sweater income, the more stable market position of the yarn, the increase of bargaining power, the raising of cashmere price, and the gradual transfer of outsourcing capacity to self production will become the key to enhance the company's profitability. The company's 2011-2013 year EPS will be adjusted to 0.30 yuan, 0.44 yuan, and 0.62 yuan to maintain the "overweight" rating. {page_break}

　　 Leveraging the capital market and implementing the strategy of "grasping the two ends"

　　 During the reporting period, in the face of complex situation such as rising raw material prices, rising labor costs, RMB appreciation and inflationary pressures, the cashmere industry continued to adhere to the development strategy of specialization and refinement relying on the advantages of the complete industrial chain in the purchase of the original cashmere and the main business of cashmere, and through the subdivision management of the cashmere producing area, enhanced the right to speak in the original velvet Market, and vigorously expanded the product sales channels. At the same time, we should improve the performance appraisal mechanism and internal control system to improve the management of enterprises.

The company implements the strategy of "grasping both ends" in the cashmere industry, namely, grasping raw material resources in advance, grasping intensive processing and brand "going out". During the period, the company built 5000 tons of cashmere purchase and initial processing projects and construction projects of domestic marketing system for cashmere products, and strengthened the construction of raw material purchase information transaction platform, warehousing logistics platform and initial processing base, providing strong support for the company to produce high-quality cashmere products, expanding the domestic sales network platform, opening brand stores and shopping malls in key domestic target cities, and extending the domestic sales of terminal products.

At the same time, we will start the technical transformation project of the production line with annual production of 720 tons of multi component special fiber roving yarn and 260 tons of worsted yarns. After the completion of the technical transformation project, the company will have the industrial scale of 5000 tons of cashmere raw materials, 1100 tons of cashmere cashmere, 300 tons of cashmere, 300 tons of cashmere, 1420 tons of cashmere, 1420 tons of worsted, 260 cashmere sweaters and 1 million 500 thousand cashmere sweaters. It will further enhance the added value of the cashmere products and enhance the market share and competitiveness of the worsted products.

For this project, Qu Zhihang, a researcher at Huachang securities, predicted that the price of the worsted yarn would be estimated at 900 thousand yuan and 1 million 200 thousand yuan / ton respectively, and the project would add about 960 million yuan to the company. According to the company's expected post natal contribution of 103 million 240 thousand yuan net profit, net profit margin of up to 10.75%. Since the establishment of the Shenzhen branch in 2010, the company has a relatively large marketing force. After its 360 tons of yarn has been put into operation, the market recognition rate is relatively high, so Hongkong has established a good cooperative relationship with nearly 20 overseas companies. In 2011, the yarn line and surface orders were full and full of capacity bottlenecks. The silver cashmere industry has the advantage of raw material control, so the expansion of yarn is conducive to cooperation with overseas high-end customers. Therefore, we believe that the first project can break through the bottleneck of capacity and further optimize the industrial chain. Among them, the worsted yarns are made of suit fabrics, which will be more demanding for the technological level and improve the yarn profitability.

The cashmere industry is a capital intensive industry, and the application of new technologies requires higher capital requirements. The cashmere industry has also made an effective combination of industry and capital, making excellent and strong cashmere industry, extending the cashmere industry chain and improving the marketing platform.

In 2010, a total of $290 million was raised in non-public offering projects, which invested 5000 tons of cashmere purchase and initial processing projects and domestic marketing system construction projects for cashmere products, forming a large-scale, meticulous, informational and professional industrial chain of raw wool collection, storage, washing and marketing.

At the end of 2011, the company started the rights issue project, and raised $650 million through the rights issue, which was used for the multi component spinning technology transformation project and the repayment of bank short-term loans. After the completion of the rights issue, the company's financial structure will be improved and its operating cost will be reduced. At the same time, the new yarn production capacity will be increased, which will basically meet the production demand of the woollen yarn, increase the product category, increase the added value of the product, and develop the high-end cashmere products market and develop the high-end cashmere brand for the company.

