Is The Textile Industry Sluggish? China Cotton Textile Ten Xinye Textile Made Nearly 3 Hundred Million In 2019.

Henan Xinye textile Limited by Share Ltd (hereinafter referred to as "Xinye textile") has released 2019 annual performance notice. It is estimated that the net profit attributable to shareholders of listed companies during the reporting period will be 272 million 208 thousand yuan -31109.49 million yuan, down by 20%-30% compared with the same period last year.

Xinye textile explained that the decline in performance was due to the fact that the Sino US trade dispute intensified during the reporting period. The domestic macro-economy was downhill, and the overall downturn in the textile industry affected the gross profit margin of the company's products, which was attributable to the decline in net profit of the shareholders of the listed companies.

Public information shows that Xinye textile is one of the major textile backbone enterprises in the country, one of the 520 major enterprises in the country and one of the 50 key supporting enterprises in Henan province. The main business of the company is to engage in the production and sale of medium and high-grade cotton textiles. The main products include grey fabric series products and yarn series products, and have the perfect industrial chain of cotton purchasing, processing, spinning, weaving, dyeing and finishing. Under the strategic framework of home and neighborhood, the company invested about 2000000000 yuan in Xinjiang, and integrated Xinjiang's cotton acquisition, cotton processing and spinning industry chain to drive the company's capacity to more than 170 million spindles. In July 2019, the China Cotton Textile Industry Association released the list of top 100 cotton textile industry competitiveness in China in 2018, ranking seventh.

In the three quarter of 2019, Xinye textile realized operating income of 4 billion 220 million yuan, down 10.98% compared with the same period last year. 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.

Everbright Securities analyst Li Jie said earlier that the Sino US trade friction intensified, the two quarter of 2019 - the three quarter cotton prices continued to decline, the current trade friction between China and the United States eased, China increased procurement of U.S. agricultural products, the future cotton prices are expected to gradually stabilize, Xinye textile product prices are expected to remain stable.

From the point of view of profitability, the three quarter of 2019 was affected by the drop in cotton prices. The gross profit margin of Xinye textile industry slipped year by year, cotton prices stabilized, Xinye textile strengthened the development of new products with high gross margin, and the gross profit margin was expected to maintain stability and improvement.

Insiders said that in the second half of 2018, cotton textile manufacturing industry was faced with weak domestic demand and external demand shocks caused by Sino US trade friction. The pressure of receiving orders was obvious. But at the end of 2019, Sino US trade friction showed a turning point, and the new cotton futures and spot prices rebounded bottom to promote yarn storage in the lower reaches; in addition, in the autumn and winter of 2020, the apparel industry was in turn. Speaking is the new year (Spring Festival in 2021), from the transmission of the industrial chain, the current phase of upstream raw material stock has been strengthened, and the relevant enterprises have been improved.

Guang Fa Securities researcher Mi Hanjie recently pointed out that for cotton spinning companies, the cotton used for production is usually cotton purchased in the past. When cotton prices continue to rise, product prices will be raised by cost plus pricing, but the cost of products will remain unchanged, so gross margins will grow correspondingly and profits will also rise. On the contrary, if the market price of cotton is kept low with the production of cotton in stock, the price basis may be lower than the cost price. In addition to the profit of the price increase, the company also faces the loss of the price basis, which is lower than the cost price.

Mi Hanjie said frankly, for upstream textile manufacturing enterprises, there are also several factors to consider. One is related to the export of upstream enterprises, which is relatively high. Therefore, the RMB exchange rate has a greater impact. If the RMB exchange rate stays at a high level and even continues to rise sharply, it will affect the order and profitability of these enterprises. Two, in recent years, the domestic and foreign exchange rate is very high. The price of raw materials abroad has risen sharply, and the price of raw materials in some textile industries has risen sharply, which has caused some pressure on the profitability of enterprises. Especially in the case of low gross profit margins and net interest rates of the textile industry, the price increase of raw materials will suppress the profit growth of manufacturing enterprises. Three, from the historical experience, clothing and related textiles are traditional options. Consumer goods are greatly affected by external economic environment. If the economy is depressed and consumers expect lower incomes, terminal retail will be under great pressure.

As of January 24, 2020, Xinye textile reported 3.46 yuan / share, a decline of 2.54%, the market value of 2 billion 826 million yuan.