Shenzhou International Group Holdings Co., Ltd. (hereinafter referred to as “Shenzhou International”) recently announced that the company’s factory in China has closed on February 10 Operations have resumed and workers have gradually returned to work. As the number of workers returning to work has increased, as of February 28, 2020, the group’s actual production capacity has reached approximately 95% of the original normal production capacity. The group’s factories in China have also restarted employee recruitment. In addition, the supply of raw materials obtained by the Group has generally remained stable.
The board of directors believes that the brief suspension of production and shortage of production capacity before resumption of work had a temporary impact on the group’s overall production level. The company is working hard to mitigate the adverse effects and will take various measures to make up for the shortage of production capacity. .
First Textile Network reporter noticed that Shenzhou International officials and Ningbo media had previously reported that Shenzhou International’s domestic factories resumed work on February 10, and the Ningbo base resumed work on the first day of 14,000 people, all of whom are local employees, with a resumption rate of 39%; 6,200 people at the Anhui factory resumed work on the first day, with a resumption rate of 62%. Due to the suspension of high-speed trains in many places at that time, Shenzhou International dispatched more than 700 buses from 14 provinces and cities including Sichuan, Gansu, Shanxi, Yunnan, and Shandong to welcome employees back to work. The number of employees totaled more than 17,000. The first batch of employees returned to work on February 13 Arrive on the same day.
Guosen Securities analyst Wang Xueheng previously believed that based on the resumption of work, it is assumed that Shenzhou International’s domestic factories will delay the resumption of work. 1 week, the capacity utilization rate in the second week is 50%, and the capacity utilization rate in the third week is 100%. Overseas factories operate as usual, and the rest of the year is produced according to the original plan. It can be roughly estimated that the impact of the epidemic’s delayed resumption of work on the company’s revenue in 2020 will be 2 %, relatively slight.
However, Wang Xueheng said frankly that taking into account the additional costs of still paying employees during the delayed resumption of work and epidemic prevention measures compared with previous years, a conservative assumption is 2,500 yuan per capita. Shenzhou International Domestic With a total of about 43,000 employees, the company’s costs will increase by about 100 million yuan. Therefore, the profit loss from the delayed resumption of work plus the additional costs will result in a total net profit decrease of 220 million yuan compared with the original forecast, which will have an impact on the company’s net profit of about 3.6%. Still relatively mild.
Wang Xueheng pointed out that from the three perspectives of sales area, order production in advance, and production capacity in short supply, it is expected that the impact of demand side impact on Shenzhou International will be limited because:
1. From the perspective of regional distribution, since the epidemic mainly affects consumer demand in Greater China, most overseas market demand is relatively normal. However, most of Shenzhou’s products are exported overseas, with only 30% in China. Domestic sales, so the negative impact of downstream demand on Shenzhou International is relatively limited;
2. From the perspective of order production rhythm, only when the epidemic lasts for more than 2 quarters will it be possible to cause orders to appear Significant changes. News of this year’s epidemic broke out around January 20. Passenger traffic declined during the Spring Festival and for a period afterward, resulting in unsalable spring goods, and the pressure was borne by brands and dealers. Brands generally place orders two quarters in advance, and summer orders were completed last year. Orders for spring and summer goods can be adjusted to a smaller extent. The short-term epidemic may also affect the confidence of brand dealers in autumn orders. However, according to the current development trend of the epidemic and the judgment of the Ministry of Commerce, consumption is likely to bottom out in March and enter the recovery period in the summer. If compensatory consumption is ushered in in the autumn, there will be Positive and beneficial effects;
3. From the perspective of production capacity, Shenzhou International still faces production bottlenecks. Order demand exceeds production capacity supply, resulting in a discrepancy between Shenzhou International’s performance and fluctuations in terminal market demand. With a large buffer space, the short-term decline in terminal consumer demand will have limited actual impact on the company.
Based on Shenzhou International’s recruitment progress and target production capacity calculations, Wang Xueheng predicts that the company’s production capacity release will accelerate from 2019 to 2022. The specific calculations are as follows:
1. In 2019, as the last round of Vietnam projects climbed close to the ideal production capacity, and multiple new projects are under construction, Deli Garment Factory is still in the early stages of production, and the production capacity growth rate is close to the company’s previous 10%-15% growth. The lower limit of the range;
2. In 2020, the ramp-up of Vietnam’s Deli factory after it is fully staffed will become the most important driving force for production capacity growth. The first phase of the new project in Cambodia will start production and contribute a small amount of additional new production. To increase production capacity, the company’s production capacity growth is expected to be in the middle of 10%-15% that year;
3. From 2021 to 2022, as Vietnam’s Deli factory climbs close to the ideal level, Cambodia’s new The industrial park project and Vietnam Shitong’s new project have entered a ramp-up period and gradually become new growth drivers. Driven by the simultaneous ramp-up of factories in Cambodia and Vietnam, the company’s overall production capacity growth rate is expected to be close to the upper limit of 10%-15%.
