The Barometer Of The Local Textile Industry, Which Made 4 Hundred Million Net Profit Last Year, Lost Tens Of Millions Of Dollars In The First Quarter Due To The Fall In The Epidemic And Cotton Prices.

The world's largest supplier and manufacturer of colored textiles, Huafu fashion Limited by Share Ltd (hereinafter referred to as "Huafu fashion") has released its 2019 annual performance bulletin. During the reporting period, the total business turnover of the company was 15 billion 886 million yuan, an increase of 11.04% over the same period. The net profit attributable to shareholders of listed companies was 402 million yuan, down 46.49% from the same period last year.

Huafu fashion explained that the main reasons for the performance change were: during the reporting period, the company implemented the established strategy, and the network chain business maintained steady development, driving revenue up 11.04% over the same period last year. Under the influence of Sino US trade disputes, Global trade is suppressed and consumer confidence is affected. The continuous decline of cotton prices of main raw materials affects the gross profit margin of yarn business, and the processing income of superimposed assets decreases compared with the same period last year, resulting in a 46.49% decline in net profit of the company.

In addition, due to the impact of the epidemic, the company's sales orders declined, logistics and staff reemployment were blocked, and cotton prices continued to decline, which had a significant impact on the production and sales in the first quarter of 2020. Huafu fashion estimated that net profit attributable to shareholders of Listed Companies in the first quarter was 15 million yuan to 35 million yuan compared with 172 million yuan in the same period last year.

　　 Lei Yu, an analyst with Changjiang Securities, said that in recent years, the global epidemic continued to spread, and many European and American countries took measures such as closed city and other anti epidemic measures. The order ratio of textile enterprises was weaker, and export textile enterprises were even more.

Lei Yu believes that under the background of the spread of overseas epidemics, cotton prices are expected to remain under pressure. In the medium term, we need to track the progress of overseas epidemic prevention and control. First of all, the cotton epidemic will have a significant impact on the global economy, and cotton consumption will decrease significantly. Price fluctuations, expected effective control of the epidemic before the international cotton prices will continue to bear pressure; secondly, the internal cotton, the overall supply of cotton is tight, the core uncertainty comes from the impact of the epidemic on demand. At present, the factors such as delayed reemployment and logistics constraints have basically been eliminated. In the context of the spread of overseas epidemic, manufacturing enterprises, especially export textile enterprises, are facing pressure from order reduction and short term pressure on cotton. Later, we need to closely follow the progress of global epidemic prevention and control and the order of textile enterprises.

According to Lei Yu, although the textile industry has basically delayed its reemployment and logistics constraints, the pressure of order reduction is still under the background of overseas epidemic spreading. It is estimated that the two quarter will be the most stressful stage of the year.

Public information shows that Huafu fashion was founded in 2000, and was listed on the backdoor market in 2008. It has become the first A share listed company in China. As early as 2010, Huafu began to enter Xinjiang to invest and build factories. In 2013, the company further expanded its overseas market and established Vietnam's production base. In 2016, the company launched the whole network chain business to build an industrial Internet platform.

All along, Huafu fashion insists on its main business and shares its industry. It believes that Xinjiang and Vietnam can not be neglected. Xinjiang is a supply market aimed at upgrading domestic consumption. Vietnam is an industry transfer to overseas markets. The company fully grasped the opportunities of the two regions and made considerable progress.

As a global manufacturer and supplier of high-end yarn, Huafu fashion has become one of the world's largest yarn dyed yarn enterprises. It is also one of the duopoly of the domestic yarn dyed yarn industry. The company integrates yarn and textile industry, integrates cotton cultivation, cotton processing, warehousing and logistics, flower yarn trading, and spinning and weaving service supply chain, so as to realize the integration of the front and rear industries. We are committed to becoming a fashion carrier in the global textile and garment industry.

In terms of yarn, Huafu fashion relies on the strategy of the state and the whole area and implements the balanced production layout at home and abroad. Now it has formed five production areas of Zhejiang, Huang Huai, Changjiang, Xinjiang and Vietnam. As of the first half of 2019, the company has a total capacity of 1 million 890 thousand spindles. The company insists on customer oriented, quality first, and improves product quality and added value through technological innovation, and has won the customers. The market share is steadily rising.

CITIC Securities analyst Shi Kun said earlier that although the Sino US trade conflict and the downward trend of cotton prices were the main factors affecting the fashion performance of Huafu since 2019, we still need to see that Hua Fu fashion is the only one in the color spinning industry with three locations in the East, Xinjiang and Vietnam. It can fully enjoy the high-quality cotton resources of origin, and Xinjiang and Vietnam two The land policy is favourable to both mainland and overseas customers. Along with the expansion of production capacity in Xinjiang and Vietnam, the production of colored spun yarn has increased, and cotton prices have continued to uplink and profit levels have increased. The network chain business is developing vigorously, and the front end goes deep into the cotton planting and trading link to guarantee the supply of high quality raw materials. The latter involves clothing fashion industry, and provides flexible supply chain by using the electricity supplier network.