Huafu Fashion Crazily Hit 1 Billion 500 Million In Vietnam To Rent 507 Mu To Build 500 Thousand Spindles.

A wholly owned subsidiary, Akesu Huafu color spinning Co., Ltd. (hereinafter referred to as "Akesu Huafu") was the largest color spinning supplier and manufacturer in the world in May 22nd. The Huafu fashion Limited by Share Ltd (hereinafter referred to as "Hua Fu fashion") released the "2020 year non public Development Bank A share plan" in June 7th (evening). The number of development stocks is no more than 455 million shares (including 4.55 shares), and the proportion of shares issued after the issue is 23.08%. Sun Weiting and Chen Lingfen, the controlling shareholders of the controlling shareholder of the company, are not involved in the subscription. After the completion of the issue, the proportion of the total shares of the Sun Weiting and Chen Lingfen couples controlling the company is 36.08%, which is still the actual controller of the company.

According to the plan, Huafu fashion company will raise the total amount of non-public offering stock no more than 1 billion 500 million yuan. After deducting the issue cost, it plans to invest in the following items:

The first textile net reporter learned from the announcement that Hua Fu fashion intends to inject $371 million into Vietnam's Huafu through Hongkong Huafu Co., Ltd., and invest in building 500 thousand new yarn projects in Vietnam Longan. In the first phase, 300 thousand new spindles will be built and two new yarn projects will be built. The non public development fund raised to invest in Huafu (Vietnam) 500 thousand ingot new yarn project is located in Concord Industrial Park, Xiehe County, Longan Province, Vietnam, with a total investment of 1 billion 505 million yuan, covering an area of 507.08 mu. After the completion of the project, a new production scale of 300 thousand spindles will be formed, including high-grade cotton, functional sports and sustainable product yarn.

First textile network reporter further learned that Huafu fashion 500 thousand ingot new yarn project total investment of 1 billion 505 million 980 thousand yuan, of which, fixed assets investment of 1 billion 358 million 350 thousand yuan, the bottom liquidity is 147 million 630 thousand yuan. The implementation of the project after the normal delivery period (second years) can achieve 1 billion 495 million 800 thousand yuan in operating income, 174 million 750 thousand yuan in total profits, 12.18% in the financial internal rate of return after tax, and 8.29 years in the investment recovery period (including construction period). The project is implemented by Huafu (Vietnam) industrial sole proprietorship limited company. After raising funds, the company will raise funds in the form of capital increase. Huafu (Vietnam) industrial proprietorship Co., Ltd.

The announcement shows that as of today, Huafu fashion has completed the record of overseas investment projects in the national development and Reform Commission on Huafu (500 thousand) new yarn project in Vietnam. The project has a total production volume of 300 thousand ingots for its first phase project. At the same time, Huafu fashion has obtained the certificate of overseas investment approved by the Shenzhen municipal commercial bureau on the project. Vietnam Huafu has also signed the lease land use right contract to obtain the right to use the construction land for the investment and investment projects, and the lease period will be until May 20, 2070.

First, according to public information, Huafu fashion was founded in 1993. It was originally called Huafu color spinning Limited by Share Ltd. Its main middle and high grade colored yarn lines provide high-grade new yarn and dyed yarn, as well as value-added services such as fashion trend, raw materials and product certification, technical consultation and so on. The company is currently the world's largest supplier and manufacturer of colored spun yarn, and has the industry chain of color spinning, which integrates cotton cultivation, cotton processing, dyeing and spinning as an integral whole. It is also the leading brand in the global colored spinning industry, with high brand recognition and leading position in the industry. Other well-known sports and casual wear brands such as Adidas, Nike, ZARA, GAP, H&M and so on are also the main suppliers of high-end underwear yarn designated by "Vitoria secret".

After the founding of Huafu fashion, the "Huafu" colored spinning brand was established. After 10 years of market development and a series of mergers and acquisitions, it gradually became one of the top color spinning enterprises in China. In 2006, the company began to invest in Xinjiang with the foresight and resources, policies and cost advantages. It is one of the earliest textile enterprises in Xinjiang. The company takes Xinjiang as its domestic strategic base and expands its capacity continuously. At the same time, it began to expand to Vietnam in 2013. So far, in the manufacturing field, Huafu fashion has formed five production areas, namely, Zhejiang, Huang Huai, Changjiang, Xinjiang and Vietnam, so as to achieve 1 million 890 thousand spindles of its own yarn.

At present, Huafu fashion is currently controlled by Sun Weiting and Chen Lingfen. The two people co founded Huafu in 1993. As of 2019, the company has 74 holding subsidiaries. Among them, Akesu Huafu is the main company in Xinjiang Akesu 1 million yarn dyed spinning project. Vietnam south Huafu is responsible for the main construction and operation of Vietnam's capacity base.

