Xinxiang Chemical Fiber Capital Chain Is Tight And Will Increase By 555 Million Yuan, And Plans To Introduce New War Investment For Relief

After more than two months, Xinxiang Chemical fiber (000949. SZ) 555 million yuan fixed increase has made new progress.

On July 4, Xinxiang Chemical fiber disclosed that it had received feedback from China Securities Regulatory Commission on the above-mentioned fixed increase. Xinxiang Chemical fiber plans to introduce Tumushuke City Investment Group Co., Ltd., the third division of Xinjiang production and Construction Corps, as a strategic investor through non-public issuance of shares. The raised amount will not exceed 555 million yuan. It is planned to use 400 million yuan to repay bank loans, and the rest will be used to supplement working capital.

In the past five years, Xinxiang Chemical fiber has successively expanded its spandex projects with an annual output of 100000 tons. With the continuous production of spandex projects, Xinxiang Chemical fiber's revenue and net profit will both increase in 2019; however, on the other hand, its interest bearing liabilities are increasing year by year.

Xinxiang Chemical fiber personage told "China Business Daily" that when the company built new projects, the funds were arranged and prepared. If the project was put into operation quickly, more working capital was needed. In addition, this year's epidemic situation has a great impact on the company's production and sales, so the pressure on cash flow is relatively large. This fixed increase can well relieve the pressure on capital.

Tight capital chain

Xinxiang Chemical fiber is the leading enterprise of spandex and viscose filament.

Since 2015, Xinxiang Chemical fiber has started large-scale investment and expansion of spandex production. In 2015 ~ 2015, the super fine fiber plant will be put into production, and the new spandex fiber production projects will be 2 × 10000 tons in 2015.

However, after a large number of project investment, the asset liability ratio of Xinxiang Chemical fiber is also rising. From the end of 2017 to the end of 2017, the asset ratio increased by 55.55%. In addition, the current ratio and quick ratio of Xinxiang Chemical fiber decreased from 1.53 and 0.88 at the end of 2017 to 1.20 and 0.65 at the end of 2019, respectively.

At the end of 2018, the asset liability ratio of Xinxiang Chemical fiber was 53.46%, the current ratio was 1.05, and the quick ratio was 0.58. The average ratio of listed company's current assets and that of the same period were 19.2% and 19.2%, respectively. Compared with the comparable listed companies in the same industry, the asset liability ratio of Xinxiang Chemical fiber is higher than the industry average, and the current ratio and quick ratio are lower than the industry average.

Meanwhile, from 2017 to 2019, the financial expenses of Xinxiang Chemical fiber consolidated statements were 68.8285 million yuan, 76.2163 million yuan and 123.1017 million yuan respectively, showing an increasing trend year by year. In recent years, financial expenses accounted for 1.68%, 1.70% and 2.56% of operating revenue, respectively, accounting for an increase.

Xinxiang Chemical fiber sources told reporters that with the company's main product production capacity, sales revenue and market share further improved in recent years, the corresponding demand for operational liquid assets increased, and the company's liquidity demand increased.

Xinxiang Chemical fiber said that part of the proceeds from the non-public offering will be used to repay bank loans. After the raised funds are in place, the company's capital structure will be optimized, and the solvency indicators such as current ratio, quick ratio and asset liability ratio will be improved.

Red Sea of competition

In fact, not only Xinxiang Chemical fiber, in recent years, other leading enterprises of spandex are also expanding, and the industry concentration is increasing. According to the data, the production capacity of the top five domestic Spandex Enterprises accounts for 63.2%, and the market control of leading enterprises is significantly enhanced. In terms of production capacity, Huafeng spandex (002064. SZ) has the largest capacity in China, and Xinxiang Chemical fiber ranks second.

The reporter noted that in terms of the gross profit rate of spandex, Xinxiang Chemical fiber is far lower than Huafeng spandex. From 2016 to 2019, the gross profit rate of Spandex Products of Xinxiang Chemical fiber is 1.39%, 12.37%, 9.56% and 10.31%. However, the gross profit rate of Huafeng spandex is 17.22%, 20.46%, 22.64% and 22.33%.

Xinxiang Chemical fiber personage told reporters that Huafeng spandex has always been the industry leader, and Xinxiang Chemical fiber's new production capacity is relatively fast in recent years, the first solution is to open the market, occupy the market, and the simplest is to reduce the price. In this way, the gross profit rate appears relatively low. However, after the market returns to normal level, the company's gross profit margin will improve.

In this regard, Wang Wendan, a researcher at Zhongyan Puhua, said in an interview that the gross profit rate of Huafeng spandex has been maintained at a high range since its listing. As a result, the price of polyurethane fiber is high and the price of raw material is stable. The advantage of Xinxiang Chemical fiber lies in the production technology. Although the price of spandex fluctuates greatly, Huafeng spandex has always maintained a high level of gross profit rate and net profit rate with its cost management ability. From 2006 to 2019, the average gross profit rate of the company is 22.97%, and the average net profit rate is 10.34%. Affected by the epidemic situation in the first quarter of 2020, the market price will go down, and the gross profit rate will still reach 21.92%, indicating that Huafeng spandex has a high level of cost management.

Li Zengjun, vice president of spandex branch of China Chemical Fiber Industry Association, once said, "in the past few years, when the spandex industry was booming, the profit margin was always higher than the average level of the chemical fiber industry. At that stage, spandex manufacturers accelerated the expansion of production capacity. However, since 2017, the domestic spandex market has entered a downward channel. However, the product price is still rising, so the market is still good. However, by 2018, the spandex industry as a whole is in a downward cycle. Under the pressure of the prices of main raw materials such as PTMEG and MDI, the prices of the main varieties of spandex have decreased to varying degrees, and the inventory has also increased. As a result, the total profit and profit margin of the industry have decreased, and the overall profit level has declined. "

In this context, Xinxiang Chemical fiber in the market continues to seize, its accounts receivable turnover rate decreased year by year. From 2016 to 2019, the turnover rate of accounts receivable of Xinxiang Chemical fiber is 17.59, 13.8, 9.73 and 7.83 respectively.

Economist song Qinghui told reporters that in recent years, the continuous expansion of spandex industry has led to fierce competition, and the accounts receivable and turnover rate of Xinxiang Chemical fiber have increased significantly, or the company has given customers certain credit sales policies in order to expand the market.

Wang Wendan told reporters that at present, the competition in the spandex industry is fierce. In recent years, the company's production capacity has expanded, and the increased capacity needs to be circulated as soon as possible. In order to increase the circulation of products, Xinxiang Chemical fiber sales mode mainly focuses on distribution. In order to increase the circulation of products, dealers are generally given one-year account period, which leads to the decline of the company's accounts receivable turnover rate and the slow down of asset flow. However, Xinxiang Chemical fiber strictly controls the spandex distributors. If the payment is not collected in time, the distribution qualification will be cancelled in the next year. Therefore, through operation control and expansion of production capacity, the market share of Xinxiang Chemical fiber will increase, and its capital operation will gradually stabilize.