As the domestic and international consumer markets accelerate recovery, the domestic textile manufacturing industry is “not slow in the off-season.” Reporters from the Financial Associated Press also learned from relevant listed companies in the industry that in the face of increased demand and rising prices of cotton raw materials, textile manufacturing companies such as Lutai A (000726.SZ) and Vosges (002083.SZ) have raised product prices. , optimize product structure, strengthen cost control and other measures to ensure and actively increase the company’s gross profit margin.
Demand picks up, orders increase
As the global epidemic situation has eased and overseas market demand has increased, the textile manufacturing industry has survived difficult days. Zhang Keming, secretary of the board of directors of Lu Thai A, told a reporter from the Associated Press that after the overseas epidemic was effectively controlled in 2021, overseas market orders have effectively recovered, and the order situation has improved quarter by quarter. The order speed in the fourth quarter of 2021 is better than in previous years, and the same in the first quarter of this year. More optimistic.
He further said that in December 2021 and January this year, the company’s orders increased significantly, the off-season is not weak, and the order-taking speed and order volume are at a relatively good period in history. At present, the company has ample orders on hand. Judging from the current number of employees, the company’s production capacity has been dynamically saturated. “The comprehensive capacity utilization rate of the company’s factories now exceeds 80%, which was about 70% in the first half of last year.”
Peng Shiqiang, Secretary of the Board of Directors of Vosges Co., Ltd. also said that the company’s recent orders have been relatively full and its customers are very sticky.
The growth in order demand has also brought enhanced performance to related listed companies.
The performance forecast shows that Lutai A expects the company to achieve profits of 280-420 million yuan in 2021, an increase of 187.74%-331.62% over the same period last year. Among them, the non-net profit deduction in the fourth quarter of 2021 exceeded the total of the first three quarters. Huafu Fashion expects the net profit attributable to shareholders of listed companies to be 550-630 million yuan in 2021, achieving a turnaround. Fuchun Dyeing and Weaving estimates that the net profit attributable to shareholders of listed companies in 2021 will be 220-240 million yuan, a year-on-year increase of 94.15% to 111.8%. Among them, the performance in the second half of the year was stronger than that in the first half.
Judging from export data, the cumulative export value of textile and clothing from January to December 2021 increased by 8.3% year-on-year, an increase of 16.2% compared with the same period in 2019. In terms of categories, the export value of textile products in December 2021 increased by 16.2% year-on-year.
Shengang Securities Research Report believes that overall, the textile manufacturing industry has gradually recovered after the normalization of the epidemic, and the industry has picked up. Leading companies have improved company production efficiency, increased production capacity utilization, and the expansion of online + offline channels have brought benefits to the industry. Positive change.
Increase product prices and launch high-end products to ensure gross profit margins
Although the increase in orders has injected confidence into the industry, rising cotton prices have also brought certain cost pressures to related companies. According to SunSirs data, the price of 3128B lint cotton was 14,981 yuan/ton at the beginning of 2021, and the price rose to 22,206 yuan/ton at the end of 2021, an increase of 48.23%. Entering 2022, cotton prices are still on an upward path. On February 7, China’s cotton price index was reported at 22,762 yuan.
In response to rising cotton prices, many textile manufacturing companies have raised prices to pass on cost pressures.
Zhang Keming said that on the one hand, the company has strengthened cost control, and on the other hand, it has raised product prices multiple times since the second quarter of last year to spread cost pressure. “As of the fourth quarter, the company’s products have roughly raised prices for major European and American customers for three or four rounds, totaling more than 10%. From the current point of view, the downstream acceptance is acceptable. In 2022, the company’s low-price orders have been digested, and all price comparisons have begun. High orders. If cotton prices continue to rise in the future, the company’s products will not rule out continuing to raise prices.” Zhang Keming said.
Similarly, Peng Shiqiang told reporters from the Financial Associated Press that due to the sharp rise in cotton prices, the company’s product prices in overseas markets will increase by an average of 3-5% in the fourth quarter of 2021, and by 5-8% in the domestic market. This year, the company’s products are still The price increase plan is currently in the process of negotiation with customers. In terms of cost control, the company has a certain cotton quota every year. In addition, with decades of experience in the industry, the company has strong purchasing capabilities at the right time.
In addition, listed companies in the industry continue to accelerate the pace of research and development of new products, increase the proportion of high-end products, and ensure profit margins by better meeting the market demand for consumption upgrades.
Zhang Keming said that the company is accelerating the research and development of new products and optimizing the product structure. Due to the impact of the COVID-19 epidemic, the implementation progress of the company’s “high-end printing and dyeing fabric production line project” has been delayed; the production capacity of the “functional fabric smart ecological park project” is gradually being released, and the production capacity is expected to reach 1 million meters per month in mid-2022. “It is difficult to raise prices for traditional products, but relatively speaking, new products have greater profit margins.”
In this regard, Peng Shiqiang said that the company has actively adjusted its product structure in recent years to increase the added value of its products. He said: “For example, the company has launched a series of Zhulier towels in recent years, which has achieved sales of 50 million yuan a year in the international market. The production process of this product reduces the dyeing process and saves a lot of water. Electrical consumption meets low-carbon requirements and the gross profit is higher.”
Guosen CertificateThe January research report pointed out that the textile manufacturing industry benefited from the situation of sufficient orders and tight supply, with good fundamental trends. Leading companies with strong export growth momentum and the ability to pass on rising cost pressures deserve attention.
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