Market Value Shrinks Nearly 74%, Textile Giant Weiqiao Textile Becomes "Weiqiao Electric Power"?

It is learned that Weiqiao textile, a textile giant, issued an interim performance announcement on August 14, saying that the company's operating revenue had reached 5.43 billion yuan (the same below), a year-on-year decrease of 30.2%; the company recorded an overall gross profit rate of about 7.6%, a decrease of about 0.2% compared with the same period last year, and the net profit attributable to the ultimate shareholders was 155 million yuan, year-on-year The decrease was 24.8%. In terms of secondary market, Weiqiao textile once opened a wave of short-term market on July 17. After that, a large-scale increase of 32.6% was accumulated in the following eight trading days. However, it began to decline continuously on July 29, followed by the company's medium-term performance disclosure with a sharp decline year-on-year.

At present, the two major business decline of Weiqiao textile, medium-term performance is not enough to give the market a bright, its share price fell back is not difficult to understand.

The business environment is not good, and Weiqiao's business is declining in an all-round way

The development of textile business and electric power business was blocked, which led to a sharp decline in the scale of Weiqiao textile revenue. Due to the adverse impact of public health events, the domestic and foreign textile market continued to be weak, which led to the decline of textile demand. The sales volume of cotton textile products of the company decreased year-on-year, and the sales price also decreased compared with the same period last year. The sales revenue of cotton yarn, grey cloth and denim decreased by 29.2%, 24.5% and 49.7% to 1.395 billion yuan, 1.991 billion yuan and 206 million yuan respectively The company's sales volume decreased to RMB 230 million, resulting in a sharp decrease in the company's sales volume to RMB 230 million.

In terms of profit, the gross profit rate declined while the expense rate was still rising, thanks to other income, which raised the level of net profit margin. In the first half of 2020, due to the impact of public health events, the government introduced a number of preferential policies. The company benefited from the periodic reduction and exemption policy of enterprise social insurance premium issued by Shandong provincial government. The social security expenditure of the group decreased and the labor cost decreased. The gross profit rate of textile sales increased by 1.3 percentage points to - 0.6% year on year. However, the reduction of electricity sales led to the fixed unit income Compared with the same period last year, the company's gross profit rate decreased by 1.9 percentage points to 23.5%, and the overall gross profit rate of the company in the first half of 2020 still fell by 0.2 percentage points to 7.6%.

In terms of expenses, the company's sales and distribution expenses, administrative expenses and financial costs decreased by 7.7%, 1.8% and 24.1% respectively to 63.124 million yuan, 132 million yuan and 56.919 million yuan, respectively. The overall decline rate of the three fees was only 9.3%, far lower than the 30.2% decline in revenue. The three fee rates increased by 1% to 4.6% year on year. However, the company benefited from the government funding, exchange earnings and sales of waste and parts, which led to a significant increase of other revenue of 76.1% to 129 million yuan, and a sharp decline of income tax of 33.8%, which eventually led to a decrease of 24.8% in net profit attributable to shareholders to 155 million yuan.

As for cash flow, although the net cash flow inflow of the company in the first half of 2020 dropped by 73% to 215 million yuan, the cash used in investment activities decreased significantly, from 273 million yuan outflow in the same period of last year to net inflow of 72.18 million yuan. By the end of June 2020, the company's cash and equivalent still increased by 116 million yuan to 9.9991 billion yuan, 1.86 times of the total current liabilities of 5.362 billion yuan Gold is still abundant.

In fact, from the first half of 2016, the performance of Weiqiao textile giant will not be far away.

Textile business decline year after year, the company changes Weiqiao power?

Weiqiao textile as a textile giant once had countless halos on its head. It is not only the largest cotton textile manufacturer in China, but also the largest cotton textile enterprise in the world. It is one of the top 500 Chinese enterprises and 26 super large enterprises in Shandong Province. In the past ten years, the company has grasped the opportunity of China's rapid economic growth, established a huge production scale, and laid a foundation in the global cotton textile market combined with technical equipment.

However, since the textile profit margin plummeted in 2016, Weiqiao textile business has entered a downward trend year after year, and has not yet seen the dawn. Due to the weakening of overall market demand, international trade situation, rising cotton cost and other issues, the company's textile business revenue increased by 3.3% to 10.087 billion yuan in 2016, while the segment profit decreased significantly by 57.7% to 176 million yuan; in 2017, the revenue of textile business increased slightly to 10.737 billion yuan, the segment profit continued to decline to 148 million yuan, and the revenue and segment profit in 2018 decreased respectively It dropped to 10.517 billion yuan and continued to be 131 million yuan. In 2019, while the revenue shrank to 9.902 billion yuan, the segment profit began to turn into a loss of 523 million yuan.

In the first half of 2020, the company's profit remained unchanged. According to the data, the company's textile business contribution segment loss was 120 million yuan in the first half of 2020, which was reduced by 25.7% compared with the same period in 2019 due to the sharp decline in scale and the policy support of public health events. Weiqiao textile, which has won numerous honors in the textile industry, seems to be the main profit-making business in recent years. The market value of the company has been falling since the peak in August 2016. It has been just four years since then, and the cumulative decline has reached 74%.

Although Weiqiao's textile business has been declining year after year, Weiqiao can still benefit from the industrial rebound opportunities in the third quarter of 2020.

Textile services market in the third quarter, is lifting market expectations

Textile clothing data gradually improved, market expectations to follow the rise. From June 2020 to June 2020, the total export amount of HS category reached US $280 million. In July 2020, China's total export value was 237.630 billion US dollars, up 7.70% year-on-year. Compared with June, China's total export volume increased by 0.50%. From January to July, the cumulative export value of textile and clothing increased by 5.6% year-on-year, and the growth rate increased by 2.4%. In terms of categories, the export amount of textile and clothing products increased by 29.8% and - 19.4% respectively, with the growth rate increasing by 3.4% and 2.8% month on month. Among them, the export amount of textile and clothing in July maintained a high growth rate of 48.4% year-on-year, and the export amount of textile and clothing reached a new high.

At the same time, the cost side of cotton prices also have good news. As of August 14, China's cotton 328 index was 12403 yuan / ton, down 5 yuan / ton or 0.04% from last week. China's import cotton price index (1% tariff) was 11972 yuan / ton, down 304 yuan / ton or 2.48% from 12276 yuan / ton at the end of last week. As of August 13, the closing price of cotook a index (1% tariff) was 11783 yuan / ton, which was 450 yuan / ton lower than 12233 yuan / ton at the end of last week. The overall cotton price was still at a steady low level.

To sum up, Weiqiao textile's share price, which has been declining year after year, has been falling for four years. The market has low expectations for the recovery of its textile business. Although the market still has funds to focus on the boost of the industry's recovery in the third quarter, the real bottom recovery will start, perhaps only when the company can show its performance to prove itself.