Public information shows that Shenzhou International is China’s largest vertically integrated garment manufacturing company, mainly providing customers with high-quality knitwear and clothing through OEM. The company’s main customers are internationally renowned brand clothing retailers, with the top four customers being Nike, Adidas, Uniqlo and Puma. The sales market covers mainland China, the European Union, the United States and Japan. In terms of production capacity, in addition to the production base at the Ningbo headquarters, there are also domestic factories in Anqing, Anhui and Quzhou, Zhejiang, as well as overseas factories in Phnom Penh, Cambodia, Ho Chi Minh City and Xining Province in Vietnam. The export volume ranks first among Chinese garment export companies.
Financial reports show that Shenzhou International hasSince its listing, the compound annual growth rate of revenue has reached 17.83% by 2018; the compound annual growth rate of net profit has reached 21.7%. As of the first half of 2019, revenue was 10.28 billion yuan, a year-on-year increase of 12.2%; net profit was 2.416 billion yuan, a year-on-year increase of 10.9%. Excluding the 83 million loss from retail, net profit increased by 13.3%.
From observation, among the four major customers, Nike, Adidas and Puma are all sports brands, and their proportion has been rising since 2008. As of 2019H1, their combined total revenue exceeded 60% . According to Bloomberg forecasts, eNike’s revenue from fiscal year 2020 to 2023 will be 42.197, 456.24, 49.290 and 52.949 billion US dollars respectively, with a compound growth rate of 7.86%; net profits will be 47.02, 53.56, 6.135 and 7.042 billion US dollars respectively, with a compound growth rate of 14.98%. Adsidas’ revenue from fiscal year 2020 to 2023 was 26.136, 280.55, 30.087 and 32.340 billion US dollars respectively, with a compound growth rate of 5.72%; net profits were 21.53, 23.93, 2.676 and 3.074 billion US dollars respectively, with a compound growth rate of 11.20%. aPuma’s revenue from fiscal year 2020 to 2023 was 5.989, 66.48, 7.308 and 7.81 billion US dollars respectively, with a compound growth rate of 9.21%; net profits were 2.85, 3.48, 426 and 525 million US dollars respectively, with a compound growth rate of 24.12%.
First Textile Network reporter learned that Shenzhou International’s equity is relatively concentrated, among which the largest shareholder is Xierong Co., Ltd. (jointly held by Chairman Ma Jianrong and family members, enjoying absolute Control), holding 46.62% of the shares; the second largest shareholder is Fugao Group Co., Ltd., holding 5.29% of the shares (jointly held by Ma Jianrong’s cousin Ma Renhe and company executives). The top two shareholders together account for 51.91%, and the Ma Jianrong family enjoys absolute control and leadership over the company.
Gao Xiang, a researcher at Guoyuan International, emphasized that in recent years, with the pressure on domestic environmental protection and the loss of labor cost advantages, the risk of setting up factories overseas has become higher for small businesses. The production environment of small businesses has also As the situation continues to worsen, the industry has begun to consolidate. Large companies including Shenzhou International have multiple advantages, stronger risk resistance and profitability, and are constantly increasing their share.
In Gao Xiang’s view, the trends in the textile and garment industry in recent years have confirmed that operational pressure has increased, and industry consolidation is the general trend. First of all, behind the rise in labor costs is the difficulty in recruiting workers, and the difficulty in recruiting workers. Behind this is the decline in the working-age population caused by aging. Therefore, the domestic labor cost advantage no longer exists. Secondly, as the trade environment further deteriorates, small companies will face a more difficult production environment and weak risk resistance, while leading companies will further increase their share. Shenzhou International’s unique high profit level in the industry also reflects its competitiveness. Advantage.
Gao Xiang predicts that Shenzhou International will be in a state of short supply of orders for a long time. Future growth will come from the improvement of production capacity on the one hand, and the adjustment of customers and product structure on the other. From the perspective of production capacity upgrades , is expected to maintain an annual growth of 10-15%, and the three new factories in Vietnam and Cambodia are expected to have a total of 30,000 employees by 2023.
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