Under The Epidemic, Everyone Shouted "Overcapacity". Why Do They Dare To Invest In New Projects?

As a representative of the backbone enterprises in the industry, every move of the listed company will attract the attention of insiders. Recently, the announcement of raising funds for new projects by 2 listed companies in the cotton textile industry has given rise to the industry's determination to enhance the main business of enterprises and expand the market. Even in this era when everyone shouted "overcapacity", Xinye textile Limited by Share Ltd (hereinafter referred to as "Xinye textile") and Hua Fu fashion Limited by Share Ltd (hereinafter referred to as "Huafu fashion") are also looking forward to using them. Achievements speak and go far.

Xinye Textile:

Optimize product structure and expand production capacity in Xinjiang

In June 5th, Xinye textile, the largest spinning rotor production line in China and the largest air spinning production base in Asia, disclosed the convertible bond plan for public offering. The total amount of fund-raising will not exceed 1 billion 600 million yuan. It will invest in 165 thousand spindles of high-grade spinning construction items, new functional yarn projects, medical hygienic nonwoven items and supplementary mobile assets of Akesu Xinfa Cotton Industry Co., Ltd. Gold.

Specifically, the 165 thousand spindles high-end spinning construction project is located in the Awati industrial cluster area of Akesu, Xinjiang. After the project is completed, it can produce high-grade cotton combed compact spinning of about 24 thousand and 800 tons, with a total investment of 610 million yuan and a construction period of 12 months.

The new functional spinning production line of 120 thousand spindles is located in the Western District of Xinye industrial agglomeration area of Henan province. After the completion of the project, the new functional yarn is about 16 thousand tons annually, with a total investment of 585 million yuan and a construction period of 12 months.

The medical hygienic nonwovens project is going to build 8 new medical nonwovens production lines. The construction site is West District of Henan Xinye industrial agglomeration area. After the project is completed, it can produce about 35 thousand tons of nonwoven fabrics annually, with a total investment of 403 million yuan and a construction period of 12 months.

In addition to the above items, Xinye textile intends to use 333 million yuan of this raised fund to supplement the working capital, satisfy the company's daily production and operation capital needs, speed up the research and development of new technologies, new products and new processes, develop and update production equipment, and nurture and inspire talents.

Xinye textile said that the company's capital raising investment project is conducive to the company's product structure adjustment, increase the proportion of high value-added products, and enhance the competitiveness of the company's products. At the same time, continue to expand production capacity in Xinjiang, enhance the proportion of the company's fist products. Wei Xuezhu, chairman of Xinye textile industry, has said that the company will optimize its production and operation and increase its market development so as to complete its 2020 year's established business objectives. The company has tried to provide customized fabrics to UNIQLO to expand the market in Japan and Korea.

In recent years, Xinye textile has made full use of the advantages of Xinjiang's cotton resources and the historical opportunity of the state to support the development of Xinjiang's textile industry. In Xinjiang's layout development project, it has invested about 2000000000 yuan successively, and through the mode of "new + acquisition", it has formed the 500 thousand ring spinning and 36 thousand Asia's largest air spinning production base, and has become a new growth point of the company's efficiency.

Industry analysts said that "productivity drive + production and marketing boom" is still the main factor driving the growth of Xinye's textile industry. As far as productivity is concerned, the current capacity of Xinye textile is mainly derived from Xinjiang Yuhua and Jinyuan, and the total spinning capacity of this department is about 170 million spindles. With the increase of production load, the performance of the current production capacity is expected to increase steadily. In addition, the knitted fabric items have been put into operation, and the subsequent production capacity will continue to be released. In terms of building capacity, Xinjiang's 165 thousand spinning project and its denim fabric project began to release capacity and contribution performance at the end of 2019; in terms of products, Xinye textile main products are white yarn, and the textile market has a larger scope of application.

The annual growth rate of yarn products can basically keep double figures, and the ratio of new products of yarn products is also gradually improving, and the market response is better. This depends on the continuous investment of the company's R & D. Since 2018, the continuous growth of R & D costs has provided continuous guarantee for the stability and improvement of the competitiveness of the company's products. In addition, from the sales point of view, the turnover rate of fixed assets of Xinye textile industry has been raised year-on-year, indicating that the production capacity projects are in the benign operation cycle, and the large customers of the company are relatively stable, and the growth of the demand is guaranteed to a certain extent. The stability of sales.

