Is It A Way To Transform The Production Of Protective Clothing In The Epidemic?

At the beginning of February, when the working hours were repeatedly postponed, Jia Linjie (002486.SZ) first received orders from the Jinshan District Economic Commission of Shanghai for the production of epidemic prevention and control disposable isolation clothing. The first order was 50 thousand, and it was required to be delivered in late February 4th. In February 6th, Jialin Jie announced again that he received the Shanghai economic and Information Committee (hereinafter referred to as the Shanghai Committee of letters and commissions), "the notice of emergency requisition for production capacity", and is now making every effort to make good distribution of raw materials and personnel. The materials designed for epidemic prevention and control will be supplied to the market after consent.

It is worth mentioning that the Commission also indicated that the economic losses caused to the company would be compensated in accordance with the law. At the time of the epidemic, the big order from the government was undoubtedly a happy event for all sectors of the industry, such as no passenger flow, lack of orders, insufficient capacity and tight cash flow.

After all, in the performance forecast of Jialin Jie's three quarterly report, the net profit of the company's net profit in 2019 was expected to be 10 million -2000, but it also made a profit of 17 million 578 thousand and 700 in the same period last year, down by 156.89%-213.77% compared with the same period last year. Since 2015, Jialin Jie was basically a large deficit in the first quarter.

Although Jialin Jie has always been the main producer of fabric production and sales, according to the national enterprise credit information publicity system, Jialin Jie did not cover the production of protective clothing in the past. At the same time, Shanghai subsidiary Jialin Jie Textile Technology Co., Ltd. (hereinafter referred to as Shanghai Jialin Jie) was certified by relevant local medical devices issued by the local authority. It shows that a week later, Shanghai Jialin Jie changed its business scope, adding new business such as "isolation clothing production", "medical device sales" and so on.

Affected by this news, Jialin Jie stock prices on the two tier market began to rise, the highest when compared with the opening rate of nearly 116% years later. According to Jialin Jie's release results announcement March 10th, in February 7th -10 days, the controlling shareholder of Shanghai Guojun almost simultaneously reduced 3 million 433 thousand and 400 shares, and its concerted action Dongxu group also last year from the end of 12 to the announcement date, the cumulative reduction of 6 million 165 thousand and 600 shares.

　　 OEM, Adidas, main business is tight, cash flow pressure.

Jialin Jie's main business is to engage in research, production and sales of high-end knitted fabrics in sports and leisure fields, as well as the production and sale of various high-end fashions, including fleece fabrics, high-grade wool fabrics, functional sports fabrics, and garments made of polyester, nylon and wool.

According to the semi annual report of 2019, sales of garments accounted for more than 70% of total revenue, while fabrics only accounted for a small part. It is noteworthy that Jialin Jie had 73.36% of its revenue from overseas, and domestic sales accounted for less than 3.

The same is true. The main customer of Jialin Jie's fabric business is the high-end fabric brand "POLARTEC.LLC" of the US Milliken company. In 2018, the revenue from POLARTEC.LLC accounted for 69.46% of the fabric sales, while the main customer of the garment business was ICEBREAKERNZ. LTD., vip.com, UNIQLO and so on, in interactive easy platform to respond to investors, the secretaries said that the company has also undertaken Adidas and other brands of OEM business, and the production of related products are exported.

Recently, foreign epidemic began to erupt. European and American fashion retailers have taken measures to reduce sales impact and inventory pressure, including orders for clothing factories, discount promotions and other measures. Recently, the fast selling group of UNIQLO parent company announced that 50 stores in the United States had been suspended from March 17th. Before that, UNIQLO also closed stores in Italy, France and Spain. On the other hand, Nike also closed retail stores in many countries and regions such as the United States and Canada, and Adidas subsequently suspended all direct outlets in Europe and North America.

Another HK.2313, a representative factory of UNIQLO and Adidas, said in its earnings report that "the impact of the epidemic on the income of the relevant customers is hard to assess". Although the utilization rate of the temporary capacity has not been seriously affected, if the epidemic can not be controlled in the short term, the future will likely be affected.

