Demand For Textiles Is Low, Wei Qiao Sells Electricity At Low Prices To Improve Profitability.

Recently, the largest in China.

Manufacturer Wei Qiao textile announced that the company intends to purchase thermoelectric assets to Zouping Changshan Industrial Company at 3 billion 186 million yuan, that is, three sets of under construction and a set of generating units under commissioning, with a capacity of 1320 MW.

Wei Qiao textile said that due to the deepening of the reform of the electric power industry and the gradual opening of the electricity regulatory policy, the acquisition of the company at this time was mainly aimed at further developing the sale of electricity business, increasing the income from external sales and reducing the related costs of the company.

In the industry view, because of the textile industry demand downturn, the company's main business profitability decline, as well as self provided power plant low-priced electricity sales way can enhance profitability, so that Wei River textile increased the revenue of the business, ease.

Business downturn brings pressure to the company.

It is understood that the CPC Central Committee and the State Council in March 2015 issued a number of opinions on further deepening the reform of the electric power system, clearly pointed out that gradually to meet the requirements.

The main body liberalized incremental power distribution business and encouraged the development of distribution business through mixed ownership.

In addition, the eligible power generation enterprises should be allowed to invest and form the main body of the sale of electricity to enter the electricity market and engage in the sale of electricity business.

The positive earnings forecasts issued by Wei Qiao textile show that, due to the continued downturn in textile demand and the impact of imported textiles, domestic cotton prices are in a downward trend, and the price of domestic textiles has declined, leading to a continuous narrowing of the gross margin of the company's textile products.

Benefiting from the completion of the Wei Qiao textile industry in late 2014, the cost of power generation of the replacement power plant has dropped significantly, resulting in a substantial increase in the company's profit from the sale of electricity, thereby driving the annual growth of the company.

In addition, Wei Qiao textile in 2014 and the holding company Shandong Wei Qiao set up a thermoelectric asset replacement agreement, decided to spend about 4 billion 368 million yuan (about 5 billion 529 million Hong Kong dollars) to acquire the seventh power plant owned by Wei bridge in Shandong.