Rainbow Semi Annual Report Highlights, 290% And 5.7%, Two Data Tell You Which Plate Is The Most Powerful?

This year, the upstream companies in the textile industry are generally affected by the international trade friction, which has made the upstream textile industry less profitable.

Recently, 02678-HK, which has just announced its first half results announcement in 2019, is also affected by trade friction, and its net profit data has dropped sharply. Specifically, Tianhong textile realized 10 billion 191 million yuan (RMB, the same below) in the first half of the year, an increase of 15.66% over the same period last year.

Net profit of 471 million yuan, 21.81% year-on-year, down from 16.76% in the first half of 2018 to 13.55%, down 3.21 percentage points, and net interest rate decreased from 6.88% in the first half of 2018 to 4.77%.

　　 The revenue of Tianhong textile is made up of seven parts. The main reason for the revenue growth is that the income of woven fabric business has increased by 290.4%. However, the growth of this income is not sustainable. Why? In April 2019, the sales revenue of woven fabrics exceeded RMB 1 billion 200 million yuan due to the merger of the woven fabric business of the Qing Ye group.

In addition, the gross profit margin of this business increased significantly from 2.8% in the same period last year to 13.1% in the first half of the year, mainly due to the promotion of the Qing Dynasty Group business with high gross margin. This is also the only concern in the first half of the company's report. The acquisition of the business has led to the growth of revenue and the gross profit margin of the company's business. If the takeover effect is aside, the company's revenue will remain unchanged.

　　 Woven fabric business volume and raise price, is a half year report of the company, but this business income after all, the proportion of total income is not high, and after the gross profit margin is raised, there is no company's average gross profit rate is high, so this revenue growth has a relatively limited impact on the overall performance of the company.

The real impact on the company's performance is the yarn business income of 7 billion 730 million yuan, an increase of 5.7% over the same period, accounting for 75.8% of the group's total revenue, gross margin of 14.1%, down 4.2 percentage points from last year. The share of the largest proportion of business, gross profit margin fell sharply, directly affecting the company's net interest rate, net interest rate from the first half of 2018 to 6.88%, down to 4.77%.

　　 The reason is that Tianhong textile further explains that it is because of the impact of international trade friction that the company adjusts its product mix. From the revenue side, even if we do not consider the impact of mergers and acquisitions, the company's revenue is basically unchanged, then, does this mean that the company sacrificed short-term profits, but kept the market share? Because trade frictions can't last forever.

Overall, the decline in the profits of Tianhong textile is related to industry factors. Most of the companies engaged in the upstream business of the textile industry in the first half of this year are affected by trade friction. In addition, after the merger and acquisition of woven fabrics, the gross profit margin of the company has been raised, which has thickened the company's profitability.