In 2016, Huafu fashion decided to adhere to the long-term strategy of "sticking to the main industry and sharing the industry", integrating yarn into the textile and garment industry, integrating cotton cultivation, cotton processing, warehousing and logistics, flower yarn trading, and spinning and weaving supply chain, realizing the integration of the front and rear industries, and strives to become the fashion carrier of the global textile and garment industry.

Hao Shuai, an analyst with Guotai Junan Securities, said that Huafu always insisted on its main business and shared the industry, and thought Xinjiang and Vietnam could not be neglected. Xinjiang is a supply market aiming at upgrading domestic consumption. Vietnam is an industry transfer to overseas markets. The company fully grasps the opportunities of the two regions and has made considerable progress.

In 2013, Hua Fu fashion decided to set up a subsidiary in Vietnam to start overseas capacity layout. In the 2014-2015 year, the first phase of the 120 thousand color spinning project was completed, and Vietnam's capacity layout was accelerated in the 2016-2017 year, and the two stage top 160 thousand color spinning project was built. By the end of 2017, Huafu fashion has formed 1 million 800 thousand ingots, of which Vietnam has formed 280 thousand spindles of spinning capacity and 20 thousand tonnes of dyeing capacity. Vietnam will gradually build Huafu as an all-around fast reaction production base in Southeast Asia to meet the needs of Southeast Asian regional customers.

Lv Ming, a researcher at Tianfeng securities, also said that Vietnam has certain advantages in terms of market potential, cost, labor, taxation and tariffs, thus attracting a large number of Chinese textile enterprises to carry out capacity layout and expansion in Vietnam. Compared to around 2013, the whole investment environment of Vietnam has undergone great changes, but it is undeniable that Vietnam is now investing in Vietnam. Capital still has the advantage. The main reason is that Vietnam's land and labor costs still have certain advantages compared with the domestic ones even though the land and labor costs are higher than before. Secondly, raw material price advantages, tax and tariff advantages still exist, and the transfer of orders to Vietnam also forces Chinese textile enterprises to invest and build factories, while effectively avoiding the risks brought about by the uncertainty of trade war. 。

From this, we can see that in the past 2014-2018 years, Huafu fashion has invested 300 million US dollars in Vietnam in the past 4 years. It has built Vietnam Huafu Industrial Park and has 280 thousand spindles of yarn production capacity. At the same time, Huafu fashion invested Vietnam 2 billion 500 million yuan in December 16, 2018 to build Vietnamese new yarn project. It continued to invest continuously in Vietnam and improved the rapid reaction base of Vietnam in Southeast Asia. Therefore, Vietnam's domestic textile enterprises still have great attraction.

Lv Ming said that preferential policies and low cost are the main factors that Chinese textile and garment enterprises choose to move to factories abroad. The cost advantage is relatively low in energy, labor, land, raw materials and other aspects.

(1) energy

Vietnam's average industrial electricity price is about 0.51 yuan / degree, while the price of industrial electricity in China's various regions is between 0.6-0.9 yuan / degree. The average price of industrial water in Vietnam is about 3 yuan per cubic meter, while domestic water charges exceed 4 yuan / cubic meter.

Labor cost

First of all, as Vietnam is in the labor bonus stage, young labor is abundant and cheap. As of 2017, the total population was 93 million 700 thousand and the median age of the population was only 31 years old. According to our understanding, the wages of Vietnamese textile workers are around 2000 yuan, lower than the domestic wage level, and the advantages are more obvious.

Secondly, according to the latest minimum wage adjustment in Vietnam in January 1, 2019, the minimum wage of grade first to fourth is 1237 yuan / month, 1098 yuan / month, 962 yuan / month, 864 yuan / month respectively, and the actual wage of textile workers is higher than the minimum wage set by the government. The minimum wage of China's first block and fourth block is 1430 yuan / month, 1330 yuan / month, 1280 yuan / month, 1120 yuan / month (data selected the minimum wage of the province's wages), compared to Vietnam's labor cost is relatively low.

Land cost

Vietnam's acquisition cost of industrial land is relatively low. According to the investment law of Vietnam, foreign enterprises can lease land for a period of not more than 50 years, and the maximum duration of land use for a project with a large investment and slow capital recovery and investment in difficult social and economic conditions is not more than 70 years. If the land use expires, if the investor has the requirement to continue to use the land, the Vietnamese relevant departments may consider extending the land use term according to the relevant plans. Compared with China's land rent, Vietnam's land cost has certain advantages. In 2017, the average land price of Hu Zhiming Industrial Park in Vietnam was 75 to 80 US dollars per square meter, and official data showed that the land price of industrial land in China was US $120.35 in the three quarter of 2018, compared with Vietnam's land cost.

