Huafang Shares (600448): The Construction Workshop Will Produce Medical Masks And Other Construction Cycles For 3 Months.

In February 9th, 600448.SH issued a notice on the construction of sterile gauze and protective clothing in sterile workshop.

In accordance with the requirements of the Binzhou municipal government on the current deployment of epidemic prevention and control, combined with the company's market development needs, and creating conditions for the future development of the company, the company intends to build a sterile workshop in the China Textile Industrial Park to produce medical masks and protective clothing. The workshop will accumulate 1500 square meters, and the self raised funds will be 10 million yuan for investment and construction, and the construction period will be 3 months.

Huafang shares said that the project invested 10 million yuan in fixed assets, producing medical masks and medical protective clothing, and investment was raised by enterprises themselves. After the project is completed, it is estimated that the annual sales revenue will be increased by 80 million yuan, and the profits and taxes will be increased by 13 million 50 thousand yuan. All fixed assets investment will be recovered within 1.63 years after the project is completed. After analyzing the profit and loss balance, the actual production capacity can reach the cost of 77% of the original design capacity, and the ability to resist external market risks is strong.

By the end of 2018, the main business of the company was printing and dyeing, home textiles, etc., of which printing and dyeing cloth accounted for 83.49% of the total revenue, home textile products accounted for 7.87% of the total revenue, clothing products accounted for 2.98% of the total revenue, and clothing products accounted for a relatively small proportion, which had no significant impact on the company's performance.

From the perspective of mask production capacity, China is the largest producer and exporter of mask in the world, accounting for 50% of the world's annual output. China's mask production increased from 2 billion 500 million in 2011 to 4 billion 540 million in 2018. Over the past year, the output of the mask has exceeded the domestic demand for a long time, for example, the total demand in 2011 is about 1 billion, so masks are exported in large quantities. In recent years, the demand for respirators has increased rapidly due to the highlight of fog and haze and the increasing awareness of people's health and hygiene. By 2018, the demand for masks has increased by about 4 billion.

Up to now, there is no medical mask and protective clothing manufacturer in Binzhou where the company is located. After the project is put into operation, it can solve the needs of some local medical institutions.

After the implementation of this investment, we can expect to achieve better investment profit rate by expanding business, integrating resources, enriching talents and strengthening management. We can effectively improve the company's return on assets and shareholder value, and further enhance the company's core competitiveness and market influence. The company's product development strategy is further implemented, which is conducive to enhancing the company's long-term profitability and enhancing shareholder value. The completion of investment behavior will not increase related party transactions and competition.

Huafang shares said that the project needs a certain construction period of 3 months, and the cost of investment will be affected by many factors such as raw material, labor costs and other factors such as price fluctuations, construction progress, and so on, thereby affecting the yield of the project. In this regard, in the implementation of the project, the company will strengthen the cost, quality and progress control in the process of the project, and pay attention to the prediction and preventive measures of the possible adverse conditions and changing factors, so as to ensure that the project is completed according to the plan.

In the course of implementation, this project may be affected by uncertain factors such as macroeconomic environment, industry development trend and approval of Shandong provincial drug administration. In this regard, the company will perform information disclosure obligations in a timely and accurate manner in accordance with relevant securities laws and regulations and Shanghai securities trading rules, so as to protect the legitimate rights and interests of investors.

In order to respond positively to the state's need to prevent and control the epidemic, the company has temporarily transferred part of its capacity to produce civil protective masks. Some of the products are used by the company itself, while the rest are sent to the government for collection and storage, not for external sale, which has no effect on the company's current performance.