Industry dynamics| textile manufacturing "off-season is not weak" enterprises have raised prices, pushed high-end products

Financial Associated Press (Qingdao, reporter Xiao Lianghua) news, with the domestic and international consumer market to accelerate the recovery, the domestic textile manufacturing industry "off-season is not weak". The Reporter of the Financial Associated Press also learned from the industry-related listed companies that in the face of increased demand and rising prices of cotton raw materials, Lutai A (000726.SZ), Vosges Shares (002083. SZ) and other textile manufacturing enterprises to ensure and actively improve the company's gross profit space by increasing product prices, optimizing product structure, strengthening cost control and other measures.

Demand picked up orders increased

Due to the easing of the global epidemic and the increase in demand in overseas markets, the textile manufacturing industry has survived a difficult day. Zhang Keming, secretary of the board of directors of Lutai A, told the Financial Associated Press reporter that after the overseas epidemic was effectively controlled in 2021, overseas market orders were effectively restored, and the order situation improved quarter by quarter, and the speed of orders in the fourth quarter of 2021 was better than in previous years, and the first quarter of this year was also more optimistic.

He further said that in December 2021 and January this year, the company's orders increased more, the off-season was not weak, and the order speed and order volume were in a relatively good period in history. At present, the company has abundant orders in hand, combined with the current number of employees in place, the company's production capacity has been dynamically saturated. "At present, the comprehensive capacity utilization rate of the company's factories is more than 80%, compared with about 70% in the first half of last year."

Peng Shiqiang, secretary of the board of directors of Vosges Shares, also said that the company's recent orders have been relatively full, and the customer stickiness is strong.

The growth of order demand has also brought performance to related listed companies.

According to the performance forecast, Lutai A expects the company to achieve a profit of 280 million yuan–420 million yuan in 2021, an increase of 187.74% to 331.62% over the same period last year. Among them, the non-net profit deducted in the fourth quarter of 2021 exceeded the sum of the previous three quarters. Huafu Fashion expects that the net profit attributable to the shareholders of listed companies in 2021 will be 550-630 million yuan, achieving a turnaround. Fuchun Dyeing & Weaving expects net profit attributable to shareholders of listed companies to be 220-240 million yuan in 2021, an increase of 94.15% to 111.8% year-on-year. Among them, the performance in the second half of the year was stronger than in the first half of the year.

From the perspective of export data, the cumulative export value of textiles and garments from January to December 2021 increased by 8.3% year-on-year, an increase of 16.2% compared with the same period in 2019. By category, 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, the industry has picked up, the head company has improved the company's production efficiency, improved the capacity utilization rate, and the expansion of online + offline channels has brought positive changes to the industry.

Product price increases, launch of high-end products to ensure gross profit space

Although the increase in orders has injected confidence into the industry, the rising cotton price has also brought certain cost pressures to related companies. According to business agency data, the price of 3128B lint cotton was 14981 yuan / ton at the beginning of 2021, and the price rose to 22206 yuan / ton at the end of the year, an increase of 48.23%. Entering 2022, cotton prices are still in an upward channel, and the China Cotton Price Index was reported at 22762 yuan on February 7.

In response to the rise in cotton prices, a number of textile manufacturing companies raised prices to conduct cost pressures.

Zhang Keming said that on the one hand, the company strengthened cost control, on the other hand, since the second quarter of last year, it has repeatedly raised prices for products and transmitted cost pressure. "As of the fourth quarter, the company's products for Large customers in Europe and the United States roughly increased prices for three or four rounds, a total of more than 10%, from the current point of view, the downstream acceptance is acceptable." In 2022, the company's low-priced orders have been digested and all orders with relatively high prices have begun to be executed. If the price of cotton continues to rise in the future, the company's products do not rule out continuing to raise prices. Zhang Keming said.

Similarly, Peng Shiqiang told the Financial Associated Press reporter that because of the sharp rise in cotton prices, the average price of the company's products in overseas markets increased by 3-5% in the fourth quarter of 2021, and the price increase in the domestic market was 5-8%, and the company's products still have a price increase plan this year, and are currently in the process of negotiating with customers. In terms of cost control, the company has a certain cotton quota every year. In addition, the company has decades of experience in the industry and has a strong ability to purchase 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 new crown epidemic, the implementation progress of the company's "high-grade printing and dyeing fabric production line project" has been delayed; The production capacity of the "Functional Fabric Smart Ecological Park Project" is gradually released, and the production capacity is expected to reach 1 million meters / month in the middle of 2022. "It is more difficult to raise the price of traditional products, and relatively speaking, the profit margins of new products are greater."

In this regard, Peng Shiqiang said that the company has actively adjusted its product structure in recent years to improve the added value of products. He said: "For example, a Zhulier series of towels launched by the company in recent years has achieved sales of 50 million yuan a year in the international market, and the production process of this product has reduced the dyeing link, saved a lot of water and electricity consumption, met the low-carbon requirements, and the gross profit is high." ”

Guosen Securities research report in January pointed out that the textile manufacturing industry benefits from the situation of sufficient orders and tight supply, the fundamental trend is better, the export growth momentum is strong and the leading enterprises with upward pressure to pass on costs are worthy of attention.