Raw material cost

For textile enterprises, the cost of cotton accounts for the largest proportion of total production cost. In order to protect the interests of domestic cotton farmers, China has imposed quota quotas on imported cotton, resulting in insufficient supply of high quality cotton, and a large gap between domestic and foreign cotton prices, thus promoting the production cost of China's textile enterprises. If China's textile enterprises are transferred to Vietnam and other countries, they can buy foreign cotton, reduce production costs and enhance the company's profitability. As of January 14, 2019, the difference between domestic and foreign cotton prices reached 3147 yuan / ton.

4) tax advantage

In order to attract foreign businessmen to invest in Vietnam, Vietnam also gives certain preferential tax policies to foreign businessmen. According to Vietnamese tax laws, enterprises that invest in Vietnam can enjoy preferential tax rates of 10% in 15 years and 17% tax concessions in 10 years according to different conditions. For Vietnam's open parks, enterprises need to meet certain conditions, that is, they can enjoy "four exemption nine and half reduction" and "two exemption four reduction".

Land cost

Vietnam's acquisition cost of industrial land is relatively low. According to the provisions of the Vietnamese investment law, foreign enterprises can lease land for a period of not more than 50 years. For the projects with large investment and slow capital recovery, and for projects invested in difficult social and economic conditions, the longest period of land use is not more than 70 years. If the land use is expired, if the investor has the requirement to continue to use the land, the relevant departments in Vietnam may consider the phase. Pass the planning to extend the land use term.

Compared with China's land rent, Vietnam's land cost has certain advantages. In 2017, the average land price of Hu Zhiming Industrial Park in Vietnam was 75 to 80 US dollars per square meter. According to the latest data of China industrial information network, 18Q3's land price of industrial land was 120.35 US dollars, compared with Vietnam's land cost, it has great advantages.

However, Lv Ming also pointed out that with the increasing number of enterprises invested in Vietnam, the investment dividends may decrease at a marginal rate. If the relocation of foreign factories to Vietnam at present time nodes, it is difficult for enterprises to find a good industrial location, and may need to invest in remote areas, and labor prices are rising gradually, and Vietnam's production cost dividends are shrinking. Therefore, combined with the reasons for the relocation of textile and garment enterprises to Vietnam, together with the comprehensive consideration of geography, humanities and politics, Burma is politically stable for a long time, and is good for Chinese friends. In addition, the labor force price is cheaper, and the tax relief policy is similar to that of Vietnam. Therefore, it may become a hot spot for the investment of the next domestic textile and garment enterprises.

The industry also stressed that taking into account the advantages of raw materials, manpower, taxation and other advantages, to superimpose the international trade environment, Vietnam will usher in the golden opportunity for development. Huafu fashion also complied with the general trend of industrial transfer to overseas, increased overseas investment, continued to promote Vietnam's continuous production capacity, accelerated the construction process of the production area, and made full use of overseas market resources. By then, with the gradual release of production capacity, it will bring about sustained growth in revenues and profits. Huafu fashion will also build a comprehensive and multi-level production layout in the eastern, Xinjiang and Vietnam three parts of the world, forming the core competitiveness of the company. The eastern and Xinjiang meet the domestic market demand and Vietnam's capacity is facing the overseas market. Huafu fashion is bound to become the only leading enterprise in the colored spinning industry that is consistent with the industrial layout and development trend, complies with the "one belt and one way" initiative, and goes deep into the mainland and reaches the downstream customers.

According to the financial report, in 2019, Huafu fashion realized total business revenue of 15 billion 890 million, an increase of 11% over the same period last year, and realized net profit of 400 million, down 46.1% from the same period last year. In the first quarter of 2020, Huafu fashion realized 2 billion 310 million of its total revenue, down 36.5% compared to the same period last year.

As for the reasons for the change of performance, Huafu fashion explained that the Sino US trade dispute, combating consumer confidence and restraining Global trade, led to market shrinkage and increased competition. The trend and cyclical changes of the market led to an increase in orders from two digits to a single digit. Secondly, the price of cotton fell sharply by 20% in a short period of time, leading to a decline in yarn prices and an increase in the profitability of orders.

According to the financial report, in 2019, the cost of Huafu fashion business was 14 billion 640 million, an increase of 14.3% over the previous year, which was higher than the 11% growth of operating revenue, resulting in a 2.7% decrease in gross margin. The period cost rate is 7.2%, which has not changed much compared with last year. Operating cash flow increased from -4.8 billion to 1 billion 890 million, an increase of 493.5% over the same period last year.

From the perspective of business structure, the net chain is the main source of Huafu's fashionable business income. During the reporting period, the net chain business revenue was 8 billion 650 million, revenue accounted for 54.7%, gross margin was 3.6%.

By the evening of the first textile net reporter, Hua Fu's fashion day was closed at 6.18 yuan / share, or 0.16%, and its market value was 9 billion 390 million yuan.