Wei Qiao Textile Delivered A Brilliant Half Year Report Card

Despite the present Spin Industry continues to slump, but 02698.HK, the world's largest cotton producer, seems to have handed out 1 bright half year transcripts.

As of June 30th this year, Wei Qiao textile The net profit of shareholders of the parent company increased by about 392.6% compared to the same period last year, reaching 266 million yuan; gross profit increased by 43.6% from the same period last year to 602 million yuan; gross margin was about 9%, up 3.6 percentage points from the same period last year.

It is noted that there is another important factor behind the half year report of Wei Qiao textile, which is a large number of cotton import quotas.

In recent years, domestic cotton prices are much higher than international prices. Cotton price Wei Qiao enjoys great cost advantages in importing cotton. It is estimated that in the first half of this year, the production cost of cotton import quotas for Wei Qiao textile saving reached at least 600 million yuan, and the "subsidy" amount far exceeded the net profit of Wei Qiao textile.

Large enterprises can get cheap imported cotton, but SMEs still face the cost burden caused by internal and external spread. "Only by implementing direct subsidy policy for cotton farmers can we break the existing ones. Cotton industry Predicament. " Gao Yong, vice president of the China Textile Industry Federation, said that the authorities are now studying the details of the policy, and the next step may be a pilot project, which may be promoted in 1 years.

　 Net profit exceeding 266 million yuan

The public explanation of Wei Qiao textile's nearly 4 fold increase in its profit in the first half of the year is: "in addition to the low profit base in the same period last year, it was mainly due to the decrease in the unit sales cost of the group and the increase in gross profit and the increase in electricity profits due to the decline in coal prices, while the financial cost of the group decreased during the same period."

Zhang Hongxia, chairman and executive director of Wei Qiao textile, also said in the interim results conference that the inventory turnover period in the first half of the year increased from 149 days in the same period last year to 210 days. This is mainly due to the rising stock of raw materials. The company mainly imports cotton and has a long turnover period, resulting in an increase in inventory turnover.

In May last year, Ma Feng, the chief shareholder of Wei Qiao Textile Group, Shandong Wei Qiao venture group, told the media that the raw materials purchased by the company were basically imported cotton and almost no domestic cotton.

For textile enterprises, if you want to get imported cotton, you must apply for quotas. The reporter recently telephoned the Binzhou development and Reform Commission, where Wei Qiao textile was located, and its staff said, so far, Binzhou city's Textile enterprises A total of 250 thousand and 700 tons of cotton quotas were obtained this year. By the beginning of May this year, when the national development and Reform Commission issued the third batch of cotton quotas in Binzhou in 2013, Binzhou had striving for a total of 206 thousand and 900 tons of imported cotton quotas.

In the quotas of imported cotton, Wei Qiao textile obviously took the "big head". According to the proportion of about 72% of the first textile quotas in Binzhou this year, the import quota of Wei Qiao textile reached 150 thousand tons as of May this year.

Why is imported cotton so popular? Price is obviously the most important reason - there is a huge price gap between domestic and international cotton prices.

Wei Qiao textile published in the China Daily said that the price difference between domestic and foreign countries had narrowed in the first half of 2013, but the cotton price difference will still exist for a period of time. In 2013 1-6, China's cotton price A index averaged about 20127 yuan / ton, a decrease of about 1.5% compared with the same period last year. The international market Cotlook index averaged about 91.35 cents / pound, down about 4.2% from the same period last year.

According to the above data released by Wei Qiao textile, the first half of this year, at home and abroad Cotton price difference The average price reached 7800 yuan / ton, even if the transportation cost was deducted, the price difference also reached at least 4000 yuan. Wei Qiao textile, which gets import quotas, is equivalent to a "subsidy" of over 600 million yuan, which is much higher than its net profit of 266 million yuan.

　 "Adjust the positioning of the government in the cotton industry"

China's cotton price has always had a big price difference with foreign countries. In the first two years, due to the sluggish international economic environment and weak demand for downstream, international cotton prices continued to fall. The domestic price of cotton at home and abroad was 6000 yuan / ton at the highest level because of the domestic reserve policy.

In order to limit the impact of cotton imports on the domestic market, since 2004, the state has stipulated that cotton imports need quotas. The allocation of quotas is directed by the NDRC.

Cotton accounts for Textile enterprises The total cost is about 7. For spinning enterprises, the availability of cotton import quotas is directly related to the cost of production. In order to reduce the pressure of domestic high cotton prices on textile enterprises, this year, textile enterprises in China have purchased cotton reserves and allocated a certain amount of imported cotton quotas.

"This policy is mainly to encourage textile enterprises to use the stored cotton and assign the nature of imported cotton with rewards," said Ma Junkai, Deputy Secretary General of the Dezhou Cotton Association. "Enterprises like Wei Qiao textile or directly apply for quotas from the NDRC, which are not linked to the sale of State Cotton stores." Different from Wei Qiao textile's huge profit due to low cost of raw materials, small and medium-sized textile enterprises in China are struggling in water and fire. The Ministry of industry and Industry issued the report on the industrial economic operation in the first half of 2013, which shows that the small and medium-sized enterprises have already stopped production and increased production restrictions in the textile industry due to the excessive price difference between domestic and foreign cotton.

"China's policy of purchasing and storage for 3 years has also produced various distortions and drawbacks in stabilizing its cotton price. Among them, the price gap between domestic and foreign markets is too large, the downstream industry chain is damaged and the closed storage system is out of line with the market. Reuters reported earlier from Beijing.

According to the above report, "although there are many debates on whether the market will continue to use or receive direct subsidies, the 1 fundamental problem is: how to adjust the position of the government in the cotton industry and give play to the role of safeguarding the market equity, rather than continue to store and store the market in a large amount".