Less Orders Under The Epidemic Situation, Lower Sales Volume! The Net Profit Of Lutai, The Global Leader In Color Weaving, Fell By 70% In The First Half Of The Year, Earning Only 100 Million Yuan

Lutai Textile Co., Ltd. (hereinafter referred to as "Lutai a") disclosed its performance forecast for the first half of 2020 on the evening of July 14. It is estimated that the net profit attributable to the shareholders of the listed company during the reporting period is only 120 million yuan - 160 million yuan compared with 411 million yuan in the same period of last year, with a decrease of 70.83% - 61.11%.

As for the main reason for the performance change, Lutai a explained that during the reporting period, the company's customer orders decreased due to the epidemic situation, and the company's product sales decreased, resulting in a sharp decline in net profit compared with the same period of last year.

Lu Tai is also the largest textile production base in the world. The company was formerly Lutai Textile Co., Ltd., a joint venture established by Lucheng textile and Thailand Talon Textile Co., Ltd., which was listed on the Shenzhen Stock Exchange in August 1997.

Lutai textile is mainly engaged in the production and sales of textiles, clothing and accessories. Its products cover yarn, fabrics, shirts, suits, coats and other categories, among which the most important products are fabrics and shirts. At present, the company's yarn dyed fabric production capacity accounts for about 18% of the world's medium and high-end shirt yarn dyed fabrics, and its net assets rank second in China's A-share industry. Our main customers include tal, CHENFENG, PVH and other well-known clothing companies at home and abroad.

Lutai textile has a complete industrial chain from textile, dyeing and finishing, garment production to brand marketing. It has 14 holding subsidiaries in 8 countries including China, the United States, Italy, Japan, India, Vietnam, Cambodia and Myanmar. It is an integrated, innovative and international textile and garment enterprise integrating R & D, manufacturing and marketing services.

Shandong is the most important production base of Lutai textile. The industrial chain includes spinning, fabric weaving and garment manufacturing. It has the main production capacity of color woven fabric and shirt. It is also the R & D design and management center of the company. Xinjiang production base is mainly responsible for cotton planting and purchasing, spinning and other businesses.

Taking advantage of the labor cost advantage of Southeast Asia, Lutai textile has garment factories in Cambodia and Myanmar. Vietnam has formed the industrial chain layout of yarn, fabric and clothing. The main reason is that Vietnam's textile industry is relatively advanced in Southeast Asia as a whole, and can form industrial chain synergy with garment manufacturing in Cambodia and Myanmar.

In addition, Lutai A's business scope also includes textiles and clothing testing, mechanical and electrical products processing, sales, agricultural products acquisition, etc.

According to the financial report, in 2019, Lutai a achieved an operating revenue of 6.801 billion yuan, a year-on-year decrease of 1.13%, and a net profit of 952 million yuan belonging to the parent company, with a year-on-year increase of 17.36%; from the perspective of sales area, the company's revenue mainly comes from overseas, and the export revenue accounts for about 65% ~ 70%. Among them, income from Southeast Asia accounted for the highest proportion. In 2019, the second phase of the company will be put into operation in Vietnam, and the production capacity will be released orderly.

In terms of products, during the reporting period, the fabric product income of Lutai a decreased by 0.33%, the gross profit rate decreased by 0.17 PCT, the income of shirt products increased by 0.61%, and the gross profit rate increased by 0.65 PCT.

In terms of domestic sales, the domestic sales revenue of Lutai decreased by 3.34% year-on-year.

Judging from the capacity of Lutai a,

1. In terms of color woven fabric, Vietnam's 40 million meter project has been put into operation. By the end of 2019, Vietnam has a total capacity of 70 million meters for non-ferrous weaving, 180 million meters for domestic non-ferrous weaving, with a total capacity of 250 million meters. China also has 80 million meters of dyed fabric capacity, with a total fabric production capacity of about 330 million meters;

2. Spinning: within this year, the second phase of Vietnam's 76000 spinning projects have been completed. At present, Vietnam has a total production capacity of 136000 spindles. It is estimated that the production capacity of 144000 spindles will be released in Xining, Vietnam in 2020, and the 3000 rotor spinning projects constructed in the same period have reached the production capacity;

3. Shirts: the production capacity of shirts is 27 million, 15 million in China, 6 million in Cambodia and 3 million in Myanmar. The planned production capacity of Cambodia is 6 million pieces, and the utilization rate is up to 70%. The production capacity of Vietnam's phase II 3 million shirts project is relatively slow, and the production will be planned according to the order quantity;

4. High tech fabrics: Lutai a has successfully issued convertible bonds in April 2020, adding 35 million meters of functional fabrics (including 10 million meters of knitted fabrics) and 25 million meters of high-end printing and dyeing fabrics.

Shi Hongmei, an analyst at Dongfang securities, said that in the short term, due to the impact of the spread of the epidemic at home and abroad, Lutai A is facing greater challenges in its production and operation this year. It is expected that the order pressure in the second quarter will be greater than that in the first quarter, and the subsequent recovery of foreign demand still needs to wait for the obvious alleviation and control of the overseas epidemic. However, Lutai a announced the transfer of part of the equity of Rongchang biology, which is expected to make a positive contribution to the company's profit this year. In addition, the initial convertible bond price of 9.01 yuan / share is expected to support the company's share price.

In the medium and long term, Shi Hongmei judged that Lutai a has always been one of the manufacturing enterprises with international competitiveness in the textile and garment industry. In April this year, the company completed the issuance of 1.4 billion convertible bonds, which were used to invest in the functional fabric intelligent ecological park project (phase I) and high-grade printing and dyeing fabric production line project, providing financial guarantee for production capacity investment and operation The expansion will continue to support the company's revenue and profit growth point, and consolidate Lutai A's leading position in the world's medium and high-end color weaving industry.

Industry insiders also believe that because Lutai textile's income from overseas market is relatively high, the recent overseas epidemic may have a certain impact on the company's export business. It is suggested to pay close attention to the subsequent order adjustment of the company in the second and third quarters, and timely follow up the impact of the epidemic on the company's revenue and performance.