Texhong Textile Group Co., Ltd. (hereinafter referred to as “Tinhong Textile”), the global leader in the elastic core-spun yarn market, recently released 2021 According to the mid-year report, during the reporting period, the company achieved operating income of 12.5 billion yuan, a year-on-year increase of 52.5%; net profit attributable to parent company holders was 1.288 billion yuan, a year-on-year increase of 12192%.
Texhong Textile said that although the epidemic has not been completely controlled globally, China’s domestic market demand has taken the lead. Recovery and economic activities in European and American countries and regions have gradually resumed after vaccination. Factors such as the impact of the epidemic in India, a major textile supplier, on its exports have promoted the better use of the production capacity invested and constructed in the past three years.
Industry insiders believe that Tianhong Textile’s explosive growth in the first half of the year fully demonstrates the company’s absolute leading position in the field of functional yarns; at the same time, the gross profit margin brought by integration has also gradually improved. appear. More importantly, the explosive performance growth in 2021 is expected to help the company comprehensively improve its asset and liability structure and lay a solid foundation for future healthy growth.
Industrial Securities analyst Han Yijia said that as a leading company in the yarn field, Tianhong Textile has been expanding against the trend since 2018 and continues to promote the integrated layout of the industrial chain, profitability and profitability. Stability is expected to continue to grow; affected by repeated overseas epidemics, some orders have been transferred to China, yarn prices have continued to rise in July and August, and gross profits can be maintained at a high level.
When the First Textile Network took stock of Tianhong Textile’s financial report, it also noticed that it looked at the product situation:
During the reporting period, yarn sales revenue was 9.875 billion yuan, an increase of 58.3% compared with the same period last year, accounting for 78.8% of the company’s operating revenue; the mid-stream and downstream business was dominated by the sales of woven fabrics , while developing knitted fabrics and clothing manufacturing business.
During the reporting period, although the woven fabric business gradually recovered under the influence of the epidemic, the order volume basically returned to normal near the end of the second quarter of 2021. However, because the Chinese market for yarns has recovered more strongly than the European and American markets for fabrics, the overall yarn sales volume and revenue have reached the highest level in the history of Tianhong Textile, driving the yarn sales revenue share to rise.
During the reporting period, yarn sales reached approximately 417,000 tons, an increase of 37.8% over the same period last year. As the Chinese market has returned to normal at the beginning of this year, and overseas markets have gradually recovered, customer demand for Tianhong Textile products is strong, and the rapid increase in customer orders has allowed Tianhong Textile to adjust its product mix to return to the ideal state, and the production capacity invested and constructed in the past three years has been able to In particular, the price of yarn has increased with the recovery of raw material prices. Before the use of lower-cost raw materials in stock, the gross profit margin is higher than the normal level. The average gross profit margin of Tianhong Textile Yarn has increased to 23.8%, an increase from the same period last year. 13.2%.
During the reporting period, the sales volume of gray fabrics was approximately 25.6 million meters, a decrease of approximately 2.7% compared with the same period last year. The decrease in sales was mainly due to the increase in the amount of gray fabrics used in fabric production compared with the same period last year. Driven by the use of Tianhong Textile’s self-produced yarn, the gross profit margin of gray fabrics also increased from approximately 8.8% in the same period last year to 31.4%.
During the reporting period, the sales volume of woven fabrics produced by Tianhong Textile was approximately 64 million meters, and the operating income was approximately RMB 1.16 billion, an increase of approximately 47.2% compared with the same period last year. The gross profit margin increased from 20.7% in the same period in 2020 to the current 22.4%.
During the reporting period, the sales volume of knitted fabrics produced by Tianhong Textile increased from 6,400 tons in the same period last year to about 8,300 tons, and the operating income was RMB 450 million, an increase of 47.3% over the same period last year. Gross profit margin increased from 12.4% to 16.1%. Knitted fabric sales were also affected by the increase in the price of purchased raw material yarn during the review period. At the same time, some new equipment in the Vietnam factory was in the initial stage of production, thus affecting profit margins.
During the reporting period, the sales volume of denim clothing produced by Tianhong Textile increased from approximately 4.7 million pieces in the same period last year to approximately 5.1 million pieces during the review period, and the gross profit margin increased to approximately 12.7 %. There is room for further improvements in product development and production efficiency, thereby improving future profitability.
During the reporting period, Tianhong Textile’s trading business (the US fabric and clothing trading business acquired in 2018) achieved operating income of 460 million yuan, with a gross profit margin of approximately 12.3%. Tianhong Textile develops trade The business mainly hopes to help expand the sales channels of self-produced products to promote its business growth.
