Accelerate The Integration Of Textile Industry&Nbsp; Cost Pressure Still Needs To Be Relieved

The downturn in foreign trade and rising pressure on raw material costs have hit the textile and clothing industry hard since 2011 Profitability . Data shows that 16 of the 23 listed textile and clothing companies that have announced their quarterly performance forecasts as of April 22 have experienced a sharp decline in performance or a loss in net profit. As the economic recovery will take some time, the restructuring and integration of the textile industry has begun to surface, and property rights transactions are also constantly active.

　　 Industry integration is accelerating

Textile, silk and other industries used to be traditional competitive industries, but their poor performance has increased the determination of all shareholders to integrate.

According to the announcement of Jiangsu Property Exchange on April 18, Jiangsu Xintian Enterprise Development Co., Ltd., a subsidiary of Jiangsu Suhao Holding Group Co., Ltd., offered a price of 14.1942 million yuan, and planned to transfer its 10 million yuan contribution to Jiangsu Yulun Textile Group Co., Ltd., or 20% of the registered capital.

The poor performance of Yulun Textile has added to the "disinterest" of Soho Holdings. According to the public data, Yulun Textile mainly produces four series of yarns including pure cotton, chemical fiber, blended yarn and rotor spun yarn as well as various poplin. However, due to poor business, it has auctioned looms, warping machines, winders, roving machines and other textile equipment for many times since March 2011. The audit report shows that Yulun Textile achieved an operating income of 92.4572 million yuan, a net profit of - 299700 yuan and a total asset of 422 million yuan from January to May 2011. Compared with the contribution of 10 million yuan, Suhao Holding's transfer premium to Yulun Textile is 42%.

However, the management of Yulun Textile still has confidence in the company. Zhu Jinan, the legal representative of the company, clearly stated that he would exercise the right of first refusal to participate in the acquisition. However, the other four shareholders gave up the right of first refusal.

At the same time, 25.71% of the state-owned equity of Shijiazhuang Textile Machinery Co., Ltd. was also listed and transferred in Hebei Property Rights Trading Center. The textile machinery company is responsible for equipment manufacturing and the management of several textile equipment factories in Shijiazhuang. However, as of November 30, 2011, the total book assets of Shijiazhuang Textile Machinery Company were 101 million yuan, and the net assets were only 30.3 million yuan. The corresponding assessed net assets of the transfer object are 8.7903 million yuan, and the transfer base price is 9 million yuan.

According to the information of the exchange, the share trading of textile companies in the property market is increasing. COFCO recently sold its 10% stake in Beijing Xinli Woolen Textile Co., Ltd, Chinese clothing The sale of 70% equity of Foshan Zhongfu Textile Printing and Dyeing Co., Ltd. and the transfer of equity of Beijing Jingguan Towel Co., Ltd. also attracted market attention.

　　 Cost pressure still needs to be relieved

The rising cost of raw materials and labor, as well as the downturn in foreign trade and the appreciation of the RMB are the main reasons why the chemical fiber textile industry continues to suffer from performance shocks.

In the published quarterly performance report or forecast Changshan Shares , Xunxing Shares, Meixinda and other listed companies turned from profit to loss on year-on-year basis.

China Garment is expected to lose 7.5 million to 8.5 million yuan from January to March, while the company still made a profit of 305300 yuan last year. According to China National Garments, in the first quarter of 2012, the demand of the international and domestic markets was sluggish, which led to the company's export business not reaching the expected goal. Due to the rise of domestic raw material prices and labor costs, plus the appreciation of RMB, the gross profit rate of the company's export commodities declined. The performance of listed companies in the textile and clothing sector is worrying one after another due to multiple factors.

The data shows that the gross profit margin of textile and clothing companies that have released their first quarter performance reports has declined significantly, of which ST Maia, Sanfangxiang and Meixinda have declined 72.52%, 59.64% and 45.83% respectively. Although the gross profit margin of a few companies, such as Langsha Co., Ltd., has increased, the increase rate is not more than 16.5%.

Industry insiders said that lower product prices and rising raw material costs have formed a double attack on the profitability of the sector. Changshan Shares said that in the first quarter, affected by the continued weakness of the market situation in the cotton textile industry, the company's cotton textile product prices fell significantly year on year, and its gross profit margin dropped significantly, resulting in a large loss of the company. Industry insiders believe that the performance recovery of the textile sector needs to wait for the relief of cost pressure and the boost of the global economy.