China'S Billion Dollar Huafu Fashion Will Issue 2 Billion 500 Million Convertible Bonds To Build Vietnamese 500 Thousand Spindles And Repay Loans.

The world's largest supplier and manufacturer of colored textiles, Huafu fashion Limited by Share Ltd (hereinafter referred to as "Huafu fashion"), disclosed a public offering plan for Switching Company bonds in the evening of March 17th.

The total amount of raised funds raised by Switching Company bonds will not exceed 2 billion 500 million yuan. After the issuance fee is deducted, the fund-raising fund will invest in 500 thousand new yarn projects and repayment of bank loans in Hua Fu (Vietnam).

The total investment of Huafu (Vietnam) 500 thousand new yarn project is 2 billion 500 million yuan. The total building area of the new building is 369 thousand and 115 square meters. We plan to build 6 spinning shops, and build the warehouse, office building and public works needed for the construction. After the completion of the construction, we can form 500 thousand new types of yarn production regulations.

Reporters learned that as of February 22, 2019, Huafu fashion investment project "Huafu (Vietnam) 160 thousand high-grade color spinning project" has been completed.

The total amount of investment raised by the project is 130 million US dollars, and the total amount actually invested is 98 million 919 thousand and 300 US dollars. The balance fund is used to replenish the working capital permanently.

At present, the yarn production capacity of the company is all over the five production areas of Zhejiang, Huang Huai, Changjiang, Xinjiang and Vietnam. In the future, it is expected to rely on the strategy of "one country and one belt" to form a global balanced layout.

Huafu fashion also believes that the project is in line with the relevant national industrial policies and laws and regulations and the needs of the company's strategic development. The implementation of the project can enhance the core competitiveness and profitability of the company. It has good market prospects, economic benefits, environmental benefits and social benefits, and promotes the high quality development of the company.

Huafu fashion said that with the wide application of colored spun yarn in the field of clothing, the demand for colored spun yarn at home and abroad has been increasing. The company has formed 1 million 880 thousand ingot capacity and is distributed in five production sections of Zhejiang, Changjiang, Huang Huai, Xinjiang and Vietnam. It has become one of the world's largest manufacturers and suppliers of colored spun yarn.

In recent years, Huafu fashion production has increased year by year, and sales volume has maintained a sustained and rapid growth. This Vietnam project will help the company release its capacity, further enhance its ability to meet orders, and better meet the market's demand for Hua Fu's fashionable color spinning products.

In order to open up overseas markets and enhance its competitiveness in the international market, Huafu fashion incorporated a subsidiary in Vietnam in 2014. At the end of that year, the trial production of the 60 thousand workshop of the first phase of Vietnam project was implemented.

In 2015, the total volume of Huafu fashion in Vietnam reached 120 thousand intakes, and the two phase 160 thousand ingot project was officially launched.

Up to now, Huafu fashion's capacity in Vietnam has reached 280 thousand spindles, accounting for 14.89% of the total capacity.

In recent years, Huafu fashion has accumulated rich experience and resources through its continuously innovating technological strength, fast delivery and green environmental protection. Its cooperation with Vietnam and even European and American countries has been continuously strengthened.

With the formation of scale effect and the improvement of staff proficiency, the core competitiveness of the company in Vietnam has become increasingly prominent.

Under the above background, this Vietnam project can learn from past project experience, and enjoy the trade network formed before layout, and promote the fast integration of Huafu fashion capacity supply and order demand.

According to the insiders, with the easing of Sino US trade friction and the development of positive direction, the recent orders of Huafu fashion are expected to pick up. It is observed that in 2019, Huafu fashion yarn production capacity is expected to achieve double-digit growth. Besides the steady progress of yarn production capacity in Akesu, Xinjiang, the announcement of the new fashion yarn at the end of 2018 will also plan 1 million new yarn projects, of which 500 thousand will start in Vietnam.

In addition, Huafu fashion signed a strategic cooperation agreement with the Xinjiang branch of the Agricultural Development Bank of China and the Xinjiang branch of the National Development Bank in 2018, providing sufficient guarantee for the development of the front-end network chain business.

Reporters learned that Huafu fashion terminal downstream includes Adidas, Nike, H&M, ZARA, UNIQLO and other international famous brands. In recent years, the international sports and leisure apparel brand has been in good condition, and has maintained steady growth.

Hao Shuai, an analyst with Guotai Junan Securities, said that Huafu fashion has steadily promoted the release of Vietnam's capacity and fully demonstrated its global layout.

