Another industry giant has transferred its printing and dyeing shares. On July 1, Zhejiang Furun Co., Ltd. (hereinafter referred to as “Zhejiang Furun”) disclosed through an announcement that the company planned to transfer its holding subsidiary Zhejiang Furun Printing and Dyeing Co., Ltd. (hereinafter referred to as “Furun Printing and Dyeing”) through a public listing. “) 46% equity and 51% equity of Zhejiang Furun Textile Co., Ltd. (hereinafter referred to as “Furun Textile”), the total initial public transfer price is not less than 359.6266 million yuan.
Some analysts said that Zhejiang Furun’s listing to transfer the equity of its subsidiary at this time is a typical manifestation of the current slump in the printing and dyeing industry. Is this really true?
Exit the traditional sale of equity
According to the 2019 annual report, Zhejiang Furun’s main business includes three areas, namely Internet services, textile printing and dyeing, and seamless steel pipe processing and sales. Among them, the textile printing and dyeing business is mainly implemented by Furun Printing and Dyeing and Furun Textile.
Furun Printing and Dyeing is located in Chengnan Industrial Zone, Zhuji City, Zhejiang Province. In its ownership structure, Zhejiang Furun, which holds 46% of the shares, is its largest shareholder, Furun Group American Industry and Trade Co., Ltd. holds 25% of the shares, and the remaining shares are held by several natural persons. Announcement data shows that Furun Printing and Dyeing’s revenue in 2019 was 1.196 billion yuan, and its net profit was 74.903 million yuan. In the first quarter of 2020, its operating income was 259.8 million yuan and net profit was 11.5664 million yuan (unaudited).
Furun Textile is also located in Zhuji City. Zhejiang Furun holds 51% of its shares and Hongfeng International Industrial Co., Ltd. holds 49% of its shares. Announcement data shows that Furun Textile’s revenue in 2019 was 225 million yuan, and its net profit was 27.4814 million yuan. In the first quarter of 2020, its revenue was 23.653 million yuan and net profit was 2.5305 million yuan (unaudited).
Moreover, Furun Printing and Dyeing and Furun Textile are among the first batch of national water-saving benchmark enterprises. At the same time, Furun Printing and Dyeing is also an enterprise admitted to the printing and dyeing industry by the Ministry of Industry and Information Technology and a “leading” environmental protection demonstration enterprise in key industries in Zhejiang Province.
Therefore, the transfer of equity when both subsidiaries have a certain profit is somewhat unexpected. “In terms of textile sales and processing, due to industry rectification, environmental protection upgrades and other factors, some small and medium-sized enterprises in the industry have been shut down. However, in recent years, Furun’s order volume has been relatively stable. Therefore, this time the main business of textile printing and dyeing is divested. This move really feels a bit sudden,” said an industry insider.
In this regard, Zhejiang Furun stated that this transfer is in line with the company’s strategic plan of “gradually divesting traditional assets and gradually clarifying the main line of the industry” and is to concentrate resources to develop emerging businesses.
It is understood that in 2019, Zhejiang Furun’s Internet services, an emerging business, accounted for 54.51% of its revenue. Currently, this business is ushering in an explosive “bonus period” in digital marketing fields such as short videos and live broadcasts. With the divestment of traditional businesses and focus on emerging main businesses, Zhejiang Furun will have full momentum for future performance growth.
Zhejiang Furun also revealed that due to factors such as the escalating international trade frictions, rising domestic labor costs, and increasing environmental pressure, Zhejiang Furun’s traditional textile printing and dyeing processing business has become increasingly profitable. Small. According to the 2019 annual report, during the period, the gross profit margin of the company’s textile sales and processing business was 20.62%, a year-on-year decrease of 0.11%.
Spinning off the former main printing and dyeing business seems to have become a common choice for many companies under the pressure of economic downturn. Faced with the tightening financial situation of enterprises, Shanghai Shenda Co., Ltd. also has the idea of selling its printing and dyeing shares. In April this year, the company issued an announcement announcing that it planned to publicly transfer its 100% interest in Shanghai Second Printing and Dyeing Factory Co., Ltd. through the Shanghai United Equity Exchange. The assessed value of the above-mentioned interest was 507 million yuan.
The rapids and bravery to increase printing and dyeing
Under market conditions like this year, the industry leader announced that it is still profitable The divestment of the textile printing and dyeing business will inevitably affect market confidence to a certain extent. However, Zhejiang Yingfeng Technology Co., Ltd. (hereinafter referred to as “Yingfeng Technology”), which is also a well-known enterprise in the printing and dyeing industry and located in Keqiao District, Shaoxing City, has recently made a completely different choice.
On July 6, Yingfeng Technology announced IPO details, and will invest a total of 640 million yuan in 131 million meters of high-end fabric intelligent green printing and dyeing projects (the total investment is 590 million yuan, of which it plans to invest in raising funds 350 million yuan), as well as the construction project of an innovative R&D testing center (planning to invest 50 million yuan in raised funds).
The prospectus shows that as of the end of 2019, Yingfeng Technology has a printing and dyeing processing capacity of 180 million meters/year of woven fabrics and 80 million kilograms/year of knitted fabrics. Zhejiang is the company’s most important sales region. Currently, sales in Zhejiang account for more than 70% of the company’s total annual sales.