On this basis, the company also relies on scientific and technological innovation to establish standardized management processes. During the reporting period, the Bank of China (cashmere) industry acquired intellectual property rights such as invention patents, started technical standardization work, and formulated enterprise standards, which will form raw material standards, production technology and technology standards, equipment technology and process standards, operation technology standards, product standards, inspection procedures, procurement verification procedures, sample standards, and outsourcing outsourcing standards, and create series own technology and technology standards, so as to provide standard management support for company development.

　　 Chinese velvet production accounts for 75% of the world's total.

Cashmere is a rare animal fiber. It is a high-grade textile material. It is restricted by region and output. It is known as "soft gold" and "fiber diamond". The cashmere textile industry has the characteristics of periodicity, seasonality, regionality and capital concentration. It is labor intensive and technology intensive, and is a resource dependent industry. Globally, cashmere goats are mainly distributed in the alpine and semi desert regions of 35-55 degrees north latitude and 5-120 degrees east longitude.

China is the country with the largest yield and the best quality of goat's raw wool. In the past 10 years, the world's original velvet output is around 16000 tons, of which China's annual average yield is about 12000 tons, accounting for 75% of the world's total output. More than 90% of the world's cashmere raw materials are processed in China, and the number, production capacity and export volume of cashmere and its products are ranked first in the world.

The domestic cashmere textile industry started late and developed rapidly. Since the 80s of last century, it has gradually entered the field of intensive processing. However, there is also a large number of phenomena of "big, all, small and all". The advantages of resources and product processing are outstanding, but lack of brand advantages, and industrial upgrading and business models need to be improved. After China's accession to the WTO, the abolition of the textile quota system accelerated the pace of industrial integration, the export of cashmere products increased, the development of cashmere industry stepped into industrialization and clustering, and the upgrading of industrial technology continued to strengthen.

At present, with the continuous improvement of the technological process of cashmere products, cashmere products show a trend of diversification. From non Plush development to cashmere yarn and cashmere sweater, from knitted products to woven fabrics and round machine disposable garments, the product structure extends from woolen and pure spinning to worsted and multi-component blends. Upgrading of industry and technology provides raw material support for the diversification of downstream products. Cashmere industry is relying on resource advantages and processing advantages, is gradually transformed into product advantages, China's cashmere products in the international market share will further improve.

Most of the cashmere producing areas in China are located in the central and western regions, such as the silver cashmere industry, which comes from Ningxia. Cashmere industry is one of the key and advantageous industries in Ningxia. In November 2010, Lingwu cashmere Industrial Park in Ningxia was upgraded to the national hi tech Industrial Development Zone.

It has many advantages for the Bank of China, which is rooted in Ningxia. It is the only cashmere product listed company in China that specializes in cashmere textiles and products production and sales, and realizes the whole industry chain covering the production of cashmere products to the cashmere products. It is also the largest cashmere purchasing processing enterprise in China. The complete industrial chain and the whole product line enable it to enjoy the added value of different links in the industrial chain, and can better control and reduce the cost than the single product manufacturer. At the same time, it can adjust the proportion of the production and sale of different products according to the market demand, adapt to the market changes quickly and maximize profits.

Huatai joint researcher Cheng Yuan, Zhang Lei and Feng Jing pointed out that domestic cashmere prices increased by 24% and 28% respectively in 2010 and 1-11 2011, mainly because the supply of cashmere market continued to be tight. In the short term, the factors that cause the tight supply of cashmere still exist, so it is expected that the price of the cashmere will go up in 2012. As of the end of the three quarter of 2011, the inventory of BOC cashmere industry increased by 71% compared with the beginning of the year. On the one hand, there are factors of price increase. On the other hand, the company's strategic increase in cashmere reserve is also an important reason for the expansion of the downstream market and the raising of cashmere prices. Under the background of cashmere price rise, the increase in inventory of BOC cashmere industry is conducive to stable operation and profitability improvement in the future.

In addition, according to the company's plan, in 2012, the CB industry will focus on building four international marketing teams, namely, the establishment of a global professional team of non fluffy, cashmere yarn, cashmere products and brand sales network, which will further extend the sales tentacles to end users, and enhance the share of cashmere products in the domestic and foreign markets.