Huafu fashion:

1 billion 500 million yuan to increase the main business and expand the overseas market.

In June 7th, the world's leading color and spinning industry - Hua Fu fashion announcements announced that the total amount of funds raised by the company is not more than 1 billion 500 million yuan, which is used for the 500 thousand new spindles (phase I) and supplementary working capital of Huafu (Vietnam), of which the new yarn project will be invested at 1 billion 50 million yuan.

In this project, Hua Fu fashion intends to inject $371 million into Vietnam's Huafu through Hongkong Huafu Co., Ltd., and invest in building 500 thousand new yarn projects in Vietnam, Longan. In the first phase, 300 thousand new yarn projects will be built and two new yarn projects will be built. After the completion of the project, a new production scale of 300 thousand spindles will be formed, including high-grade cotton, functional sports and sustainable product yarn.

For the investment, Huafu fashion said that the construction of the project can effectively reduce the cost impact of the difference between domestic and overseas main raw materials, make full use of local policy advantages, reduce international logistics costs, effectively avoid tariff barriers, enhance cost competitiveness and service capabilities of the ASEAN market; meanwhile, make full use of Vietnam's advantages as an CPTPP member to expand production. It can enhance the competitiveness of the company in ASEAN market.

It is worth mentioning that in May of this year, Akesu Huafu, a wholly owned subsidiary of Huafu fashion, was included in the entity list by the US Department of Commerce. But Hua Fu fashion says that Akesu Huafu's raw materials, equipment and technology can circumvent products originating in the United States. Being included in the entity list will not have a substantive impact on the daily operation of the company.

The announcement indicates that Huafu fashion continues to increase its determination to develop its main business overseas. As early as 2013, Huafu fashion began to expand to Vietnam and set up a subsidiary in Vietnam. In the year of 2014~2015, it built the first phase 120 thousand color spinning project, and accelerated Vietnam's capacity layout in 2016~2017, and built two phase 160 thousand high-end color spinning project. By the end of 2017, Huafu fashion has formed 1 million 800 thousand ingots, of which Vietnam has formed 280 thousand spindles of spinning capacity and 20 thousand tonnes of dyeing capacity. Vietnam will gradually build Huafu as an all-around fast reaction production base in Southeast Asia to meet the needs of Southeast Asian regional customers.

The results proved that the layout of Huafu fashion in Vietnam did bring benefits to them.

In recent years, the growth of Huafu fashion revenue has been stable. In 2017 ~2019, its operating income was 12 billion 597 million yuan, 14 billion 307 million yuan and 158.87 billion yuan respectively. In terms of net profit, it increased from 201 million yuan in 2015 to 747 million yuan in 2018. Although it was affected by external environment, its net profit in 2019 dropped to 402 million yuan, but in 2019, operating cash flow went well, reaching 1 billion 893 million yuan in the same period. At the end of 2019, the total volume of Huafu fashion yarn was 1 million 890 thousand yuan, which was flat compared with the beginning of the year. The domestic and Vietnamese production capacity was 1 million 610 thousand spindles and 280 thousand spindles respectively.

　　 Industry analysts believe that Huafu always insists on the main industry and shares the industry, and considers Xinjiang and Vietnam to be the most important ones. Xinjiang is a supply market aiming at upgrading domestic consumption. Vietnam is an industry transfer to overseas markets. The company fully grasps the opportunities of the two regions and has made considerable progress. Vietnam has certain advantages in terms of market potential, cost, labor force, taxation and tariff, which has attracted a large number of Chinese textile enterprises to carry out the layout and expansion of production capacity in Vietnam. Compared to around 2013, the whole investment environment of Vietnam has changed a lot. But it is undeniable that even if Vietnam's land and labor costs rise earlier than before, it still has certain advantages compared with the domestic market. In addition, raw material price advantage, tax and tariff advantages still exist, and the transfer of orders to Vietnam also urges Chinese textile enterprises to invest and build factories in Vietnam, and at the same time, it can effectively evade the risks caused by the uncertainty of trade friction.