Knitted Sweater Leader South Spin Holdings Made 2 Hundred Million In The First Half, And UNIQLO Is The Number One Big Customer.

The industry had expected that the sales growth of Nam Ping holdings was mainly due to the release of Vietnam's capacity and the increase in average selling price.

And the management of Nan Ping holdings is right.

The market outlook is also full of confidence, and it is expected that there will be an increase in sales of medium and high number of units and a double-digit increase in average sales prices.

Nan Fang holdings, one of the local well-known knitwear manufacturers, released the interim results report for the 6 months ended September 30, 2018. During the reporting period, the company achieved operating income of HK $2 billion 882 million, an increase of 36.3% over the same period of November 26th.

Gross profit was HK $497 million 300 thousand, an increase of 2.7% over the same period last year.

The profit attributable to the owners of the company was HK $236 million, a decrease of 19.2% compared to the same period last year. The adjusted net profit was HK $241 million, a decrease of 17.4% compared with the same period last year, and the basic earnings per share were 10.4 Hong Kong cents. The interim dividend is expected to be HK $3.6 per share.

The announcement shows that the group bought from V.SuccessLimited and its Affiliated Companies (Polyflor letter group) in the second half of last fiscal year, so Polyflor letter group came from selling knitted goods.

The income of face and knitted shoes was HK $100 million in the total income of the group for the 6 months ended September 30, 2018.

Nan Ping holdings explained that the increase in company revenue during the reporting period was mainly attributable to increasing demand from group customers, increased customer penetration and changes in product mix leading to an increase in the average selling price and sales volume of the group knitted products.

In addition, the decrease in net profit in the period was mainly due to the increase in gross profit margin in the 6 months ended September 30, 2018, mainly due to the increase in material costs and overall manufacturing overhead costs of the group's knitting products division compared with the company's expectations. The income from the knitted vamp and knitted shoes division was lower than expected. The overall financial cost increased as a result of increased market interest rates and group loans, which extended funds for the expansion business; and the sale of property, plant and property for the 6 months ended September 30, 2018.

The decrease in earnings.

In the reporting period, the company has passed the rising cost of raw materials by raising the average selling price of cashmere garments.

However, the overall cost of raw materials has increased, and the cost of raw materials such as wool and cotton has risen sharply, resulting in a significant increase in the cost of sales.

In addition, Vietnam's plant capacity utilization rate is improving faster than expected. Therefore, the group needs to hire additional personnel to cooperate with it, and the production efficiency needs to be released.

The industry had expected that the sales growth of Nam Ping holdings was mainly due to the release of Vietnam's capacity and the increase in average selling price.

The management of Nan Ping holdings is also confident about the market prospect of the knitwear market. It is expected that there will be an increase in the sales volume of medium and high number of units and a double-digit increase in the average selling price.

According to the financial report, in the 2013-2017 fiscal year, the operating income of Nan Ping holdings increased from HK $2 billion 543 million to HK $2 billion 797 million, CAGR was 2.41%, mainly due to the growth of orders for quality new and old customers such as UNIQLO, and the continuous release of Vietnamese capacity.

Hua Xiaowei, an analyst with CITIC Securities, said that from the sales area, the three main export markets of Nan Ping holdings, Japan, North America and Europe, accounted for over 75% of the total income of the three parties. The proportion in the first half of 2018 was 75.94%, of which Japan accounted for up to 34%, mainly because the Japanese market was mature and large, and UNIQLO was the first largest customer in the company for a long time.

European income grew steadily, and in the first half of 2018, it surpassed that of the United States, ranking second, accounting for 22%.

In the United States, some customers such as TommyHilfiger orders declined in 2017, resulting in a significant decrease in revenue, accounting for 20%.

The mainland market accelerated growth, and the share of revenue rose from 6% in 2016 to 13% in the first half of 2018.

As the company deepens cooperation with the mainland's raw material suppliers, further expands the logistics network and distribution channels, and gradually improves the permeability of knitted products, the mainland's business development space is still large.

From the perspective of customer structure, UNIQLO and TommyHilfiger (Tommy Hilfiger, one of the leading leisure brands in the United States), are the top two customers of South spin holdings. Since 2013, their share of revenue has basically exceeded 75%. Among them, the first largest client of UNIQLO is stable, and its revenue share has increased from 55% in fiscal 2013 to 62% in the first half of 2018.

The TommyHilfiger revenue of the second largest customers decreased from 21% in 2016 to 14% in the first half of 2018.

Overall, Hua Xiaowei believes that the successful development of UNIQLO growth and Lands' End, AnnTaylor, GAP and other new customers effectively fills the influence of TommyHilfiger.

The acquisition of Polyflor post knitting knitwear business will also complement the UA, PUMA and other high quality sports brand orders, and the customer structure will be further dispersed.

According to public information, the South spin group was incorporated in Hongkong in May 1990. The founder of the group, Mr. Wang Tingcong, founded Hengchang manufacturing plant in 1982 to run knitted products, with nearly 35 years of experience in the industry.

The company operates vertically and vertically, covering from raw materials development and procurement to product design, manufacturing, production and quality control. It covers women's clothing, men's wear, children's wear, scarves, gloves and so on. The products include knitted sweater, cardigan sweater, knitted dress, knitted cloak, knitted vest and so on. It mainly exports to Japan, the United States and Europe and other downstream areas, and its downstream customers are international brands such as UNIQLO, TommyHilfiger, Land 'sEnd.

Since its establishment in 1990, its capacity has passed through Hongkong, Japan, Osaka and Mainland China. In 2015, the production line was extended to Vietnam, and the two phase of Vietnam's production capacity was completed in 2017. Now it has formed the two largest production bases of Huizhou and Vietnam in Guangdong.

In 2017, the company introduced WholeGarment technology and acquired Polyflor letter to achieve technological innovation and expansion of knitted upper.

In the future, Nan Fang holdings will strengthen the cooperation between new and old customers with the help of Vietnam's preferential policies and low cost, improve the utilization ratio of new factories and the coverage of new technologies, and further enhance the overall competitiveness.

It is understood that Nan Fang holding has strong expertise and R & D capability in horizontal knitting, so that they can explore more room for development, such as TWHOLEGARMENT and knitted upper.

WHOLEGARMENT and knitted upper are two advanced products equipped with cutting-edge technology, which have low penetration in the market and successfully enter these two areas that will rapidly increase, marking the South's super strong knitting ability.