Reflections on Quanzhou Textile Industry's "Revenge of Revenue"

Core Tip: Last week, Fujian Fengzhu Textile Technology Co., Ltd., a leading domestic textile company, disclosed half-year performance forecasts. According to the forecast data, the company’s net profit attributable to owners of the parent company in the first half of this year was approximately 90% lower than the same period of last year.

In the previous month, China Taishan (Lianjie Textile) and Haidong Qingxin Materials Group also successively disclosed the semi-annual report. Behind the growth in performance, the former’s net profit fell by 57.7% year-on-year, while the latter’s net interest rate decreased by 3.2 percentage points year-on-year. There are also two companies that have achieved growth. That is Baihong Industrial Holdings Co., Ltd. and Fulian Fabric Technology Holdings. The former profit increased by more than four times year-on-year, and the latter's second-quarter net profit growth was as high as 1119%.

Quanzhou textile industry's living conditions can be seen from the semi-annual report data of these listed companies. In contrast to finished garment enterprises, which generally maintain the growth trend and accelerate channel expansion and diversification of brand diversity, Quanzhou textile companies have experienced “some people like to have some people’s worries”. Although there are also many companies that are doing well, most companies The top priority is to survive.

Raw materials “provoke disasters” Net Lipu dropped Baihong Polymer Fibers, and its revenue in the first half of the year was 2.969 billion yuan, up 65.7% year-on-year; China Taishan, its half-year income was 428 million, down 34% year-on-year; Fulian Fabric Technology Holdings’ second-quarter revenue was 203 million. 203%; Haidong Qing, the first half of income of 650 million, an increase of 54.3%.

"If you look at operating income, most companies will have growth. The growth data of our textile industry will keep up with the overall situation. In your media's words, it will be called 'all the way forward.'" Quanzhou Textile Company executives mocked themselves. Road.

The person in charge of the company showed selflessness and anxiety at the same time. Because, behind the rise of many corporate income data, is the decline in net profit.

Phoenix Bamboo Textile, the first half of the net profit or a drop of 90%; China Taishan, half a net profit of 46.2 million yuan, down 57.7%; Haidong Green's net interest rate fell 3.2 percentage points. The sharp contrast between the two sets of data reflects some of the real developments of Quanzhou textile companies.

As for the reasons for the sharp decline in net profit, Fengzhu Textile, China Taishan, Haidongqing and other companies all indicated that they had been affected by factors such as the appreciation of renminbi, tightened monetary policy, rising labor costs, and fluctuations in raw material prices in the first half of the year. influences. Among these, frequent and significant fluctuations in the prices of raw materials have seriously affected the demand for the textile market and caused the company's profits to suffer a direct impact. "Rising raw materials and fierce competition in the industry. Customers are on a wait-and-see attitude, orders are reduced, and prices for products are difficult. High-margin product sales and rising raw material costs have resulted in a sharp decrease in profit," said China Taishan.

The analysis of these listed companies tells the voice of most companies in the Quanzhou textile industry. Many companies such as Hongtai Textile and Tailong Fabric are still experiencing the difficult game stage of “cost increase and price increase”. "In the first half of the year, the company's various types of costs have all increased by more than 20%, and the product price increase has only raised about 5%. After all, the burden of cost is still very heavy," said Liu Zhishun, deputy general manager of Tailong Fabrics.

"Compared with income data, net profit or net interest rate can better explain the living conditions of enterprises." The head of the textile industry said.

Breakthrough in new technology products When most companies are bothered by the balance of payments, Baihong Industrial and Fulian Fabrics, which have achieved substantial growth in net profit, have become the focus of the Quanzhou textile industry.

It is understood that Baihong Industrial actively researches and develops new products. By June 30, 2011, 25 new-type differential polyester filaments developed by the company have obtained 18 national patents, and new devices independently researched and developed have also been patented. A variety of products and devices are applying for patents. Although raw material prices are also rising, because of the diversified product mix, Baihong Industrial has high bargaining power and passes most of the cost increase to customers. Therefore, the gross profit margin is also stable at a relatively high level.

“We have diversified our products to increase our bargaining power, and we have developed new products to increase our market share, so we can fully grasp business opportunities and achieve satisfactory results in the first half of this year.” Shih Tianyou, one of Baihong Industrial, said.

Fulian's fabrics, on the other hand, benefited a lot from functional fabrics. The company and Xi’an University of Engineering reached an all-round cooperation in production, education, and research and development. Nano-three defense, anti-termite, floating printing, and sensible temperature and other functional fabrics became the main driving force for its net profit growth.

This breakthrough in "diversification of functional products and increasing research and development capabilities" is being tried and explored by the Quanzhou textile industry. Many textile companies have stepped up their cooperation with universities and want to build new technology products in the second half of the year to seek new profit growth points.

In early August, Haidong Qing and Donghua University reached a cooperation on the "Central Project for Joint R&D of Comprehensive Utilization of Resources." Prior to this, Haidong Qing had already reached cooperation with high-tech textile projects in different fields with Wuhan University of Textiles, Tianjin University of Technology, and Zhejiang University of Technology. “The Group will continue to improve and optimize the function, production technology and quality of nonwoven materials and recycled chemical fiber. With enhanced recycling and reduction of pollutant emissions to reduce production costs, improve the competitiveness of enterprises and bargaining power, and maintain market leadership. “Hai Weiqing, CEO of Hai Dongqing, said in an interview with the media.

Taishan of China has also strengthened cooperation with universities. In the second quarter of this year, the company received research results of five new product prototypes from Wuhan Textile University. Next, through the discussion with new customers, these research results will be transformed into commercial products. "Under normal circumstances, new products will bring better sales and higher profits." China's Taishan said.

Expanding Production Capacity With the cooperation projects with major universities started one after another, Haidong Qing said that it will continue to track market dynamics and implement different strategies for the Group's 3rd Five-Year Plan. Among these, supporting the new project process is the expansion of capacity planning.

“The production line of high temperature resistant filter material with an annual production capacity of approximately 18 million square meters will be put into production gradually in September this year. The production line of composite synthetic leather with an annual production capacity of approximately 22.5 million square meters will be produced in the third quarter of 2012. The production base is expected to be put into production in 2014, and it is expected to expand the company’s annual production capacity of recycled chemical fiber to 162,000 tons.” Haidong Qing detailed the expansion plan in the “3rd Five-Year Plan”.

After the development strategy in the first half of the year was reflected in the benefits, Baihong Industrial and Fulian Fabrics also expressed their desire to further expand their production capacity in order to increase production efficiency and product quality, and achieve even higher performance. It is reported that Baihong Industrial's new plant is expected to be put into operation in November this year. It is expected that before the end of 2013, the company's total drawing and pre-oriented yarn design capacity and tensile-deformed wire design capacity will both increase significantly. At the same time, the company’s plan to expand its polyester film business has been approved by the board of directors. Fulian Fabrics stated that “the business strategy in the future is to continue to focus on R&D and product mix, and to strengthen new and advanced equipment and production lines so as to expand the production of high-end functional products.”

However, not all textile companies will take steps to expand production. Many companies, including China’s Taishan, are conservative when formulating plans for the second half of the year.

Taishan of China stated that in order to respond to the challenging business environment, the company will obtain higher cash inflows from operating activities based on the credit adjustments made by suppliers. It is reported that the group’s net cash in the first half of the year was 798 million, which was higher than the 426 million in the same period of last year. "Keeping a healthy balance sheet and net cash will enable the Group to overcome its operational difficulties."