In Shenzhou, Another 30 Thousand People In Vietnam And Kampuchea, At Least 1 Hundred Million Due To Delayed Domestic Reemployment.

Shenzhou International Group Holdings Limited (hereinafter referred to as "Shenzhou International") recently announced that the company's factory in China has resumed operation in February 10th, workers have also resumed work, with the number of reemployment workers increased, as of February 28, 2020, the group's actual production capacity has reached the normal production capacity of about 95%. The group's factories in China have also restarted staff recruitment. In addition, raw materials supplied by the group remained stable.


The Board considered that a temporary shutdown and capacity shortage before the resumption of work had a short impact on the overall production level of the group. The company is working to mitigate the adverse effects and will take various measures to make up for the shortage of capacity.


Reporters noted that Shenzhou International Official and Ningbo media had previously reported that Shenzhou International domestic factory resumed in February 10th, and the Ningbo base resumed 14 thousand workers on the first day, all of them were local employees, with a recovery rate of 39%; the Anhui factory resumed 6200 workers on the first day, and the recovery rate was 62%. Due to the high speed rail failure at that time, Shenzhou International dispatched more than 700 buses, and received more than 17 thousand employees from 14 provinces and cities such as Sichuan, Gansu, Shanxi, Yunnan and Shandong. The first batch of employees arrived in February 13th.


Guoxin Securities analyst Wang Xueheng previously believed that according to the resumption of work, assuming that Shenzhou International and domestic factories delayed the resumption of work for 1 weeks, the capacity utilization rate of second weeks was 50%, the utilization rate of third weeks was 100%, the overseas factories were still normal, and the rest of the year was planned according to the original plan, and then the approximate delay of the epidemic situation was delayed. The proportion of the impact on the company's income in 2020 was 2%, which was relatively slight.


But Wang Xueheng said frankly that, considering the additional cost of paying wages and preventive measures during the period of postponing the resumption of work, the conservative assumption is 2500 yuan per capita, while the total number of employees in Shenzhou is 43 thousand yuan, and the cost of the company is increased by about 100 million yuan. As a result, the total net profit is reduced by 2. compared with the original forecast due to the delayed profit loss and additional cost. 200 million yuan, the impact on the company's net profit of about 3.6%, is still relatively mild.


Wang Xueheng pointed out that the impact of demand side on Shenzhou International is limited from three angles, namely, sales area, early production of orders and insufficient supply of capacity.


1, from the perspective of regional distribution, most of the overseas market demand is relatively normal due to the epidemic's consumption demand, while Shenzhou's products are mostly exported to overseas, and only 3 of them are sold domestically in China. Therefore, the negative impact of downstream demand is more limited to Shenzhou International as a whole.


2, from the rhythm of order production, only when the epidemic lasts for more than 2 quarters can it lead to significant changes in orders. The news of this year's epidemic broke out around January 20th. During the Spring Festival and after a period of time, the passenger flow declines, resulting in unsalable goods in spring, and the pressure is borne by brands and distributors. The brand generally orders 2 quarters ahead of time, and the summer order has been completed last year. Orders for goods in spring and summer can be adjusted to a lesser extent. Short term epidemics may also affect brand dealers' confidence in autumn orders, but according to the current epidemic trend and the judgment of the Ministry of Commerce, the consumption rate will be bottomed out in March and the recovery period in summer.


3, from the perspective of capacity, Shenzhou International still faces bottlenecks in production capacity. The demand for orders exceeds the capacity supply, making the buffer between the Shenzhou International Performance and the fluctuation of terminal market demand larger.


According to Shenzhou International's recruitment progress and target capacity calculation, Wang Xueheng predicted that the company's capacity release in 2019-22 years will accelerate.


In 1 and 2019, as the last Vietnamese project climbed nearly the ideal capacity, and many new projects were being built, the DLI garment factory is still in the initial stage of production, and its capacity growth is close to the lower limit of the previous 10%-15% growth interval.


In 2 and 2020, Vietnam's Dali factory will be the main driving force for productivity growth when the factory is full. After the first phase of the new project in Kampuchea, a small amount of new capacity will be added to the project. The company's capacity growth is expected to be in the middle of 10%-15%.


