New Australian Textile IPO: Query On Outsourcing Processing Mode

Recently, the securities and Futures Commission disclosed the prospectus of Zhejiang new Australia textile Limited by Share Ltd (hereinafter referred to as "new Australian textile").

The company is going to be listed on the Shanghai stock exchange. The initial public offering does not exceed 26 million 680 thousand shares. It intends to raise 431 million yuan and the sponsor is Guoxin Securities.

New Australia textile is based on wool spinning industry. Its main business is the research, production and sale of worsted yarn. Its main products are wool worsted yarn and intermediate wool wool, which are mainly used in downstream textile and garment industry.

At present, most of the wool textile enterprises in China do not have a high profit level. Under such circumstances, the prospect of new Australian textile is not very optimistic.

In addition, the company's external processing accounts for a relatively high proportion, and it also adds risks to its future development.

Prospectus shows that from 2011 to 2013, the company's operating income was 1 billion 466 million 901 thousand and 100 yuan, 1 billion 488 million 790 thousand and 800 yuan, 1 billion 428 million 594 thousand and 900 yuan, it is obvious that 2013 year revenue than the previous two years, there has been a significant decline.

In 2012, the company's operating income rose slightly, the growth rate was 1.49%, while in 2013, the company's operating revenue growth rate was -4.04%.

As for the negative growth of operating income, the new Australian textile company explained in its prospectus that its operating income in 2013 was 4.04% lower than that of last year, mainly due to a 130 million 483 thousand and 200 yuan decrease in gross sales revenue over the previous year.

Besides operating income, the net profit data of new Australia textile also fluctuated.

From 2011 to 2013, the net profit of the company was 101 million 154 thousand and 500 yuan, 80 million 398 thousand and 100 yuan and 101 million 233 thousand and 900 yuan respectively.

In 2012, the net profit of the company decreased significantly, down 20.52% from the previous year.

The net profit in 2013 was higher than that in 2012, but it remained at the same level as 2011.

Moreover, it is worth mentioning that, if tax concessions and government subsidies were deducted, the net profit of New Zealand textile during the reporting period was 93 million 140 thousand yuan, 73 million 460 thousand yuan and 89 million 590 thousand yuan respectively, and the net profit in 2013 was 3 million 550 thousand yuan lower than that in 2011.

The revenue and net profit of new Australia textile are fluctuating, and the business prospects are being questioned. Dagong financial reporter found that the development situation of the wool textile industry in the company is quite grim.

According to the analysis of the profit level of China's wool spinning industry and its trend of change, China's wool spinning industry has been actively undertaking the industrial pfer of the global wool textile industry in recent years, and has become the world's largest wool textile production and processing power.

The profit level of wool textile industry is affected by the upstream price of wool and downstream demand, and there is a certain fluctuation.

For example, in 2012, as the whole wool textile industry was affected by the international market shrinkage, domestic market growth slowed down and the cost of production factors increased, the total profits of all industries above Designated Size reached 11 billion 91 million yuan, showing a certain decline.

Under the influence of the whole industry environment, the prospect of new Australian textile seems to be uncertain. However, its single business is even more doubtful about the future development of the company.

The main business income of the company in each period accounted for more than 98% of the total revenue, almost entirely from the wool spinning and wool top business, while the other business revenue was small and accounted for a low proportion of revenue.

Moreover, the new capacity of the new Australian textile investment project is mainly concentrated in the wool spinning business, which will make the main business of the company more concentrated.

Public information shows that brand building has become an important basis for wool yarn enterprises to enter the high-end clothing market to obtain high profits. In the future, yarn products will gradually develop towards differentiation, functionalization and ecological development.

However, the development of single centralization of new Australian textile business is running counter to the trend of the future industry, which also makes the company face certain market risks.

According to the new Australian textile prospectus, the company can not meet the existing capacity of the order, the company takes the form of outsourcing processing, including spinning (including combing), dyeing and finishing and other main processing parts, the main products of the external processing are blended yarn.

From 2011 to 2013, the processing capacity of New Zealand textile was 682.27 tons, 694.29 tons and 955.03 tons respectively, and the proportion of external processing volume was 11.38%, 11.39%, 12.86%, respectively, showing a trend of increasing year by year.

As we all know, the output, quality and production speed of the outsourcing products are limited by the company's management system and the production capacity, technology and management level of the partners.

The production mode of new Australian textile processing is not conducive to the company's control of product quality.

If the company's co processing outsourcing manufacturers have a wide range of production and business stagnation and disclosure of technical secrets, or the quality of products can not meet the requirements of the company, it will not only cause certain risks to the timeliness and effectiveness of product performance, but also may have adverse effects on the production, operation and performance of the company.

In addition, it is worth mentioning that from 2011 to 2013, the processing cost of the top five outsourcing processing units accounted for 83.64%, 78.84% and 79.36%, respectively, with an average ratio of 80%.