For Jialin Jie, the same result, from the 2018 annual report, the sales of the top 5 customers accounted for 61.78% of the total revenue, of which clothing accounted for about 43.68% of the total sales of customers, and recently, on the interactive platform, Jialin Jie Dong only skipped, did not respond positively to the question of whether the foreign normal business orders were largely canceled, but in the 27 announcement, Jialin Jie said temporarily. Fashion did not cause the cancellation of orders from overseas customers due to the epidemic. However, the export of the company's products includes the "severe disaster areas" such as Korea and Italy, and there is still some uncertainty in the future.

In addition, the government's large list also saved Jia Linjie's cash flow to some extent. In the 2017 annual report, the company ran a net outflow of 24 million 600 thousand of its cash flow. When it returned to the inquiry letter, it gave the loss to the subsidiary company, but it turned out that after the divestiture of the deficit assets, the net cash outflow in 2018 narrowed slightly, but then rebounded. In 2019, the three quarterly report showed that the merger started early to the end of the year. At the end of the reporting period, the net cash flow of operating activities was 61 million 107 thousand and 700. In other words, Jia Linjie himself did not solve the problem of cash flow.

　　 After stopping the expropriation, they are busy with leisure and planning the production and export of protective materials.

After the evacuation of medical teams in Hubei and the gradual release of Shanghai, the demand for protective clothing and other protective clothing in China gradually declined. In March 27th, Jialin Jie received the notice of the Shanghai commission to terminate the requisition of production capacity. At present, Shanghai has stopped the acquisition of the company's capacity and will arrange its own production and sale later. All protective materials such as isolation clothing and isolation caps can not be supplied and exported to the outside world.

At the same time, in the announcement, Jialin Jie also gave follow-up business arrangements for production plan, in addition to quickly make up for the previous main business orders during the acquisition of production capacity, the qualified subsidiary Shanghai Jialin Jie will continue to carry out the production and sale of epidemic prevention related products.

In March 13th, Jialin Jie set up a new company, Beijing Yi Qian science and technology limited liability company (hereinafter referred to as Beijing Yi Qian) on the basis of the original isolation clothing cap production. (hereinafter referred to as: Beijing Yi Qian) will invest in building two masks production lines in the short term, and will develop personal health protection products related businesses in the near future. According to the eye, it shows that only second kinds of medical devices can be produced in the company's business scope. In addition to bringing orders to Jia Linjie, it may also give its performance a way out.

It is worth mentioning that in March 23rd, when Dong Ma had said that Jialin Jie isolation clothing production capacity was 20 thousand pieces / day, the medical cap production capacity was 40 thousand pieces / day, although it was necessary to arrange production according to the delivery bill issued by the government, the daily sales volume fluctuated, but this was the largest production capacity after the total expropriation. Orders are basically required to be delivered in the first half of the year. After the end of the expropriation, the production capacity of export protective materials will be greatly reduced, and Jialin Jie also revealed that although there has been previous contact with potential customers abroad, Jialin Jie has not yet been able to turn the order into an order.

In addition, up to now, Shanghai Jialin Jie has already obtained the export qualification of China, but the CE certificate and FDA certificate of the related products have not yet applied for the results. According to the interface news report, the EU certification time for personal protective masks (non medical devices) is usually about half a year, but not for sterile medical masks. It takes 2-3 months, and the aseptic medical mask is up to 1-. 2 years.

At present, due to the large demand for exports, the third party advisory bodies that have been assisting in the application and certification of domestic enterprises have issued certificates of certification to the enterprises that have issued non statutory authorization or do not possess relevant qualifications. However, on the 20 day, we have issued the emergency examination and approval regulations. Even if the evaluation has not yet been completed, they can also be allowed to sell within a certain time, but will focus on spot checks. Epidemic prevention products. The relevant industry also said that after the end of the epidemic, the certification bodies and non-compliance masks issued by the certificate of violation may usher in a wave of liquidation.