In The Next Two Years, Overseas Employees Or Nearly 30 Thousand Of Shenzhou International Are Mad About 700 Million.

Shenzhou International Group Holdings Limited (hereinafter referred to as "Shenzhou International") recently announced that the company will invest about $100 million to build a garment production facility specially designed for Adidas (ADDYY.US) in Vietnam. The foundation stone ceremony was held in October 15, 2019. It is expected that the new garment production facilities will be put into operation in 2021.


The Board believes that the construction of garment production facilities in Vietnam will diversify the production base of the group, ease the tension of the group's capacity and provide flexibility in the increasingly complex international trade situation. Therefore, the Board believes that the construction of new production facilities will be beneficial to its customers, groups and their shareholders as a whole.


The industry believes that under the impetus of Shenzhou new international production facilities and continuous improvement of production efficiency, it is expected that the company's capacity will gradually expand in the next few years. Based on strong R & D capability and good reputation among customers, Shenzhou International expects to maintain its leading position in the industry.


Another reporter learned here that in order to promote the introduction and development of young talents in Beilun, Ningbo, Shenzhou International donated one hundred million yuan to the Beilun Charity Federation for the construction of Beilun Youth Plaza. It is understood that Beilun Youth Plaza is a dream space that Beilun is currently trying to create to attract young people to study, work, live and start up in Beilun. The project covers an area of about 20 mu, with a construction area of about 28 thousand square meters, and a construction fund of about 250 million yuan. More than 100 meters of tall buildings can accommodate nearly 2000 young people living and living.


Hao Shuai, an analyst with Guotai Junan Securities, said that after Shenzhou International listing in 2005, it has established cooperative relations with Adidas, Nike, Puma and other three international brands and other international brands, while the business has extended to the sportswear field while maintaining good cooperation with UNIQLO. Benefiting from the expansion and rapid development of overseas market layout in early twenty-first Century, the company maintained a high double-digit growth rate before 2012. Since 2012, with the revival of sports industry, Nike, Puma and other key customers have achieved rapid growth in revenue. By 2018, the compound growth rate was 9.52% and 4.79% respectively. The increase in orders led to a double-digit increase in revenue growth. By 2018, the company had diversified layout in the field of foundry, and the foundry service in sports and leisure fields has become the main force to promote the development of the company.


Up to now, Shenzhou International's revenue from Nike, Adidas, Uniqlo and Puma accounts for about 70% of the four major customers. In 2018, the revenue from Nike was 6 billion 260 million yuan, accounting for 29.9%. The income from Adidas, Uniqlo and Puma accounted for 19%, 18.5% and 10.1% respectively, and the top four customers accounted for over 80% in the first half of 2019. Shenzhou International cooperation with four major customers is stable, and the expansion of production capacity for key customers has made these customers increasingly sticky. In 2018, the Adidas hanging garment factory in Kampuchea was put into operation. The proportion of revenue coming from Adidas will further improve in the future.


In Hao Shuai's view, big clients contribute more revenue to the company, while Shenzhou International has more and more importance to customers. With the advantage of efficient production, the company has become the largest supplier of clothing brands of Nike, Adidas, Uniqlo and Puma. In 2018, the total purchases of four major customers accounted for over 10%, accounting for 12%, 12%, 14% and 30% of clothing purchases of Nike, Adidas, Uniqlo and Puma respectively.


In addition, in order to protect customers' trade secrets and avoid conflicts of interest, besides the special factory of UNIQLO, Shenzhou International has set up brand specific production plants for Nike and Adidas respectively, thus achieving deep binding with core customers. In September 2006, Nike dedicated plant and R & D design center were put into operation, and the monthly garment production capacity exceeded 1 million 400 thousand. In August 2007, the Adidas special factory area was put into use, and the monthly garment production capacity exceeded 2 million. The commissioning of the two specialized factories has effectively protected the company's ability to satisfy customers' huge orders, and has greatly improved the company's sports subcontracting business. In the short span of four years from 2005 to 2009, sales of sports products increased from 230 million yuan to 2 billion 580 million yuan, and sales increased rapidly from 9.3% to 42.3%.


Hao Shuai predicts that in the next few years, relying on the development of the four core customers of Nike, Adidas, Uniqlo and Puma, the leading position of Shen Zhou will be more stable. In addition, with the gradual release of overseas capacity, the company is expected to deepen its cooperative relationship with its new partners in the process of expanding new fields and new partners and cultivate them into new core customers.


According to public information, Shenzhou International is China's largest vertically integrated knitting manufacturer. Shenzhou International mainly produces high quality knitwear for its customers by the way of subcontracting. Its main customers are Uniqlo, Adidas, Nike and Puma, which are well-known brand clothing retailers. The sales market covers the domestic market, Japan, Asia Pacific and Europe and America. The cloth production base is located in Ningbo, Zhejiang, and is strategically located in garment factories in Quzhou, Anhui, Anqing, Kampuchea, Phnom Penh, Vietnam, Hu Zhiming and Vietnam, and has sales offices and representative offices in Shanghai, Hongkong, Osaka and other places. The company is the largest exporters of knitted garment manufacturers in China and ranks first among Chinese garment exporters.


According to the financial report, Shenzhou International Business Income in 2018 was 20 billion 968 million yuan, an increase of 15.82% over the same period last year, the annual compound growth rate was 17.84% since the listing, and the net profit of the female parent was 4 billion 540 million yuan, an increase of 20.65% over the same period. In 2018, the income of sportswear reached 14 billion 276 million yuan, accounting for 68.14% of the company's annual business income. The proportion of sportswear sales increased year by year, and the operating income of casual wear reached 5 billion 167 million yuan, accounting for 24.66% of the annual operating income. In the first half of 2019, Shenzhou International Sporting Goods revenue maintained a high growth rate of 18.6%.


In the first half of 2019, Shenzhou International realized 10 billion 280 million yuan in revenue, an increase of 12.2% over the same period last year, a gross profit of 3 billion 175 million yuan, an increase of 7.4% over the same period last year, and a net profit of 2 billion 416 million yuan to the parent company, an increase of 10.9% over the same period last year.


Liu Chang, a Dongxing Securities researcher who has long been concerned about Shenzhou International, said that as at present, Shenzhou International is located in Vietnam and Kampuchea factories overseas, and the efficiency of new factories has been improved smoothly. Two vertical integration capabilities at home and abroad have been strengthened. In the short term, Vietnam's new factory has already recruited some workers, and has officially started production in the second half of this year. Currently, it has recruited 2000 people, 8000 people and 10 thousand original factories). In the medium and long term, the new factory in Kampuchea has basically been built, faster than expected, and will gradually contribute to production capacity in 2020 and 2021 (about 18 thousand of the new factory workers and 11 thousand of the original factory). After the completion of capacity building, the production capacity of fabric and garment will be strengthened. With the deepening of lean management and the promotion of automation, the production efficiency of Shenzhou International overseas factory will continue to improve.