In 3 or 2021-2022 years, with the climbing of the Dali factory in Vietnam near ideal level, the new industrial park project in Kampuchea and Vietnam's new WorldCom project entered a climbing period, and gradually became a new driving force for growth. In the Cambodian and Vietnamese factories climbing at the same time, it is expected that the company's overall capacity growth will be close to the 10%-15% ceiling.


According to public information, Shenzhou International is China's largest vertical integrated garment manufacturing leading enterprise, mainly to provide quality knitwear and clothing for customers by means of subcontracting. The main customers of the company are international famous brand clothing retailers. The top four customers are Nike, Adidas, Uniqlo and Puma respectively. The sales market covers mainland China, the European Union, the United States and Japan. In terms of production capacity, apart from the production base of Ningbo headquarters, there are also factories in Anhui, Anqing, Zhejiang and Quzhou, overseas and Kampuchea, Phnom Penh and Hu Zhiming and Xining provinces in Vietnam.


According to the financial report, Shenzhou International has been listed since 2005, and the composite growth rate of revenue has reached 17.83% in 2018, and the net profit compound growth rate has reached 21.7%. As of the first half of 2019, the camp recorded a total of 10 billion 280 million yuan, an increase of 12.2% over the same period last year, and a net profit of 2 billion 416 million yuan, an increase of 10.9% over the same period last year, excluding the 83 million loss from retail sales and a 13.3% increase in net profit.


From the perspective of the four major customers, Nike, Adidas and Puma are all sports brands. After 2008, the proportion of all the customers is rising. As of 2019H1, the total revenue is over 60%. According to Bloomberg forecasts, eNike's revenue from fiscal year 2020-2023 was 421.97, 456.24, 492.90 and 52 billion 949 million US dollars, respectively, with a compound growth of 7.86%. Net profits were 47.02, 53.56, 61.35 and 7 billion 42 million dollars, respectively. Adsidas from 2020-2023 fiscal year revenues were 261.36, 280.55, 300.87 and 32 billion 340 million US dollars, a compound growth of 5.72%; net profit were 21.53, 23.93, 26.76 and 3 billion 74 million U. S. dollars, compound growth 11.20%. APuma from 2020-2023 fiscal year revenues were 59.89, 66.48, 73.08 and 7 billion 810 million US dollars, a compound growth of 9.21%; net profit were 2.85, 3.48, 4.26 and 525 million U. S. dollars, compound growth 24.12%.


The reporter was informed that Shenzhou International shares were relatively concentrated. Among them, the largest shareholder was Hsin Rong Limited (Chairman of Ma Jian Rong and members of the family holding absolute control), holding 46.62% shares; the second largest shareholder was Fu Gao Group Limited, holding 5.29% shares (jointly owned by Ma Jianrong cousin Ma Renhe and company executives). The top two shareholders accounted for 51.91% of the total. The Ma Jianrong family had absolute control and leadership over the company.


Guo Yuan international researcher Gao Xiang stressed that in recent years, with the pressure of domestic environmental protection and labor cost advantages, overseas factories are becoming more and more risky for small businesses. The production environment of small enterprises is deteriorating and the industry is beginning to integrate. Large enterprises including Shenzhou International have many advantages, anti risk ability and profitability, and are constantly upgrading their share.


In Gao Xiang's view, the textile and garment industry in recent years has confirmed the trend of operation pressure, industry integration is the general trend. First, labor costs rise behind recruitment difficulties, and recruitment difficulties behind the aging population brought about by the decline in the workforce. Therefore, the domestic labor cost advantage has not been covered. Secondly, under the worsening trade environment, small enterprises are facing more difficult production environment and weak ability to resist risks, while leading enterprises will further increase their share. Shenzhou International's unique high level of profits in the industry also reflects its competitive edge.


Gao Xiang expects Shenzhou International to be in a state of insufficient supply of orders for a long time. On the one hand, the future growth will come from the upgrading of production capacity. On the other hand, it will come from the adjustment of customers and product mix. In terms of capacity upgrading, 10-15% growth is expected to be maintained every year. 3 new factories in Vietnam and Kampuchea are expected to reach 30 thousand people by 2023.