Cotton Spinning Industry Is So Difficult That Xinye Textile Made Only 2 Hundred Million In The First Three Quarters.

Henan Xinye textile Limited by Share Ltd (hereinafter referred to as "Xinye textile") released the three quarterly report in 2019 in October 21st. During the reporting period, the company achieved operating income of 4 billion 220 million yuan, down 10.98% from the same period last year, and the net profit attributable to shareholders of listed companies was 204 million yuan, down 35.61% from the same period last year. Basic earnings per share of 0.2502 yuan. Among them, the three quarter achieved operating income of 1 billion 358 million yuan, down 62.39% compared with the same period last year, the net profit attributable to shareholders of listed companies was 51 million 767 thousand yuan, down 62.39% from the same period last year.


According to public information, Xinye textile is one of the leading textile enterprises in the country, one of the 520 key enterprises in the country and one of 50 key enterprises in Henan province. The largest shareholder of the company is Xinye County Finance Bureau, with a holding ratio of 27.3%. It has 8 wholly-owned subsidiaries, 1 holding subsidiaries and 1 equity joint ventures. The main businesses include cotton spinning, cottonseed processing, cotton processing and marketing, logistics, trade and so on, and belong to the leading enterprises of cotton spinning and weaving industry.


Xinye textile main business is engaged in the production and sale of medium and high grade cotton textiles, the main products include grey fabric series products and yarn series products. The results show that Xinye textile has made steady progress in recent years. From 2012 to 2017, business income increased from 3 billion 158 million yuan to 5 billion 195 million yuan, and the annual compound growth rate was 10.47%. The net profit of the company returned from 80 million yuan to 292 million yuan, and the annual compound growth rate reached 29.56%.


In the first half of 2019, Xinye textile realized total business income of 2 billion 870 million, down 10.7% from the same period last year, and realized net profit of 150 million, down 15.1% compared with the same period last year, and the earnings per share were 0.19 yuan. During the reporting period, the gross profit margin of the company was 16.2%, an increase of 0.6 percentage points compared with the same period last year, with a net interest rate of 5.2%, basically maintaining the same level in the same period last year. In addition, non recurring gains and losses totals -1584.6 million, which has a greater impact on net profit. After deducting the non recurring gains and losses, the net profit to the mother was 170 million yuan, a slight decrease of 0.4 percentage points.


The industry believes that Xinye textile revenue growth mainly comes from the continuous release of production capacity. The company intends to issue convertible bonds to invest in the top 165 thousand spinning projects of the new cotton industry in Akesu, so the production capacity will continue to grow, but in the short term, cotton prices are still falling, leading to a fall in product prices.


Xinye textile also said that the main raw materials used for daily production were cotton, and cotton cost accounted for about 70% of the company's production cost. The fluctuation of cotton market prices had a direct impact on the company's production costs and profitability. Since 2019, domestic and foreign economic situation, Sino US trade war, market demand change and other factors, cotton prices fluctuate sharply, thus increasing the difficulty of company cost control, to a certain extent, has affected the company's profit level. If the price of cotton in the future fluctuates sharply, and the company can not take effective measures to control the cost or adjust the selling price of the product synchronously, it will have a certain impact on the gross margin level and profitability of the company.


Changjiang Securities analyst Yu Xuhui said that at present, the industrial chain inventory remained relatively high and the trade friction uncertainty remained unchanged, while benefiting from the weak recovery of domestic demand and stable export growth, some textile manufacturers' orders improved slightly. At the same time, exchange rate fluctuations also contributed to the improvement of the revenue side. From the profit side, the low base effect overlay exchange rate fluctuations and exchange earnings are expected to further thickening performance. It is expected that the textile enterprises' performance ratio has also been warmer. It is expected that the textile manufacturing side will benefit from weak demand recovery and exchange rate fluctuations, which will slightly improve.