During the reporting period, Tianhong Textile’s non-woven business achieved operating income of 42.34 million yuan. Although it increased significantly compared with the same period last year, it still needs to further develop customer sources to win market orders.
As of June 30, 2021, Tianhong Textile has a total of 39,926 employees, of which 20,461 employees are stationed in the Shanghai regional headquarters and the company’s factories in mainland China, and the remaining 19,465 employees are stationed in China. Areas outside mainland China (including��South Africa, Turkey, Nicaragua, North America, Hong Kong SAR and Macau SAR)
As of the end of the reporting period, the total number of spindles of Tianhong Textile in China and overseas (mainly in Vietnam) was approximately 2.52 million spindles respectively. and 1.62 million tablets. Since the first half of 2021, the increase in the sales price of Tianhong Textile yarn has completely caught up with the increase in raw material prices. In addition, the export supply of textiles in some countries or regions is still affected by the epidemic, which is beneficial to Tianhong Textile’s sales orders and Profitable, Tianhong Textile expects that the company’s yarn business will still relatively benefit from the current operating environment in the future.
The epidemic situation in Vietnam is still unstable, which will put certain pressure on Texhong Textile’s production capacity utilization in Vietnam in the second half of the year. Texhong Textile’s factory in northern Vietnam has arranged vaccinations for employees, with a coverage rate of nearly 90%. So far, employees at Tianhong Textile’s factory in southern Vietnam have completed the first round of vaccinations. In order to comply with the local government’s requirements for epidemic prevention and control, Tianhong Textile has only arranged for employees staying in the factory to continue working as usual, resulting in the factory’s capacity utilization rate being reduced to Less than 40%. If the relevant situation lasts for 30 days, it will affect Tianhong Textile’s annual yarn production capacity by approximately 1%. Due to the delay in completing the new factory in Vietnam, and the epidemic in Vietnam has also slowed down the delivery of products to garment factories, the knitted fabric sales target for 2021 needs to be lowered to 20,000 tons.
Texhong Textile said that entering the second half of the year, the company will continue to consolidate its existing production bases in China, Vietnam, Turkey, Mexico and Nicaragua, and give full play to regional supply and vertically integrated fabric production. advantages to enhance and stabilize the group’s profitability. At the same time, the company will also focus on completing the construction of a new knitted fabric factory in Vietnam and the technical transformation of local yarn factories.
Yu Xuhui, a researcher at Changjiang Securities, previously pointed out that demand from major overseas clothing importing countries has picked up significantly, coupled with the rebound of the epidemic, the return of orders has continued, and the export-side prosperity has gradually increased. At the same time, the stability and competitiveness of China’s textile and apparel industry chain have improved under the epidemic. In addition, the spread of the epidemic in India and Southeast Asia has also caused some orders to be transferred to mainland China. It is expected that the positive pull of the return of orders will still exist under the rebound of the epidemic. Under the rising pressure of raw materials and the improvement of domestic and foreign demand, the inventory performance of the textile and apparel industry chain is slightly differentiated, that is, cotton industrial and commercial inventories are high, while inventories of intermediate products and finished products are at historically low levels. Under the expectation of rising upstream raw materials represented by cotton, companies have a strong willingness to stock up on cotton and are actively stocking up. Cotton industrial and commercial inventories are at historically high levels. The recovery in demand has driven the rapid depletion of inventories of intermediate products such as yarns and gray fabrics, as well as finished products. Looking ahead to the market outlook, Yu Xuhui believes that, except for cotton, the current industry inventories are basically at Historically low, it is expected that manufacturing companies will have full orders and improve their income, catalyzed by the recovery of domestic and foreign clothing retail sales, the replenishment needs of brand customers, and the traditional Q3 peak season. The profit side has ushered in a comprehensive recovery due to the increase in capacity utilization and the increase in order volume and price. It is particularly important to emphasize that at present, foreign clothing retail sales are still mainly recovering in some countries represented by the United States and the United Kingdom. Clothing retail sales in Japan and other countries have not yet returned to pre-epidemic levels and the downward trend is still continuing. In the future, it will shift from initial to deepening. , the partial shift to the overall situation is expected to drive further release of external demand. In the short term, the positive pull of the return of orders is also expected to continue. In addition, the third quarter is the peak season for the cotton spinning industry, and manufacturing companies are expected to usher in an overall improvement under the “prosperity.”
As of the last trading day before First Textile Network published this evening, Tianhong Textile closed at HK$12.10 per share, an increase of 1.68%, with a market value of HK$11.1 billion. </p
