All The Way Through The Wind And Rain, How Is Jingyuan International Now?

The market concentration of children's clothing industry is not high, but the pattern of clothing factory is basically formed.

Our country is still a big country in garment processing. Most of the garment manufacturers on the top of the list have already been listed.

These seemingly "low-level" industries are actually "big money" and are upgrading industries.

Jingyuan international has been on the market in 2017 after nearly 50 years of wind and rain.

Brilliant achievements

Jingyuan international company, founded in 1970, is not a simple processing and manufacturing company. It mainly manufactures and sells garments. Through the "co creation" mode, we provide customers with one-stop services such as product design, development, procurement of raw materials, industrial process innovation, production, optimization of production costs, inventory management and delivery.

It was listed on the HKEx in November 2017.

At present, the company delivers about 350 million garments annually.

In 2016, Jingyuan ranked first in terms of output in the global garment manufacturing industry, ranking second in the world in terms of output value.

In 2017, Jingyuan international realized a profit of 2 billion 178 million US dollars, an increase of 23.5% over the same period last year.

Gross profit was 442 million US dollars, up 24.4% over the same period last year.

Net profit amounted to US $149 million, an increase of 20.1% over the same period last year.

Data show that Jingyuan group's revenues in the first half of 2014 to the first half of 2017 were $1 billion 700 million, $1 billion 688 million, $1 billion 763 million and $1 billion 27 million respectively, with profits of 81 million 800 thousand US dollars, 68 million 290 thousand US dollars, 124 million US dollars and 69 million 230 thousand US dollars in the reporting period.

Whether it is revenue or net profit, it has shown a healthy growth since 2016.

Jingyuan group's business is divided into five categories: casual wear, jeans, underwear, sweaters, sportswear and outdoor wear.

Jingyuan international main service target is UNIQLO, H&M, GU, GAP and other internationally known fast fashion brands.

In the six months from 2014 to 2015, 2016 and June 2017 30, sales from the largest customer FastRetailing (fast selling group) accounted for 33%, 34.1%, 36.2% and 33% of the company's revenue respectively, accounting for 1/3 of the company's revenue.

Affected by the complex factors such as the fast fashion brand slump and the Sino US trade friction, in March of 2019, the stock price of 02232.HK, known as the "global garment making first" (International), fluctuating. The report of Nomura reported that all the gross margins of the whole international business category were negative. Therefore, it is expected that the gross profit margin will remain depressed in the first half of the fiscal year, and the gross profit margin will remain below 20% in the 2021 fiscal year, thus maintaining the "neutral" rating of the Jingyuan international and the target price of HK $4.5.

The profit of single piece garments is very low.

Behind the huge revenue and rising gross profit margins, Jingyuan group's average net profit per garment is not high, or even very small.

According to the group's description, the price range of the company to most customers is: casual wear products from 2.4 US dollars to 7.2 dollars, denim products from 5 to US $13, underwear products from 1.1 US dollars to 7.5 dollars, sweaters from 5.5 to US $15, and sportswear and outdoor wear from US $5.6 to 15 dollars, which range from 6.6 yuan to 6.6 yuan.

The net profit of Jingyuan group in 2016 was 124 million US dollars and 350 million garments were calculated. The net profit of each garment is only 35.4 cents, which is equivalent to 2.4 yuan.

Capacity is close to full load.

With the increase of orders, the original capacity of Jingyuan has been unable to meet the needs of business expansion.

In 2017, Jingyuan has 20 production bases in 5 countries, including Vietnam, Kampuchea, Bangladesh and Sri Lanka. The 4 countries are the low cost production base of the company. In 2017, the proportion of the company's revenue in the low cost production base accounted for 61% of the current revenue.

The design capacity of the 20 production bases is about 350 million garments a year. By the middle of 2017, the capacity utilization rate of these production bases was 92.1%, and for 90% consecutive years three years.

In addition, at present, the highly concentrated state of the company is also prone to lead to risks, such as reducing, delaying or cancelling purchase orders by one or more large customers, and the performance of one or more large customers turning to choose competitors will have a great impact on their performance.

Pain in garment processing industry

The garment manufacturing industry is used to making foreign trade processing orders, and obtains profits through quantity. But with the change of people's sense of work and the rising price of labor force, the cost burden is increasing. It is obvious that the labor cost of high cost performance has already retired from the historical dance platform.

As most garment factories are export orders, and do not establish their own clothing brands, their premium capability is not dominant, coupled with global trade, trade frictions and other related issues, making the industry face uncertainty.