The prospectus shows that the construction content of its 131 million meters of high-end fabric intelligent green printing and dyeing project includes three parts. The first is the knitted fabric printing and dyeing project with an annual output of 11,900 tons, and the second is the annual output of 35 million meters of woven fabrics. Pad-dyeing projects, the third is a printing project with an annual output of 40 million meters of woven fabrics and 10,100 tons of knitted fabrics. After the project reaches full production, it is expected that the company’s annual new operating income will be 594 million yuan and its annual new net profit will be 68.5158 million yuan.
The innovative R&D test center construction project plans to build R&D buildings, laboratories and supporting facilities. It will improve the R&D system based on existing R&D resources and purchase advanced R&D equipment and instruments at home and abroad.equipment, introduce talents, build a new R&D platform, establish and improve R&D management systems and processes, improve the standardized management of the R&D center, and better provide technical guidance for the product production process.
Yingfeng Technology stated that the intelligent green printing and dyeing project for high-end fabrics will make full use of the company’s high brand awareness and rich dyeing and finishing experience in the printing and dyeing industry to expand its business scope into the fields of textile pad dyeing and printing. It is conducive to enriching the company’s product categories, improving its business structure, and enhancing its comprehensive competitiveness.
Yingfeng Technology is not the only one that is investing in the printing and dyeing industry. As the first green industrial building three-star project in the domestic textile industry, Fujian Fengzhu Textile Technology Co., Ltd., its Anton new factory has now entered the equipment stage. In the field and commissioning stage, it is expected to be put into use by the end of September this year. The project covers a total area of approximately 165 acres, with a total construction area of 160,000 square meters. It mainly produces high-end knitted printing and dyeing fabrics, with a designed annual production capacity of 50,000 tons.
Forge ahead and adapt to changes
There have always been a large number of enterprises in my country’s printing and dyeing industry, but most of them are Chinese small companies. Many small and medium-sized printing and dyeing enterprises have insufficient capabilities in R&D innovation and environmental protection investment, and the proportion of high value-added products is not high. Therefore, the industry as a whole is facing a situation of low market concentration and fierce market competition.
In recent years, with the continuous advancement of “supply-side structural reform” and the deepening of industry transformation and upgrading, advanced dyeing and finishing processes in the industry have been continuously applied, including energy comprehensive utilization technology, wastewater treatment and reclaimed water. The gradual promotion of recycling technology has promoted energy conservation and emission reduction, technological progress and process innovation in the printing and dyeing industry, optimized the industrial structure, and also increased industry concentration. In this process, overall, the competitive advantages of leading companies are relatively obvious.
However, there is no doubt that the epidemic that has lasted for more than half a year is rewriting the development trajectory of many printing and dyeing companies. In the first quarter of 2020, affected by the epidemic, domestic and foreign demand in the textile market weakened. Most companies did not operate enough. Some companies’ product prices or processing fees declined. In addition, wages, rent and other expenditures lacked elasticity, as well as epidemic prevention and control, logistics and transportation costs. increased, and the company’s profitability dropped significantly. Data released by the China Printing and Dyeing Industry Association shows that in the first quarter, my country’s printing and dyeing enterprises above designated size achieved main business income of 48.535 billion yuan, a year-on-year decrease of 23.64%; total profits were 1.213 billion yuan, a significant decrease of 43.08% year-on-year.
“Judging from the actual situation of Zhejiang Furun, although the current announcement of the transfer of textile printing and dyeing sector assets is indeed in line with the company’s overall strategy, after all, both subsidiaries are still profitable. Based on this analysis, this year The severe situation in the printing and dyeing market may have prompted it to speed up its decision-making,” said an industry insider.
“Generally speaking, when a company faces a situation where the capital chain is relatively tight, it is a good choice to realize sufficient cash flow by selling off some assets and equity.” Some people in the industry think so. Some people in the industry also pointed out that there is an opportunity in a crisis. Choosing to expand printing and dyeing production capacity at this time will further consolidate the industry’s position, stimulate the endogenous power of enterprises, and expand the market.
As for the market outlook, Lin Lin, secretary-general of the China Printing and Dyeing Industry Association, said that at present, positive factors in the industry are constantly emerging and the situation is gradually improving. “Domestic support policies are being gradually implemented and continued to be exerted, the domestic epidemic prevention and control situation continues to improve, production and living order is accelerating back on track, and part of the consumer demand that was suppressed in the early stage is gradually being released. In May, the profit growth rate of my country’s industrial enterprises above designated size Achieving a turn from negative to positive, the printing and dyeing industry has improved its resilience in response to the epidemic.” However, she also pointed out that as the global epidemic is still spreading, my country’s textile supply chain and ecological chain are under pressure, and global consumer demand for textiles and clothing is at a certain level. Problems such as difficulty in significant improvement within a certain period will cause problems in corporate business planning.
“Printing and dyeing enterprises must actively adapt to changing trends, seek opportunities in crises, and adapt to new situations and major changes.” Lin Lin concluded that despite the current complex external situation, overall, my country’s textile and garment industry is still in a It is an important strategic opportunity period and has the industrial advantage of closed-loop innovation capabilities in the entire industry chain. She predicted that in the second half of the year, the operation of the printing and dyeing industry will improve and is expected to gradually return to stability. </p