In 2013, Hua Fu fashion decided to set up a subsidiary in Vietnam to start overseas capacity layout.

2014-2015 years to build the first phase of the 120 thousand spindle color spinning project; 2016-2017 years to accelerate the layout of the production capacity of Vietnam, the construction of the two phase 160 thousand spindle high-grade color spinning project.

By the end of 2017, Huafu fashion had formed 1 million 800 thousand ingot capacity, among which Vietnam Huafu had formed 280 thousand spindles spinning capacity and 20 thousand tons dyeing capacity.

Vietnam will gradually become Huafu's all-around quick reaction production base in Southeast Asia to meet the needs of Southeast Asian regional customers.

Taking into account the various advantages of raw materials, manpower and taxation, and the superposition of the international trade environment, Vietnam will usher in a golden opportunity for development. Hao Shuai expects that Hua Fu fashion will comply with the trend of industrial pfer to overseas, increase overseas investment, continue to promote Vietnam's continuous production and investment, speed up the construction process of production areas, and make full use of overseas market resources.

It is understood that in the context of the gradual decline of domestic demographic dividend, combined with the upgrading of raw materials and energy costs, the overall production cost of China's textile manufacturing industry chain is rising.

Southeast Asian countries have low labor costs and export to Europe and the United States.

Low tariffs, for labor-intensive enterprises, cost advantages are highlighted, plus tax and policy preferences, many domestic textile and garment enterprises have invested in factories in Southeast Asian countries, and the number of factories in Vietnam and Indonesia is increasing.

Huafu fashion says that while downstream customers are pferring to Southeast Asia, they will give priority to purchasing materials needed for local clothing production, and achieve one-stop production to reduce pportation, customs and other costs.

Therefore, the implementation of this Vietnam project can not only stabilize the cooperative relationship with existing customers expanding outward, but also help expand the new customer network and further enhance the market share of the company.

The cost of spinning raw cotton accounts for more than 60% of the total cost, so the price of colored spun yarn is more sensitive to cotton price fluctuations.

At present, the price of cotton is lower than that of domestic cotton, while building factories in Southeast Asia can directly purchase foreign cotton, which can also avoid the impact of trade wars and thus reduce costs.

Huafu fashion is closely following the pace of textile industry's pfer to Southeast Asia, and continues to lay capacity in Vietnam, and relies on the advantages of local labor, land and raw materials, and rich downstream customers and convenient export conditions to produce and sell.

With the continuous release of capacity and the accumulation of customers, enterprises with priority in Vietnam and other places are expected to form industrial clusters and regional advantages.

At present, the company has formed 280 thousand ingot capacity in Vietnam. Huafu fashion implements the balanced global capacity layout strategy at home and abroad, and realizes the further expansion of the overseas capacity of the company, which is conducive to enhancing the competitiveness of the company's overseas market.

In addition, Huafu fashion will also use raised funds of 700 million yuan to repay bank loans.

It is reported that with the rapid development of Huafu fashion and the expansion of business scale, the company's capital demand continues to grow, and the scale of debt has also expanded.

As of September 30, 2018, the total assets of the company amounted to 17 billion 524 million yuan, with a total liabilities of 10 billion 70 million 490 thousand yuan and an asset liability ratio of 57.47%.

Among them, the company's short-term borrowings totaled 7 billion 360 million yuan and the short-term liabilities were larger.

Through the issuance of some of the funds raised by convertible bonds to repay bank loans, it can effectively reduce the company's debt level, ease the company's short-term debt repayment pressure and improve the company's financial structure.

With the acceleration of structural adjustment in textile industry, Huafu fashion has changed from traditional labor intensive industry to technology intensive and capital intensive industry.

The company has large demand for capital and high interest expense, which is not conducive to improving the company's profit level.

In recent three years and a period, the interest expenses of Huafu fashion were 188 million yuan, 179 million yuan, 180 million yuan and 135 million yuan, respectively, and the amount was higher, which caused a certain financial burden to the company.

Therefore, raising funds through this convertible bond will effectively reduce the company's financial expenses and improve its profitability.

According to public information, Huafu fashion is a global manufacturer and supplier of high-end yarn. It has become one of the largest yarn dyed yarn enterprises in the world. It is also one of the duopoly in the domestic yarn dyed yarn industry. In 2018, Huafu fashion realized its operating income of 14 billion 306 million yuan, an increase of 13.57% compared with the same period last year. The net profit attributable to shareholders of listed companies was 779 million yuan, up 15.14% from the same period last year.